Connecticut’s paid sick leave: No negative impact on business

The following is from the Center for Economic and Policy Research, a non-partisan think tank focusing on economic and social issues.

WASHINGTON, D.C. (Mar. 26, 2014) — Almost three years after Connecticut became the first state to sign into law paid sick days legislation, a new report, “Good for Business? Connecticut’s Paid Leave Law,” demonstrates that the law had little or no negative impact on businesses in the state.

“I have always been proud of Connecticut for being a leader and model for the nation on work-family balance. Connecticut was the first state to act on paid sick days and this report is further proof that doing so was the smart move for both workers and employers,” said Rep. Rosa DeLauro (D-CT). “Now we need to take paid sick days national and that is why it is part of a comprehensive economic agenda for families that I have put forward with my Democratic colleagues. As this report on Connecticut shows, they are common-sense. They are business-savvy. And they are the right thing to do.”

As state and local municipalities across the country search for solutions to work-family issues, the report — by Eileen Appelbaum, a senior economist with the Center for Economic and Policy Research; Ruth Milkman, a professor at the CUNY Graduate Center and Academic Director of the Murphy Institute at CUNY; Luke Elliott, a graduate student and PhD candidate at CUNY; and Teresa Kroeger, a research assistant at the Center for Economic and Policy Research – focuses on the experience of Connecticut employers with the state’s paid sick leave law, yielding valuable insight on the effect of such laws on business.

Using data drawn from a survey of Connecticut employers and on-site interviews, the authors analyzed the impact of the state’s pathbreaking new law. Though lobbyists and some employers in the state expressed concern that the law would negatively affect employers, the report demonstrates that these fears were unfounded. In fact, in several of the sectors most directly affected by the legislation — such as hospitality and health services — employment actually rose.

“Connecticut’s paid sick days law has not imposed major burdens on businesses,” said Dr. Appelbaum, a senior economist with the Center for Economic and Policy Research. “Rather than the job-killer opponents of the legislation claimed it would be, over three quarters of the employers we surveyed reported a positive experience with the law.”

Connecticut’s paid sick days law allows workers to earn up to 5 days of paid sick leave per year. Under the law, employees earn one hour of leave for each 40 hours worked. The leave pay can serve as wage replacement during an absence tied to an employee’s own illness, injury or health condition; or one spent caring for a child’s or spouse’s illness, injury or medical care. The law also prohibits retaliation or discrimination against employees who request or use paid sick leave. An estimated 200,000 to 400,000 Connecticut workers are covered by the law.

While hourly workers in a number of service occupations in sectors like health care, hospitality, janitorial services and retail are covered, manufacturers and most national non-profits are exempt, as are businesses that employ less than 50 workers. Per diem and temp workers are exempt, although most part-time workers are covered.

According to the surveyed employers affected by the legislation, it had little impact on business. About half of the employers reported no increase in costs and the majority of those who did report an increase saw costs rise by less than 2 percent. Even then, a very small number of employers report that this led to any changes in business practices.

While Connecticut was the first state to pass a paid sick days law in 2011, San Francisco became the first city to guarantee paid sick days five years earlier, in 2006, followed a few years later by Washington, D.C. and Milwaukee. A number of states and municipalities including Alaska, Arizona, Hawaii, Illinois, Iowa, Maryland, Massachusetts, Michigan, Nebraska, New Jersey, New York City, New York State, Newark, North Carolina, Oregon, South Carolina, Vermont, and Washington are currently considering passage of similar legislation. Many of these state and local governments are confronting the same claims that paid sick days legislation will be a job-killer or amounts to anti-business regulation. The Connecticut experience detailed in “Good for Business?” provides ample evidence that this is not the case.

EDITOR’S NOTE — In the 2014 legislative session, Washington’s Democratic-controlled House of Representatives approved legislation that would make Washington the second state to establish a paid safe and sick leave standard. HB 1313, which passed 52-45 mostly along party lines, would require businesses with at least five employees to allow their employees to earn and accumulate some paid sick leave over time.

But the Republican-controlled Senate refused to allow a vote on the bill. It was killed in the Senate Commerce and Labor Committee chaired by Sen. Janéa Holmquist Newbry (R-Moses lake), who is now running for Congress to fill the seat being vacated by U.S. Rep. Doc Hastings.