Research Overview

Since San Francisco became the first U.S. jurisdiction to pass paid sick leave in 2006, over 20 additional cities and 4 states have adopted sick leave laws.^[i] At least two localities, Washington, DC and New York City, have expanded their initial laws.

Protecting public health, assuring that sick children receive care and prompt medical attention, rebuilding family economic security, and providing safety for victims of domestic violence and sexual assault have motivated voters and policymakers to support Paid Sick and Safe Days. Opponents consistently voiced fears that requiring businesses to provide paid leave would be costly, forcing employers to reduce jobs or hours and pushing some businesses to relocate.

Studies of sick leave laws to date show:

• Covered economies are equaling or out-performing nearby communities in job and business growth.
• Sick leave laws have had small to no impact on business costs, hiring, or location decisions, and a majority of business owners support the laws.
• Workers and their families are benefitting with more access to paid leave and better ability to care for their own and their families’ health needs.
• Some workers are not receiving the paid sick leave they are entitled to and some still go to work sick. Lack of knowledge about the law, limited enforcement, prevailing U.S. work culture, and the fact that minimum standards often are not sufficient to cover multiple illnesses in a year are likely factors.

Business and job growth have been strong in cities with sick leave laws

Since Seattle’s law was implemented, jobs and businesses have grown faster in Seattle than in nearby cities of Bellevue, Everett, and Tacoma, according to a University of Washington study based on Washington Employment Security Department data. Study authors concluded:^[ii]

Even after controlling for factors such as seasonal variations, the time period of the Ordinance, and the overall Seattle effect, employer growth in Seattle after the Ordinance was significantly stronger than in the other cities combined. This evidence contradicts fears that the Ordinance may reduce the number of employers in the City. If anything, the Ordinance seems to have had a positive effect on the hiring sector. This is also true for the food and accommodation sector, which was the industry that made the most changes in benefits after the Ordinance went into effect. (p. 34)

San Francisco’s job market, including in food services, has compared favorably to the surrounding counties and the state of California since the sick days law went into effect in 2007.^[iii] A 2010 survey (conducted at the height of recessionary impacts) of more than 700 employers and 1200 employees found that 2/3 of employers supported the law.^[iv]

The Washington, D.C. Auditor found that the city’s 2008 sick and safe leave law “neither discouraged business owners from locating in the District nor encouraged business owners to move their businesses from the District.”^[v] In Connecticut, employment growth has continued and 76.5% of employers said they supported the law implemented in 2012.^[vi]

Impacts on business costs have been small; the majority of businesses that implemented new policies neither raised prices nor cut other compensation

The University of Washington study of Seattle included a baseline random survey of businesses and nonprofits, a follow-up survey with 345 of those required to provide leave one year later, and in-depth interviews with 24 employers. 70% of business owners supported the law.

Seattle employers reported that one-time implementation costs amounted to 0.125% of annual revenue, and annual costs of providing sick leave averaged 0.4% of annual revenue. 8.2% reported raising prices; 6.4% decreasing pay raises or bonuses; 5.3% decreasing vacation; 2.7% decreasing employees in Seattle; 0.7% relocating outside Seattle. UW researchers concluded:^[vii]

“Initial fears were allayed by modest use. When employers first learned about the ordinance and the leave mandates, many feared that offering the required leave would substantially increase their labor costs and generate staffing shortages. After operating under the Ordinance for at least a year, most of these initial fears had faded. In general, workers used far less paid leave than employers had anticipated.” (p. 38)

In Connecticut, 11% of surveyed employers reported that their costs had risen by 3% or more due to the law.^[viii] In San Francisco, 7% of businesses reported reducing raises or bonuses.^[ix] Multiple studies over many years of firms that voluntarily provide paid leave have also found that sick leave benefits businesses through higher morale and productivity and lower rates of turnover.^[x]

Worker access to sick leave has increased

In Seattle, 37% of employers reported changing policies in response to the law. Provision of sick leave to part-time employees increased from one-third of employers to three-fourths; in restaurants provision of any sick leave rose from 14% of employers to 78%.^[xi]

In Connecticut, 45% of for-profit firms reported increasing employee access to paid sick leave, including about half of health and retail firms, and nearly two thirds of hospitality firms. Employers reported that in the previous 12 months two-thirds of employees had used some sick leave, with average usage of 4 days – about half the amount available to them. Employers also reported the law increased the number of workers calling in sick, but reduced the spread of disease and increased morale.^[xii]

In San Francisco, more than half of employees with access reported benefitting either because their employer became more supportive of usage, the number of sick days provided increased, or they were better able to care for themselves or family members. Black, Latino, and low-wage workers were those who most often benefitted from the law.^[xiii]

Sources:

[i]     Localities with paid sick leave laws: WA: Seattle, SeaTac, Tacoma; Portland, OR; CA: San Francisco, Oakland, Emeryville; NJ: East Orange, Irvington, Jersey City, Newark, Passaic, Paterson, Trenton, Montclair, Bloomfield, Elizabeth, New Brunswick; PA: Philadelphia, Pittsburgh; New York, NY; Washington, DC; Montgomery County, MD. States: Connecticut, California, Massachusetts, Oregon.

