Obama Administration Announces Paid Sick Leave For Government Contractors — And A New Policy To Address Pay Disparities

The Obama administration announced Thursday two new rules it says will boost working families. Starting next year, federal government contractors must provide paid sick leave to workers, and large companies must report to the government how they pay employees by race and gender.

The updates reflect the needs of the modern workforce, White House senior adviser Valerie Jarrett said, and are designed to lift the country’s struggling breadwinners. Opponents of both measures say they overburden businesses and could threaten jobs.

“To build a 21st-century workplace that is globally competitive,” Jarrett said, “employers must adopt 21st-century workplace policies.”

The paid sick leave mandate, which will affect only government-solicited contracts, will reach about 1.1 million workers, allowing them to accrue up to seven days of compensated time off each year, according to the Labor Department. Eligible employees would earn one hour of paid sick leave for every 30 they work.

Labor Secretary Thomas Perez said families that lose a day or two of wages risk slipping into poverty. “It’s the difference between food on the table,” he said, “and gas in the tank.”

The measure comes a year after President Obama first signed an executive order compelling federal contractors to provide paid sick leave and seven months after the Labor Department released a draft of the directive. Perez said the White House will keep pushing to open the benefit to all workers.

“Paid sick leave is not simply a family imperative,” he said. “It’s an economic imperative and a public health imperative.”

The Labor Department estimates supplying the leave will annually cost, on average, $349.5 million

Carrie Lukas, managing director of the Independent Women’s Forum, a right-leaning think tank in Washington, D.C., said workers will ultimately absorb the bill. "We recognize that all Americans – men and women – need to take time off from work to address personal matters,” she said in a statement Thursday, “But there are tradeoffs between more benefits and take-home pay. Some workers may prefer having more money in their paychecks rather than guaranteed paid time off.”

Paid leave advocates view the program as an investment, one that will keep workers productive and healthy.

During the 2008 H1NI outbreak, for example, approximately 7 million people caught the bug and 1,500 died because contagious employees didn’t stay home, according to the American Public Health Association. An August study from the Swiss Economic Institute’s Stefan Pichler and Cornell University’s Nicolas Ziebarth, found that U.S. cities that adopted paid sick leave over the last decade — including San Francisco and Washington, D.C. — saw flu rates drop an average of 5 percent.

The Equal Employment Opportunity Commission, meanwhile, will begin collecting summary pay data from employers with more than 100 workers, requesting information about employee compensation by sex, race, ethnicity and job category. The requirement, first proposed in January, adds a task to paperwork such companies annually file to the government, EEOC Chair Jenny Yang said.

"Pay discrimination often goes undetected because of a lack of information about how people are paid,” she said. “We can’t let equality be left to chance.”

The EEOC will publicly release the aggregated data in a yearly report, showing the average pay for workers across sectors, industries and regions. The numbers are meant to help managers assess how they set pay and inform employees during the negotiation process. The reporting deadline for 2017 will be March 31, 2018.

Although Obama promoted equal pay for equal work early in his administration, the average wages between men and women haven't much changed. In 2008, female workers took home 77 cents for every dollar paid to men. That ratio today stands at 79 cents for every dollar, dropping to 64 cents for black women and 56 cents for Hispanic women.

A January study from Cornell economists Francine Blau and Lawrence Kahn found that industry and occupation choices account for nearly half of the country’s gender wage gap. Thirty-eight percent of the chasm, however, remains “unexplained,” they wrote, suggesting that discrimination could drive disparities.

Some members of the business community disagreed with how the government plans to tackle this issue, arguing pay data would be difficult to gather and could be easily misread. After the EEOC rule was unveiled, Randy Johnson, senior vice president of Labor, Immigration, and Employee Benefits for the U.S. Chamber of Commerce, said that, though the organization supports equal pay for equal work, the measure "would place unnecessary and onerous burdens on employers while providing no meaningful insight."