No, Connecticut’s History-Making Paid Sick Leave Law Did Not Hurt Business

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When Connecticut was considering whether to become the first state to require employers to offer their workers paid sick leave, businesses raised concerns that it would create an unbearable cost, forcing some to close, and that abuse would be rampant. But a new survey of employers in the state a year and a half after the law took effect shows those fears were unfounded.

“The concerns articulated by many business associations that the law would impose heavy burdens on employers and invite worker abuse turn out to have misplaced,” the authors of the new report for the Center for Economic and Policy Research write; “instead, the impact of the new law on business has been modest.” After they surveyed 251 employers in the state who were covered by the law and conducted on-site interviews, they found that nearly two-thirds said it had led to no change or an increase of less than 2 percent in their overall costs. About another 12 percent didn’t know how much their costs had increased. “This suggests, as more than one manager we interviewed told us, that the cost increase may have been ‘below the radar’ and not worth tracking,” they note. Just 11 percent saw costs go up by 3 percent or more.

Costs have likely been low because most employers covered sick workers in inexpensive ways. Most, 85 percent, temporarily assigned the work to other employees, allowed them to swap shifts, or just put the work on hold. The rest, 15 percent, hired hired temporary replacements or increased overtime among other workers. The low costs also mean that very few had to change wages, prices, hours, or other practices. “Virtually none reported reducing wages,” the authors report, while about 90 percent didn’t reduce hours and 85 percent didn’t have to raise prices.

The anticipation of rampant abuse also didn’t pan out. Despite the fact that the law allows workers to earn five days of leave a year, on average they used just four and half used three days or less. A full third didn’t use any sick days within a year at all. More than 85 percent of employers reported that there were no known cases of abuse. “Having more available does not lead to workers using more sick days,” Eileen Appelbaum, one of the report’s authors, said on a call with reporters. “They use the sick days they really need over the course of the year.”

On the other hand, many employers said they experienced benefits from the paid sick days law. About 30 percent saw morale improve and nearly 15 percent saw productivity improve. Others experienced increased motivation and loyalty. A human resource manger in the hotel industry said that “the law ties into retention and turnover in a positive way.” Almost 15 percent also said the sick leave reduced the spread of illness.

Given the low costs, negligible abuse, and prevalence of benefits, more than three-quarters of employers support the law, with nearly 40 percent saying they are very supportive. One manager in the grocery industry had actively lobbied against the law, but now says, “The impact has been less than anticipated,” adding that in regards to cost increases, “It doesn’t even hit the radar screen.”

Connecticut is still the only state to pass a paid sick leave requirement, although seven cities have done the same and eight other states could soon follow. They can be assured that Connecticut’s experience is similar to findings from other places that have passed paid sick days. Employment and business growth actually increased in the wake of San Francisco’s law and a majority of businesses in the city support it. Seattle’s job growth was also stronger the year after its policy was implemented and sales growth increased. Washington, D.C.’s policy hasn’t discouraged business owners from opening up or encouraged them to move elsewhere.

This data could help propel a national law, which would remedy the fact that 41 million people don’t have access to paid sick leave. Rep. Rosa DeLauro (D-CT) noted on the press call that “Connecticut in recent years has been a laboratory for federal pro-family initiatives,” and that “this report demonstrates and shows that it’s common sense legislation.” She added, “Now we need to take it national.” In 2004, she co-sponsored the Healthy Families Act, a law that would do just that, but it still hasn’t passed despite being introduced multiple times since then.