[ii]     A 2014 evaluation by a team of University of Washington researchers was based on confidential economic data from the state, two comprehensive surveys of employers conducted a year apart, and in-depth interviews with small samplings of employers and workers. “Implementation and Early Outcomes of the City of Seattle Paid Sick and Safe Time Ordinance,” prepared by Jennifer Romich et al, University of Washington, for the Seattle City Auditor, April 2014, http://www.seattle.gov/Documents/Departments/CityAuditor/auditreports/PSSTO_ReportSummaryOCAEmail.pdf

[iii]    California Employment and Development Department, Employment by Industry Data, annual averages, for San Francisco County and California, 2000-2009, http://www.labormarketinfo.edd.ca.gov/?pageid=166; Vicky Lovell and Kevin Miller, “Job Growth Strong with Paid Sick Days,” October 2008, Institute for Women’s Policy Research, http://www.iwpr.org/pdf/B264_JobGrowth.pdf; John Petro, “Paid Sick Leave Does Not Harm Employment,” Drum Major Institute, March 2010, http://drummajorinstitute.org/library/report.php?ID=143.

[iv]    Institute for Women’s Policy Research, “San Francisco’s Paid Sick Leave Ordinance: Outcomes for Employers and Employees,” Robert Drago and Vicky Lovell, February 2011, www.iwpr.org.

[v]     Office of the District of Columbia Auditor, “Audit of the Accrued Sick and Safe Leave Act of 2008,” 2013, http://dcauditor.org/sites/default/files/DCA092013.pdf.

[vi]    The survey used a size-stratified random sample and included 251 Connecticut employers covered by the sick leave law. Eileen Appelbaum, Ruth Mikman, Luke Elliott, and Teresa Kroeger, “Good for Business?: Connecticut’s Paid Sick Leave Law,” Center for Economic and Policy Research, February 2014, http://www.cepr.net/documents/good-for-buisness-2014-02-21.pdf.

[vii]   “Implementation and Early Outcomes of the City of Seattle Paid Sick and Safe Time Ordinance,” Romich et al, University of Washington, for the Seattle City Auditor, April 2014, http://www.seattle.gov/Documents/Departments/CityAuditor/auditreports/PSSTO_ReportSummaryOCAEmail.pdf

[viii]   The survey used a size-stratified random sample and included 251 Connecticut employers covered by the sick leave law. Eileen Appelbaum, Ruth Mikman, Luke Elliott, and Teresa Kroeger, “Good for Business?: Connecticut’s Paid Sick Leave Law,” Center for Economic and Policy Research, February 2014, http://www.cepr.net/documents/good-for-buisness-2014-02-21.pdf.

[ix]    Robert Drago and Vicky Lovell, “San Francicso’s Paid Sick Leave Ordinance: Outcomes for Employers and Employees,” February 2011, Institute for Women’s Policy Research, http://www.iwpr.org/publications/pubs/San-Fran-PSD.

[x]     Examples include: Christine Siegwarth Meyer, et al, “Work-Family Benefits: Which Ones Maximize Profits?” Journal of Managerial Issues, vol. XIII, No. 1, Spring 2001: 28-44; Jane Waldfogel, “The Impact of the Family Medical Leave Act,” Journal of Policy Analysis and Management, vol. 18, Spring 1999; Thomas E. Casey and Karen Warlin, “Retention and Customer Satisfaction,” Compensation & Benefits Review, May/June 2001, p. 27-30.

[xi]    “Implementation and Early Outcomes of the City of Seattle Paid Sick and Safe Time Ordinance,” Romich et al, University of Washington, for the Seattle City Auditor, April 2014, http://www.seattle.gov/Documents/Departments/CityAuditor/auditreports/PSSTO_ReportSummaryOCAEmail.pdf

[xii]   The survey used a size-stratified random sample and included 251 Connecticut employers covered by the sick leave law. Eileen Appelbaum, Ruth Mikman, Luke Elliott, and Teresa Kroeger, “Good for Business?: Connecticut’s Paid Sick Leave Law,” Center for Economic and Policy Research, February 2014, http://www.cepr.net/documents/good-for-buisness-2014-02-21.pdf.

[xiii]   Institute for Women’s Policy Research, “San Francisco’s Paid Sick Leave Ordinance: Outcomes for Employers and Employees,” Robert Drago and Vicky Lovell, February 2011, www.iwpr.org.