When Connecticut’s first-in-the-nation paid sick leave law was being debated in 2011, advocates said it would not be a burden to businesses — in fact, it would help them boost productivity by keeping their employees healthy.
Restaurant owners and the state’s general business lobbying group called it an onerous burden.
On Tuesday, a Washington, D.C. group released a survey showing that some business owners scaled back employee hours, cut wages and canceled plans to expand as a result of the law, which took effect on Jan. 1, 2012.
The report by the Employment Policies Institute fuels both sides of the argument. At a time when the state is spending tens of millions of taxpayer dollars to boost community businesses — what I call the “butcher, baker and candlestick maker” strategy by Gov. Dannel P. Malloy — anything that adds to the cost of doing business is rightly viewed with suspicion.
Here’s the key finding:
Of the 156 businesses that responded to the survey, 86—
or 55 percent—had started providing sick leave to comply
with the new law. Prior to the law taking effect in January
2012, 31 of the businesses surveyed had scaled backed
on employee benefits or reduced paid leave (or both) to
account for the cost of the new law. Twelve had cut back
employee hours, and another six reduced employee wages.
Nineteen businesses raised consumer prices, six laid off
employees, and three converted part-time positions to
full-time positions. Sixteen businesses indicated they
had decided to limit or restrict their expansion within
That sounds worse than it is in reality. The survey by EPI — a business-backed group that opposes such measures as raises in the minimum wage, not to be confused by the other EPI, the pro-labor Economic Policy Institute — is not scientific. The 156 businesses in the survey voluntarily responded, from a list of about 800 businesses identified by anti-sick-leave groups, including the Connecticut Business and Industry Association as likely to have been affected by the law.
So, if 12 businesses cut back hours and 19 raised prices, but 150 Connecticut residents didn’t get the flu as a result of the law, what’s the cost and what’s the benefit?
Under the law, firms with 50 or more employees must offer paid sick leave at a rate of one hour for every 40 hours worked, a maximum of 40 hours of paid sick time per year. Employees must work at least 680 hours to be eligible and employers can charge the time off as vacation time if they offer vacation.
The law does not apply to manufacturers and tech firms, which is important. Service firms such as school bus companies and restaurants can raise prices and they can hurt the economy by not expanding, but they can’t move jobs to other states.
The concerns of business should not be waved off even if the direct effects of the law don’t turn out to be large. Attitude matters when we’re trying to be “business friendly,” whatever that means, and all of us hear stories from our friends who own businesses about how hard it is to comply with Connecticut’s mandates.
Moreover, it’s always risky to the the first state mandating a new cost for businesses. Cities such as San Francisco and Seattle have mandated paid sick leave, but no other state has joined the club.
What we have here is a survey that shows a very small number of businesses claiming a large burden from the law. Credit should go to Employment Policies Institute, which did not try to overstate the burden in its report.
Among those businesses that started providing sick leave
to comply with the new law, 43 said it would have a large
effect on their cost of business, 30 said it would have a
small effect, and 12 said it would have no effect. (One
business opted to not respond to the question.)
The state Department of Labor, which has held seminars on the law for hundreds of employers, has received just four complaints — arising from confusion, not hardship, spokeswoman Nancy Steffens said Tuesday.
“The vast majority of employers are complying with the law without experiencing an undue burden on their business,” Steffens said, adding that the sectors most affected added jobs in 2012.
Breaking down the numbers, 60 percent of the companies that responded are in businesses whose employees have significant contact with the public: food/beverage, retail, health care or social services/child care. That’s exactly where we don’t want sick people working.
For some companies, the chief complaint was not direct added cost, but record-keeping and workflow management. This from a restaurant:
The owner expressed frustration in the ‘antagonistic relationship’ the law created between him and his employees. He said the business ‘always took care of its people,’ and that the lack of a paid policy was never an issue until labor unions decided to make it one. He said the sick leave law itself wouldn’t cause him to close his business, but that it was ‘one more anti-business piece of regulation’ that makes Connecticut less-friendly to job growth.
By limiting the scope of the law, lawmakers watered down the bill to make it palatable, and probably not an economic burden on the state as a whole.
We can find a few restaurants that have been hurt, and their voices matter. But we can’t easily identify the countless companies that gained a tiny bit of output in 2012 because their employees or their employees’ kids were not sick as often as they would have been.