True Costs of Sick Leave

by Phil Anderson

A sick leave ordinance is being considered by the Duluth City Council. It would require businesses in the city to provide an earned sick leave and personal leave benefit to their employees. 

Opponents of the plan say it will cost too much, especially for small business. They say the cost will kill jobs and discourage businesses from locating in Duluth. But this ubiquitous conservative argument is not accurate and ignores the benefits to everyone, including the business owners. 

Opponents use a simplistic calculation in assigning costs to these benefits. They assume that an hour of sick leave costs the employer an hour of wages (this was the example used in a recent Reader article by an opponent). The actual monetary cost is less. In my experience (and I have worked in many different situations) the other employees pick up the slack or the work goes undone until you return. There is often NO actual out-pocket expense. A common workplace joke (or complaint?) is that taking vacation is not worth it. You work extra to get ready to go and you come back to a pile of work on your desk.

Of course there are situations where the work has to get done. The employer does have to call in another employee, pay overtime, or hire a temp to cover the work. Many larger employers have to hire more employees to cover the expected absenteeism from various paid time off benefits. However, all this is a typical cost of doing business that most businesses handle with no problems. 

The Bureau of Labor Statistics facts support this position and brings real data to the discussion. Their figures show sick leave in 2012 cost employers with less than 100 employees $0.35 per hour worked or 0.9% of total compensation. This would be $728 per year for a full time employee. Sick leave is the most prevalent employee benefit provided by employers in private industry. For companies under 100 employees, 73% of full time and 52% of part time workers received sick leave benefits in 2012. If most employers are already providing sick leave, why is this such a burden for those that don’t?

There are costs to employers for NOT allowing sick days. There is a cost of having people come in sick and infecting other people. Sick employees (or employees concerned about a sick child) perform poorly and are more accident prone. There is a cost when customers do not appreciate being served by sick employees (many small businesses are in food service or retail with direct customer contact). There is a cost of losing employees to other companies who do treat their employees like human beings. Employee turnover, hiring  and training costs, can be significant especially for small businesses. 

There are also positive benefits for employers from treating employees well. Employers do attract and keep good employees by offering benefits. Happy workers who have flexibility and tools to deal with personal and family issues are are more productive. All these costs and benefits may not be easily quantified but they are real. 

But conservatives believe in the “free market” which solves all problems. According to this dogma everyone is on their own and must be individually “responsible.” Employers are not responsible for your personal problems. Getting sick is your problem. But, like co-pays and deductibles on health insurance, this is counter productive. Rather than promoting responsibility this belief often creates or exacerbates problems. Too often people need the money and will come too work when they shouldn’t. 

Another simple fact of life is that most people have NO options for medical treatment WITHOUT taking off from work. Doctors, dentists, and medical clinics are not open evenings or weekends. Urgent care and emergency rooms are not for for primary care. Everyone, including employers, pay more insurance costs for unnecessary use of emergency rooms. So   conservative attitudes not only hurt people they simply don’t work.         

Conservatives say people should negotiate benefits with their employers or find a better job rather than government imposing standards (a position advocated in the Reader article). But in the real world few people are able to do this. Few employers will negotiate benefits with individual employees. Few employers want collective bargaining with unions. We need to remember that unions are the reason we have employment benefits. Unions set the standards and provided the incentive for non-union employers to offer benefits. If it had been up to the ”free market” everyone would be buying their own insurance or doing without.

Employment benefits are not the best way to provide necessary medical or other social support for people. Connecting benefits like health care, retirement, or sick leave to employment is not efficient or even logical. We would be better off with national programs that are not tied to employment, cover everyone, and are able to control costs. But the same folks who oppose business mandates also oppose other sensible government solutions as socialism.

Opponents complain about the city getting involved in these issues. It would be better to establish these needed rules at the state or federal levels. This would create a more fair playing field for all business. Businesses and people would have less confusion with uniform requirements. But because of conservative opposition at the state and federal levels, people have turned to local, more obtainable solutions. If conservatives don’t like local mandates, they should support broader solutions.

Employers should see themselves as part of the community. They are part of society and have the responsibility to enhance the common good. The world does not exist solely for their profit. They should realize that a healthy, prosperous workforce with needed social supports works best for everyone including their businesses. Sick leave is good for everyone. Sick leave legislation is necessary because there are a minority of irresponsible employers who won’t do the right thing.