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Seattle Mandatory Sick Leave Proposal a Prescription for Economic Illness

September 06, 2011

The following Op-Ed appeared in NWDailyMarker.com – Good information about this important issue.

The Seattle City Council appears close to requiring almost all businesses to provide employees paid sick leave.
It’s an extremely rare idea with harmful potential outcomes that haven’t been fully examined by the council. Members of the Washington Retail Association want the council to slow down and perform an economic impact study of the effects of this idea before taking a final vote whether to approve it.

The proposal by Councilman Nick Licata would require all Seattle businesses with at least five employees to offer paid sick leave on a sliding scale. Employees of businesses with more than 250 workers could accrue up to nine paid sick days a year. Those with fewer than 50 employees would only be able to accrue up to five paid sick days.

The proposal puts small businesses and their employees at a competitive disadvantage with larger companies. Illness doesn’t discriminate depending upon how large your employer is but this proposal does.

Despite pleas from concerned businesses, the council has taken no scientific steps to assess the financial impacts. It has sidestepped performing an economic impact analysis, so we don’t know what the idea might cost Seattle businesses. That’s insensitive to many vulnerable businesses struggling to survive the recession and persevere through the weak economy.

But what do we know about the Seattle economy?

Puget Sound Regional Council data show that the City of Seattle lost 40,000 jobs between 2000 and 2010 and is losing employment share to the suburbs. At the same time, Bellevue added about 1,500 jobs.

Elected officials often seem to ignore the layers of regulations and financial obligations that make it a challenge to generate profits in the current economy, or any economy for that matter. These obligations include wages, paid vacations, retirement benefits, health care and operating expenses including sales and business taxes paid to government. Now comes a proposal for more expenses that could force many employers to further reduce hours or trim payrolls to survive.

The city council needs to slow down and take a closer look at this idea. Licata proposed it in June and wants to approve it before many businesses even know about it let alone understand what it might cost them to respond.

An objective economic impact analysis would more intelligently assess the possible outcomes on the weak local job market. It would help get the word out about this idea and extend businesses a voice in the debate.

Without a professional study, we won’t know enough about the financial impact of paid sick days on the economy. As slow as the recovery has been, the local economy shouldn’t suffer another blow, especially an avoidable one.

The financial burden threatened by this idea not only is intimidating to small businesses. It presents a potentially expensive wrinkle for larger retailers with stores inside and outside of Seattle. Seattle would be one of a very few cities – San Francisco and Washington, D.C. being among the others – to mandate paid sick leave. The idea would require larger retailers to offer a benefit to their Seattle employees they would not be required to offer employees around the rest of the state. This could force larger companies to compensate for the inequity by extending the same benefits to all employees. The fallout from mandating potentially rippling new costs can have far reaching effects on where companies choose to build their stores. Anything that would discourage companies from doing business in Seattle or the state is worth more study than this idea has received so far.

Early indications are the idea is unpopular in the business community. That shouldn’t surprise anyone. Nearly 70 percent of the 1,040 business respondents informally polled in the Puget Sound Business Journal recently opposed the mandate that all businesses pay for sick days.

Put simply, there are too many unanswered questions and costly consequences for the council to approve this idea, as expected, in September.

The proposal suffers from its “one-size-fits-all” nature. Why not decide, instead, to offer businesses incentives to voluntarily offer paid sick days? Opt for the carrot instead of the stick. That way, businesses that could afford paid sick days could offer them and those that could not wouldn’t have to consider painful tradeoffs to meet the mandate.

We need to know more before a vote. Employers need a greater voice and a fairer shake on this proposal. And frankly, the council should take further steps to ensure better accountability by fully vetting this idea before deciding whether to move forward.

Jan Teague is president and chief executive officer of the Olympia-based Washington Retail Association.
Contact:
Jan Teague, Washington Retail Association, 360-943-9198, Ext. 19
Jim Szymanski, Director of Public Affairs, 360-943-9198, Ext. 12, jim.szymanski@retailassociation.org

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