Mandatory Paid Sick Leave in Orange County?

Some of you may have noticed an article in the Orlando Sentinel (Sep 8) about a study I authored regarding a ballot proposal that would require all businesses in Orange County with 15 or more employees to provide paid sick leave.  Given the title of my blog, Objective Economic Analysis, you may ask, "How can you author a study that takes sides on a controversial issue?"  Though there's too much to discuss in one blog post, I plan to discuss the issues involved with requiring paid sick leave in a series of posts.  For those that want to go straight to the details, click on one of the following choices:

• the entire report as published
• discussion of the proposed benefits
• discussion of the estimated costs
• impact on employers and employees
• interview on Fox 35

During my research for the study, I shared what I was doing with a few people.  Several were surprised to find out that my conclusions indicated that mandatory paid sick leave was not good for Orange County.  It was almost as if they were saying, "I thought you were a nice guy?  How could you oppose paid sick leave?"  It's not an issue of good vs. evil.  Many people on both sides have good intentions.  However, good intentions doesn't necessarily mean good policy.  As with any policy, there are costs and benefits.  Unfortunately, there's a tendency for the two sides to exaggerate either the costs or the benefits to fit their bias.  A proponent of mandatory paid sick leave was quoted in the Sentinel article as stating that my study exaggerated the costs and ignored the benefits.  Did I do that?  If you read the study, I think you'll recognize that isn't the case.  In fact, the method used was nearly identical to that used by one of the leading proponents of mandatory paid sick leave at the local level, the Institute for Women's Policy Research (IWPR).  Why did I try to replicate their approach?  To be objective as possible.

Enough background!  Here are the key findings.  Requiring paid sick leave in Orange County is estimated to cost businesses between $69.2 million and $82.3 million per year.  Why a range?  Details are provided in another post (see the link to the discussion of estimated costs), but basically I originally followed the approach used by IWPR and others that have studied the issue by assuming that workers in different industries used the same number of paid sick leave days per year.  Rather than pick a low number which would minimize the cost or a high number that would amplify the cost, I found an objective source (the Bureau of Labor Statistics) and used their estimate of four days (from a report published in February 2012; I even spoke with the author of the report).  At the last minute, someone pointed out to me that more detailed estimates by industry were available.  Though other studies didn't use that approach, I wanted to be as objective as possible and did a second estimate using BLS estimates of the usage of paid sick leave by industry (the biggest effect came from an estimated usage of two days by workers in leisure and hospitality).  This resulted in a slightly lower estimated cost, so why include it?  To be objective as possible.  The original estimate is easy to defend, but that's not good enough for me.

What about the benefits of paid sick leave?  I think the burden of proof is on those advocating a change in policy.  Thus, I considered the evidence they used in coming up with their estimated benefits.  Unfortunately, the support was quite weak and brought into question much of the benefits.  Does that mean that no one will benefit?  Some are likely to benefit, but it will be considerably less than estimated by the supporters of mandatory paid sick leave.  As discussed in the post discussing costs, this study underestimates the costs of mandatory paid sick leave, so the extra costs not captured by this study are likely to offset most of the benefits.