NFIB: Oregon paid sick leave bill full of problems

By Jan Meekcoms
Oregon NFIB
(Originally published in Salem Business Journal)

Fortunately for our state’s economy, a bill calling for a paid-sick-leave law has been shelved for now at the request of its author, Rep. Michael Dembrow, who sensed a lack of support for its passage. Good thing.

Like minimum-wage increases, paid sick leave is one of those issues that comes Teflon coated against any criticism. Who could be against such a seemingly good thing to do? But its protective, public relations coating easily flakes and falls when scratched by facts and general common sense.

Because of the failure of House Bill 3390 to get any traction this session, Oregon remains smartly and securely – for the moment — one of 49 states that does not have a paid-sick-leave law. Always best to begin a debate on this issue by asking why 48 other states have wisely begged off instituting such a law, and why we should not hurry to join Connecticut, the only state with a paid-sick-leave law, smack into an even greater law: That of unintended consequences.

The idea for a state law emanates from Portland, which, along with San Francisco, Washington, D.C, and Seattle, has a local one. There is also an effort in Congress to create a federal law.

Writing in the Orange County Register, Michael Saltsman, research director for the Employment Policies Institute, hits the nail on the head with paid sick leave’s underlying problem and an inconvenient truth, the latter of which: It’s not needed and detrimental to jobs.

“Proponents claim that ‘everybody benefits’ from these mandates—employers, employees, and the general public. But a fair-minded look at the evidence from San Francisco and Connecticut suggests that these laws aren’t the cure-all that advocates claim they are.

“The rationale behind paid leave mandates seems simple enough: Employees shouldn’t be going to work sick. The left-wing activist groups pushing these campaigns (as well as the labor unions and foundations writing checks to finance them) view this as a compelling rationale for a new business mandate.

“Yet the data suggest that businesses don’t need a reminder from the government to take care of their workforce. Three-quarters of private employees already have access to some form of paid time off. Those employers who can’t afford a paid policy (think: service sector businesses with low profit margins) provide schedule flexibility instead.

“But the new costs created by a mandated time-off policy upset this status quo. This isn’t just speculation: In San Francisco, for instance, one survey—conducted by a group that supported the mandate—found that nearly 30 percent of the lowest-paid employees experienced lay-offs or lost hours at their place of work following passage of the city’s paid leave law.”

And it’s just not layoffs that result from a forced paid sick leave law. In a pilot study on Connecticut’s law for his institute, Saltsman found other courses of action employers took—none of them, of course, good.

“Prior to the law taking effect in January 2012, 31 of the businesses surveyed had scaled back 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 the state.

“Perhaps more concerning were the future actions that state businesses were likely or highly likely to take in response to the law: Thirty-eight businesses said they would hire fewer people as a consequence. Other actions included offering fewer raises, scaling back on overtime, raising prices, and increasing the cost of other benefits like health insurance. Also surprising was the perception of the public health problem the law was intended to solve. Contrary to rhetoric used during the campaign, nearly 90 percent of all responding businesses indicated that sickness in the workplace was not a serious problem prior to the law taking effect; just 3 businesses described it as a serious problem.”

Granted, Saltsman’s is only a pilot study. But do you think it gets better for paid-sick-leave proponents? We should all be glad the Legislature passed on this bad idea. Let’s hope it does so again in the future.

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Jan Meekcoms is Oregon state director for the National Federation of Independent Business.