Despite Big Business’ Warnings, There’s No Evidence That Mandated Sick Leave Causes Job Loss

Requiring that businesses provide employees decent amounts of sick leave doesn’t cost jobs, according to research by the consumer advocate group Public Citizen. The researchers studied three examples of sick leave policies — the San Francisco paid sick leave ordinance (which requires general paid sick leave), the wider California Paid Family and Medical Leave (which requires paid time to take care of children or sick family members), and federal Family and Medical Leave Act (FMLA, which mandated job-protected, but unpaid sick leave).

In each case, Republicans and industry advocates like the Chamber of Commerce warned that sick leave would kill jobs. In each case, the evidence after the fact proved them wrong.

Take the San Francisco law, both the most progressive of the three laws (in that it mandated paid sick leave for a wide set of reasons) and the clearest case of success. Here’s what Public Citizen found:

[A]fter implementation of the paid sick-leave law, San Francisco experienced an increase in employment. A study by the Drum Major Institute found that employment in San Francisco increased 3.5 percent between the start of 2006 and the start of 2010. In San Francisco’s five closest neighboring counties, employment fell 3.4 percent during the same period. The same study found that despite predictions to the contrary, the number of businesses in San Francisco grew by 1.64 percent between 2006 and 2008 while falling by 0.61 percent in neighboring counties. San Francisco also experienced growth within both large and small businesses, and within the retail and food service industry during this period. (These industries expected to be affected most by the ordinance.)

The impact on businesses themselves was minor. A majority reported that understanding and implementing the ordinance was either “not difficult” or “not too difficult.” Additionally, while only 14 percent of businesses reported a negative impact on profits, more than 70 percent reported that the law had either no impact or a positive impact on their profitability…After its implementation, many small business owners discovered that many of the dire consequences predicted prior to the ordinance’s passage, virtually none of them came to fruition. In 2010, three years after the ordinance was enacted, the San Francisco Chamber of Commerce realized there was very little impact on business, noting that “it has not been a huge issue that we have heard from our members about.”

The reason for the gap between industry predictions and reality, as Public Citizen notes, is clear: “Productivity, and thus profitability, suffers when workers are forced to come to work when they are sick. One study on the impact of illness on productivity estimates that businesses lose twice as much money to workers who show up at work while sick then when workers stay home due to an illness.”

Currently, the FMLA does not, as San Francisco does, mandate paid sick leave. For this and other reasons, Congress should consider expanding the FMLA’s protections.

Public Citizen also studied the effect of three other unrelated regulations which business interests decried as job killing, coming to similar conclusions about their actual impact. Their conclusion squares with a wide body of evidence suggesting that overregulation is not the problem holding back American growth and, moreover, that smart regulation can effectively create jobs under certain circumstances.