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The Economic Case for Paid Leave Laws

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Posted on Jan 24, 2014
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By David Sirota

For all the pro-family rhetoric that dominates America’s political discourse, U.S. law remains decidedly anti-family—at least in comparison to peer countries. This is the world’s only industrialized nation that does not require employers to provide any paid vacation days. It is the only industrialized nation that does not require employers to provide paid maternity leave. And it is the only industrialized nation that does not mandate paid sick days. That’s American exceptionalism at its worst.

The standard public defense of this sad reality is a domino-theory argument. Corporate leaders and the conservative politicians they own typically argue that paid leave mandates will automatically raise costs and that those costs will consequently prompt job and wage cuts that hurt the very workers the mandates aim to help. This shrewd bit of spin reimagines the corporate class’s desire to exploit workers as fight-for-the-little guy altruism.

As political demagoguery, the line has been wildly successful in not only helping defeat paid leave proposals but also in justifying laws in 10 states that preemptively prohibit local communities from enacting such mandates. The trouble, though, is that mandate opponents’ underlying economic argument is not substantiated by the data.

In recent years various studies have shown that requiring companies to provide paid sick days, vacation time and maternity leave would likely provide a macroeconomic benefit by limiting workforce turnover, lowering overall health care costs and boosting productivity. In the case of sick leave in particular, mandates could reduce the output losses associated with what economists call “presenteeism”—aka employees coming to work ill and subsequently making customers and fellow employees sick.

In the past, it may have been easy to write these findings off by saying they were just speculative or by claiming that other countries’ success with employer mandates is irrelevant to America. But as of this month, even those facile misdirects have been debunked, as powerful new data emerges from Connecticut, a state that mandated paid sick days back in 2011.

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In a new study surveying 251 Connecticut firms, researchers from the Center for Economic and Policy Research and the City University of New York showed that “a large majority of employers reported that the law did not affect business operations and that they had no or only small increases in costs ... employers saw decreases in the spread of illnesses and increases in morale.” In all, the study found that today “over three-fourths of (Connecticut) employers reported that they were very supportive or somewhat supportive of the paid sick days law.”

It should go without saying that denying workers any guaranteed leave is inhumane and the opposite of “pro-family.” With roughly 40 million American workers having no paid sick leave, with only 11 percent of private-sector workers having access to paid family leave, and with millions getting no paid vacation, there is a strong moral argument for lawmakers to enact guarantees for sick, maternity and vacation leave. Indeed, just like a basic sense of human decency was the impetus for labor, wage and workplace safety laws, so, too, should human rights be the basis for paid leave mandates.

But even if you are a cold-hearted misanthrope, a greed-driven executive or a corrupt politician ignoring the moral case for reform, the concrete numbers from Connecticut prove that paid leave mandates make macroeconomic sense.

In practice, that means such mandates do not conflict with capitalist objectives or American culture’s worship of the almighty dollar. It means that paid-leave mandates are both moral necessities and smart economic policies. It also means they are long overdue.


David Sirota is a staff writer at PandoDaily and the best-selling author of the books “Hostile Takeover,” “The Uprising” and “Back to Our Future.” Email him at ds@davidsirota.com, follow him on Twitter @davidsirota or visit his website at www.davidsirota.com.

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