Leading Economists Support Paid Sick Days

March 27, 2012

Honorable Members of the General Court

State House

Boston, MA  02133

Dear Members of the General Court,

In these tough economic times, no one should have to lose income — or worse, lose their job — just because they get sick or have to care for a sick child.  But that is the reality for nearly 1 million men and women in Massachusetts with no paid sick days.[1]  An Act Establishing Earned Paid Sick Time, H 3995, will change that reality and help our state’s workers keep their jobs, support and take care of their families.  Allowing workers to earn a limited number of paid sick days will create job security for our families, help rebuild an economy that values hard work, and protect our health and safety.  That is why as economists we urge you to pass the Earned Paid Sick Time bill.

Providing paid sick days in Massachusetts will help speed our economy’s recovery by protecting jobs and ensuring families have the financial security they need to spend their wages on goods and services.  The bill will also protect public health, create a healthier workforce and help businesses cut costs and hold onto trained and productive employees:[2]

• Retention policies like paid sick days help reduce unemployment and strengthen the economy. Jobs are lost when worker do not have paid sick days, as shown by a report from the National Opinion Research Center, which found that 23% of workers have lost a job or threatened with job loss for taking time to care for personal or family illness.[3]
• Workers who have the least ability to absorb the loss of pay are most vulnerable to losing their jobs due to the lack of paid sick days.  Among workers in Massachusetts without access to a single paid sick day, almost 70% are earning less than $25,000 a year.[4]  A new study from the Economic Policy Institute found that loss of a few days’ pay for a low-wage worker can equal a month’s worth of groceries.[5]
• When sick workers are able to stay home, the spread of disease slows and workplaces are healthier and more productive. Workers recover faster from illnesses, get timely medical care, and rely less on emergency room care, cutting health care costs.[6]
• Businesses also benefit from increased worker loyalty, reduced turnover, lower replacement costs, and fewer losses from low productivity.[7]  Indeed, the annual benefit to Massachusetts businesses alone is $348 million.[8]

But despite these facts, you will no doubt hear doomsday predictions from business lobbyists who oppose this measure. However, the real-life experiences of firms that provide sick leave and a growing body of academic research show beyond any doubt that the costs of providing paid sick days are extremely small. The benefits – for employees, employers, and the public – are substantial.[9] We urge you to pay close attention to evidence and data, not unfounded speculation about the impact this legislation will have on our economy:

●  A study on the impacts of enacting paid sick legislation by the Economic Policy Institute concluded, “The data clearly show that the potential cost of providing paid sick days is in fact extremely small relative to the total sales of a firm. In addition, available research shows cost-savings for employers that provide paid sick days, largely resulting from reduced employee turnover.”[10]

●    Reducing turnover saves employers money – including cutting the costs of   advertising, recruitment, interviewing, training, and lost productivity, often outweigh the cost of paid sick time to retain existing workers.[11]

●    When sick workers can stay home, the spread of disease slows and workplaces are healthier and more productive. Further, workers recover faster from illness and obtain timely medical care— enabling them to get back to work sooner and cutting health care costs, including $22.7 million in Emergency Room expenses for Massachusetts hospitals, including $13.4 million in taxpayer dollars.[12]

●   Providing paid sick days dramatically reduces the cost of “presenteeism” – the lost productivity stemming from employees coming to work sick. According to the Society of Human Resources Management, presenteeism costs American employers $180 billion annually, far outpacing the cost of absenteeism.[13]

●    According to the Economic Policy Institute, workers with paid sick days do not abuse the time.  Among workers who currently have access to five paid sick days, the industry-weighted average number of days taken is 2.41 days; if employees used this average number of paid sick days, the total cost would be 0.19% of sales.[14]

●    Recent analysis from economists at the Center for Economic and Policy Research shows that paid sick days help reduce the unemployment rate by protecting workers from firings due to their own or a family member’s health needs.[15]

• Access to paid sick days reduces use of hospital emergency departments by 14% by allowing workers to use primary care. Because emergency care is more expensive than primary care, making paid sick days universal nationally would decrease unnecessary emergency room costs nationwide by $1 billion while improving health outcomes. Reduced contagion, especially from seasonal and pandemic influenza, would also prevent millions in health costs.[16]

Real-world experience also informs our view as economists. When the City of San Francisco enacted its Paid Sick Leave Ordinance (PSLO), critics there raised many of the same concerns that lobbyists have raised in Massachusetts. Five years later, the number of small and large businesses in the city has grown — and growth in the city has been stronger than in the surrounding five counties with no paid sick leave laws.[17]  And San Francisco was rated in 2011 as the world’s third best city for business and innovation by the global accounting firm PriceWaterhouseCoopers. Employers and employer associations in San Francisco have publicly embraced the policy, with the Golden Gate Restaurant Association calling it “the best public policy for the least cost.”[18]

Additionally, ensuring access to paid sick days is a critical way to modernize workplace standards in light of substantial demographic and economic changes over the past fifty years. Today close to two-thirds (64 percent) of mothers work outside the home and most families with children have two working parents.[19]  Nearly half of all Americans (48 percent) are unmarried and many of them are sole breadwinners in families with children. One in three working women provides care for aging parents.[20]  Many employers have adapted their policies in recognition of the importance of helping workers meet both work and family responsibilities. Indeed, some of the fastest growing and most innovative employers are those who have embraced smart, modern employment practices, enabling them to attract and retain the dedicated and talented workforce they need to compete.

Finally, as you contemplate your vote, we ask you to consider the benefits of paid sick days to our state’s economy, businesses and workers detailed in this letter.  To get our economy moving again, we encourage you to enact paid sick days and other practical policies to help hardworking people hold onto their jobs, support their families and sustain local businesses.

As economists, we believe providing a minimum floor of paid sick days is the kind of policy we should be promoting to improve employee retention, minimize layoffs, promote work-life integration, enhance economic security for working families, and create a level playing field among employers.  Please protect and promote the economic security of workers and businesses in Massachusetts, and vote to pass the Earned Paid Sick Time Act, H 3995.