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Activists face third strike on paid sick leave proposal

Michael Saltsman

Michigan proponents of a paid sick leave mandate are hoping the third time’s a charm.

After failing to generate enough signatures in 2014 or 2016 to take the proposal to voters in the form of a ballot initiative, they plan to try again in 2018. You have to give them an “A” for effort.

Unfortunately, the real-world effects of paid sick leave mandates do not match proponents’ rose-colored rhetoric. And those facts won’t change with the calendar.

For a preview of what’s to come, Michigan should look to Connecticut. This month, my organization released a study by Dr. Thomas Ahn of that state’s 2011 first-in-the-nation state paid sick leave mandate. Dr. Ahn, a professor at the University of Kentucky, concludes that the law had negative job market effects for the state’s young employees.

Compared to New England’s surrounding states, Dr. Ahn finds that Connecticut’s paid sick leave mandate reduced annual hours worked for employees between 20 and 34 years old by 24 hours. That amounts to $850 of lost annual income — about the cost of one month’s apartment rent in Detroit.

This finding is in-line with existing paid sick leave research. An earlier study in Applied Economic Letters finds a nearly 1 percentage point increase in the fraction of unemployed workers associated with the law. And a 2011 study of San Francisco’s paid sick leave law by the Institute for Women’s Policy Research found that 1 in 6 employees reported reduced hours or jobs in their workplace after it was implemented.

Paid leave advocates like MI Time to Care suggest that the costs associated with a paid sick leave mandate will be made up by savings stemming from a healthier workforce. However, research undercuts the premise of this argument, concluding that paid sick leave mandates have little-to-no success in decreasing workplace illness.

The Freedom Foundation, in a review of five paid sick leave studies, found that four of them showed no reduction in workplace illness following the implementation of a paid sick leave mandate. (The fifth had serious methodological problems.) To take one example: In San Francisco, just 3.3 percent of surveyed employers reported that the sick leave policy reduced workplace illness.

What’s to account for this surprising finding? First, workplace illness does not seem to be a pressing problem. Over 85 percent of Connecticut business owners said that workplace illness was a “not at all serious” problem. (A Seattle survey found similar results.) Employers don’t want sick employees in the workplace any more than customers do, and take necessary steps to allow those who are unwell to change shifts.

Second, research and common sense indicate that employees don’t necessarily take their sick leave when they are sick. Forthcoming research from Drs. Thomas Ahn and Aaron Yelowitz finds that paid sick leave laws in the country have increased employee absenteeism by 1.2 days per year, but these absences don’t coincide with the most severe influenza outbreaks.

Proponents have taken to calling their paid sick leave mandate an “earned” benefit, but you can’t earn something unless someone else provides it. We’ve now learned from other states’ and localities’ experiences that the cost of this particular benefit will eventually be paid by younger and less-experienced employees.

For their sake, Michigan voters should ensure that the third try for this latest burden on job creation is a failure like the last two attempts.

Michael Saltsman is research director at the Employment Policies Institute.