A federal mandate requiring employers to offer paid leave would erase 430,000 jobs and shrink economic output by $652 billion over 10 years, according to new research released today by the National Federation of Independent Business (NFIB).
“There’s no such thing as a free benefit,” said NFIB President and CEO Dan Danner. “This would come at a high cost to small business and will have a serious effect on jobs and the economy.”
President Obama has made mandatory paid leave a central part of his domestic agenda. Last year during his State of the Union Address and again Tuesday evening he called on Congress to pass the mandate. Organized Labor has also made it one of their top political priorities and it will very likely have a prominent place in the elections this year.
“What the advocates don’t realize is that there are millions of small businesses that don’t make a dollar if their employees aren’t there to perform a service for customers,” said Danner. “No one gets paid, including the business owner, if customers aren’t being served.”
It’s easy for activists and elected officials to give away someone else’s money, said Danner. But someone has to pay. NFIB analyzed the Healthy Families Act (HR 932) which would require firms with 15 or more employees to grant 56 hours of paid leave every year. The measure would include part-time as well as full-time time workers.
According to the research, mandatory paid leave would impose three major costs on employers: the direct expense of paying wages to absent workers; lost productivity resulting from workers not working; and increased costs for reporting and recordkeeping that the new mandate will require.
The combination of all three will raise the cost of labor and reduce productivity. The smallest firms will be hit hardest, accounting for 58 percent of the job losses. Some industries will suffer more than others, with construction and retail shedding the most jobs.
“The question isn’t whether paid leave is a good benefit,” said Danner. “The question is whether every business can absorb the cost and whether we’d be causing more harm than good by trying to graft it onto an economy in which wages are flat and growth is slow.”
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