Costs and benefits of paid sick leave: reviewing the research

Bell researchers reviewed a range of studies and reports as well as data from San Francisco and Washington, D.C., the two cities with the most experience with such laws.

Key findings concerning public health include:

– More than four in 10 private-sector workers in Denver lacks paid sick leave. The total number is approximately 107,000.
– Workers who lack paid sick leave are more likely to come to work sick, send their children to school while sick, recover more slowly from illnesses, and rely on expensive visits to emergency rooms than are workers with sick leave. The net effects are higher rates of infection and increased health care costs.

Key findings concerning the effects on employers and jobs include:

– The maximum direct cost of this law for a business with less than 10 employees is likely to be a one-time increase in base compensation expenses of 2 percent, assuming all employees exhaust all their paid sick leave. Data from San Francisco show that employees on average do not use all their sick leave, meaning the actual direct costs are more likely to be around 1.2 percent.
– There is strong evidence that paid sick leave increases overall productivity and reduces turnover rates, resulting in average savings to employers that exceed the average costs of the law. Workers who work while sick on average cost employers more than those who stay home to recuperate.
– More than 70 percent of San Francisco employers who responded to a survey reported no negative effects on profitability from the paid-sick-leave law. A small number reported finding ways to mitigate increased costs (including converting vacation leave to sick leave or delaying bonuses or wage increases).
– U.S. Bureau of Labor Statistics data from the Washington, D.C., and San Francisco metropolitan areas show both cities’ job markets were actually stronger vis-à-vis their surrounding counties in the years after sick paid leave was implemented than they were in the years before implementation.

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