Saturday, November 01, 2008

Who could oppose paid sick leave?

One of the weaker arguments on behalf of the City of Milwaukee's sick pay referendum is that it will help businesses. It is certainly true that paid sick pays can be a benefit that helps attract and retain good employees. That's why many businesses offer them.

But those that don't aren't stupid. They have either found that they can attract the workers they need without offering paid sick days or that, in the context of their business, the benefits to the enterprise don't outweigh the cost.

The idea behind requiring them to offer paid sick days presumes that they will simply absorb the additional cost and that there will be no impact on employment or other forms of compensation.

That's unlikely. In a competitive labor market where the marginal cost of labor is roughly equivalent to marginal productivity, some people who were worth employing will no longer be. There will be the winners that we see (i.e., those who still have a job and now have paid sick leave) and the losers that we do not see (those who would have been employed but are now unemployed). In a market where there is an oversupply of labor, employers who are forced to provide paid sick days will simply reduce other forms of compensation.

One argument in support of this type of regulation is that, if you impose this obligation on all employers, they will be able to pass the cost on to their customers knowing that none of their competitors will be able to avoid it. There are market conditions where that can happen.

But this isn't one of them. Many employers can escape the mandate by moving the jobs outside the city.

Of course, you can make these arguments in opposition to almost all forms of mandated labor practices, including wage and hour regulation. I can see an argument that certain employment relationships are an affront to human decency even if they are freely entered into. But I don't know that the absence of paid sick leave qualifies as such.

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