This year’s flu season is estimated to cost the U.S. more than $16 billion in lost revenues and employee productivity. In order to slow the spread of viruses like influenza, the Centers for Disease Control and Prevention recommend that those of us with symptoms remain at home and away from others.
Yet, according to the U.S. Bureau of Labor Statistics, nearly four out of 10 private-sector workers, including 80% of low-wage workers, lack access to a single day of paid sick leave. New data suggests that more than 700,000 Maryland employees are ineligible for paid sick leave under existing company policies, leaving them vulnerable to wage or job loss when they, or a family member, becomes sick.
For these workers, who may handle food in restaurants or care for children in day care centers, contracting the flu means having to choose between coming to work sick (and possibly infecting co-workers, clients or customers) or forgoing a paycheck — a perilous choice for those whose wages already place their families in financial jeopardy.
President Obama announced in January that he would call upon Congress to pass legislation to allow workers to earn up to seven paid sick days a year. Some employers argue that providing paid leave would be cost-prohibitive, difficult to implement or result in understaffing. Recent studies have found, however, that investing in employee health by providing paid sick leave can increase employee productivity and corporate profitability.
A six-year study of private sector initiatives across the globe found that sick leave policies had significantly reduced turnover costs, in one case from 15–20% to just 3%, thus boosting those company’s bottom lines. The study’s findings, published by the Harvard Business Press, echo those by the Institute for Women’s Policy Research, which found that “paid sick days bring a range of economic, social and health benefits for employers, workers, and communities. … The benefits of paid sick leave for employers include improvements in productivity, reductions in workplace contagion, and reduced worker turnover.”
Some employers have heeded these findings by adopting what MIT professor Zeynep Ton calls the “good jobs strategy.” Ton’s research reveals that, perhaps counter-intuitively, employers can maximize profits by raising wages and improving working conditions.
However, given the numbers of employers who remain reluctant to adopt this strategy, cities like Seattle; Portland; San Francisco; Washington, D.C.; and New York, as well as states like Connecticut, have enacted paid sick leave laws to level the playing field between the “high road” employers — who provide such benefits to their low-wage workers — and “low road” employers, who do not.
Burden for Employers?
Opponents argue that such laws will burden employers struggling in what they perceive as a precarious economy. Recent impact assessments reveal, however, that the availability of paid sick days benefits workers and employers, and has an overall positive economic impact on local markets. For example, economists point to growth in both small and large businesses since the San Francisco ordinance was passed in 2007, and six out of seven San Francisco employers report no negative profitability from providing paid sick leave.
Similarly, a survey of Connecticut employers conducted 18 months after that state’s paid sick leave law went into effect found that more than three-quarters of employers supported the law. The authors conclude that the law has had a modest impact on business in the state, contrary to many of the fears expressed by business interests prior to the passage of the legislation.
Moreover, employers cited positive benefits flowing from the law, such as improved workplace morale and reductions in the spread of illness in the workplace.
Other business leaders have acknowledged that paid sick leave laws are not bad for employers. Jim Lazarus, senior vice president for policy at the San Francisco Chamber of Commerce, reported that his city’s sick leave law has had “minimal” effect on employers. “By and large, this has not been an employer issue,” said Lazarus. And Amanda Rothschild, owner of a Baltimore café that offers paid sick days, said, “We provide our employees with paid sick days not because it’s the right thing to do, but because it’s good for business.”
This legislative session, the Maryland General Assembly again will consider the Healthy Working Families Act. Last year, the U.S. Women’s Chamber of Commerce testified in support of paid sick leave in Maryland, as did Ed Hatcher, president of The Hatcher Group, who cited the benefits to businesses when employees have the flexibility to take care of themselves and their families.
“When sick workers are able to stay home without risking losing their wages or their jobs,” he said, “the spread of disease slows, workplaces are healthier and safer, and workers are more productive.” Hatcher noted what other “good job” employers have recognized for some time — that “happy, healthy employees are also more likely to be loyal employees.”
In announcing Obama’s intention to create a federal paid sick leave model, Senior Policy Adviser Valerie Jarrett said, “This is not a partisan issue; this is a family issue, and it’s an economic issue.”
With access to paid sick leave poised to be taken up as a national debate among employers, workers and public health advocates, opportunities for raising workplace standards and creating shared employer value remain squarely a Maryland issue.
Elizabeth Kennedy is an associate professor of law and social responsibility at Loyola University Maryland Sellinger School of Business and Management. The Sellinger School has a campus in Columbia. She can be contacted at 410-617-5534 and [email protected].