Paid sick days keep bodies – and bottom lines – healthy

The latest research shows that minimum paid sick days standards and a strong economy go hand-in-hand. The Drum Major Institute (DMI) for Public Policy has just released a report titled Paid Sick Leave Does Not Harm Employment that lays to rest fears that paid sick days legislation may cost jobs. The report examines the effect of San Francisco’s paid sick days requirement on employment by collecting data on San Francisco and five of the counties surrounding the Bay Area.

In their analysis, the DMI found employment remained stronger in San Francisco than in surrounding counties without a paid sick days law. Between December 2006 (the law went into effect February 2007) and December 2009, total employment in San Francisco fell just 3% in the midst of the worst recession since the Great Depression (see graph 1). Compare that to an average decline of just over 5% for the five surrounding counties during the same period of time.

Graph 1
Graph 2

Although the ‘job-killer’ mantra repeated by opponents to paid sick days legislation is not industry specific, many restaurant associations argue that paid sick days standards will put more pressure on the service industry. (Try to forget, for a moment, that the people serving your food likely have no paid sick leave.) So the DMI decided to take an industry-specific look at the retail, leisure and hospitality, and accommodation and food services industries.

What did they find? Growth in leisure/hospitality and accommodation/food services was twice as high in San Francisco as in the surrounding five counties, and loss in retail jobs was less than half as much as in surrounding counties (see graph 2).

Want more info from the Economic Opportunity Institute on paid sick days? Click here.

How much does it really cost businesses to provide paid sick days?

The recently released Bureau of Labor Statistics (BLS) newsletter on paid sick leave (featured in a previous post) has caught the attention of some policy experts and researchers because it features previously unreleased data on the true costs of paid sick days to businesses.

The BLS analysis finds the average cost for sick leave per employee hour worked for private-sector employers was just 23 cents. That’s less than $10 per week, and under $500 per year.

But that’s just the average cost to all private industry. The cost of providing paid sick days to sales and office workers was just 18 cents, or $375/year. For service workers: just 8 cents, or about $166 per year! So what drives up the average? Higher costs for management and professionals (the very people who claim ‘costly mandates kill jobs’), which cost 53 cents per hour.

Additionally, the BLS estimate of hourly cost is similar to data presented in a 2009 report by the Institute for Women’s Policy Research (IWPR) titled Valuing Good Health in New York City: The Costs and Benefits of Paid Sick Days. In that report, IWPR researchers estimate the average hourly cost at 21 cents per hour.

And this analysis doesn’t even include the research that shows businesses providing paid sick days may benefit from increases in productivity and employee morale.

Now that the BLS has released hard data proving the cost of providing paid sick days is, on average, less than 1% of total compensation, maybe the NFIB can ease up on the ‘job-killer’ rhetoric when talking about paid sick days.

More than 1/3 of private industry workers lack paid sick leave

The Bureau of Labor Statistics (BLS), which monitors, tracks and analyzes statistical data about labor economics, recently released its March 2010 newsletter titled “Paid Sick Leave in the United States.”

In the report, The BLS estimates that 61% of private sector workers and 89% of state and local government workers receive paid sick days. However, there were larger disparities by occupation, with only 42% of service workers receiving paid sick days in comparison to more than 80% of management positions.

Paid sick days is also largely depended on business size: 80% of private industry workers in businesses with 500+ employees received paid sick days compared to just 52% in establishments with fewer than 100 employees.

Cost estimates for paid sick days show that in March 2009, the average cost for sick leave per hour for a private sector employee was just $0.23 cents (less than $10/week). The cost for paid sick days in state and local government positions is higher, $0.81 cents, due to better access and more days received.

To read more about the cost, state temporary disability programs, and which workers receive paid sick days, read the full newsletter here.