June 16 2011

Policy Focus: Paid Sick Leave Regulations

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Across the country, politicians are pushing proposals to require businesses to provide paid sick leave to workers. Connecticut, for example, just passed legislation mandating businesses with more than 50 workers to offer paid time off for illness. Similar legislation has been proposed in Congress.

Sick leave requirements are sold as common sense regulations to force businesses to act humanely, and provide needed relief to low-income workers.

Yet this narrative misses the full story: Of course it’s nice to have paid time off, but benefits have costs, and many workers value the ability to negotiate their own compensation packages, including packages with more take-home pay instead of benefits.

Most businesses do provide workers with paid sick leave. However, the businesses that don’t currently provide paid sick leave will face new costs as a result of the mandate, and they will consider a variety of ways to compensate for these new costs. Some may be able to take costs out of profits, but others will consolidate jobs, reduce worker hours or take-home pay, or outsource to offset the extra costs.

Particularly in this time of high unemployment and sluggish growth, paid leave mandates are bad news for this nation’s unemployed and our economy.

Moreover, Americans should recoil from this latest expansion of government authority. These mandates make it illegal for a company to offer a job without providing paid sick leave. That’s an inappropriate use of government power.

Governments should instead leave employers and employees to negotiate contracts on their own.

 

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