'Sick Leave' Mandates We Can Ill Afford

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"Never let a good crisis go to waste," said President Obama's chief of staff, Rahm Emanual. For Democrats, the H1N1 pandemic is as good a crisis as they come.

Congress seeks to use this crisis to do what Democrats have wanted to do for years-to write into federal law, for the first time, a requirement that employers give workers paid sick leave.

On Tuesday Connecticut Democrats Senator Chris Dodd and Representative Rosa DeLauro released the Pandemic Protection for Workers, Families, and Businesses Act, which would require that all employers with more than 15 workers offer full-time workers seven days of paid sick leave, and part-time employees a share commensurate with hours worked.

"This isn't just a workers' rights issue - it's a public health emergency," said Mr. Dodd. "Families shouldn't have to choose between staying healthy and making ends meet."

But with an unemployment rate of 10.2% and forecast to rise even further, the additional cost of paid sick leave would discourage hiring, lower some workers' wages, and cause others with low-skills to lose jobs.

Under the bill paid sick time would not just be available when workers were sick. An employee would also be able to use leave to look after sick children-to stay home with them when they were sick, to take them to the doctor for routine as well as sick visits, or to stay home with them when schools were closed due to the sickness of other children.

Use of sick leave in the bill is restricted to contagious diseases, but it's a fair bet that as soon as Congress hears from breast cancer patients, HIV/AIDS sufferers, and car accident victims that the law would be extended to cover all sickness.

The Dodd-DeLauro bill is similar to the Healthy Families Act, originally sponsored by the late Senator Edward Kennedy, and the Emergency Influenza Containment Act, sponsored by Chairman George Miller of the House Education and Labor Committee.

Bills to require sick leave have never passed Congress for a simple reason: they don't make sense. More than three-fourths of workers already have sick leave and would derive no benefit from a new federal law; workers without sick leave are often in entry-level jobs and might lose their jobs altogether.

The bills are open to abuse. The Dodd-DeLauro bill states that "paid sick time shall be provided upon the oral or written request of a covered employee" without medical certification needed, and employers are not allowed to consider potential abuse of sick leave into account when considering promotions or raises. Sick workers mean others have to pick up the slack.

Economists such as Harvard's Alberto Alesina and MIT's Olivier Blanchard, now International Monetary Fund chief economist, have reached the same conclusion: European labor market regulations, including those that award sick pay, have resulted in higher unemployment because employers substituted labor-saving machines as the cost of low-skill workers went up. With the U.S. unemployment rate at a 26-year high, this is not the time to price American workers out of jobs.

The Labor Department estimates that 77% of full-time private sector workers and 89% of state and local government employees have some paid sick leave, and still others have access to nonspecific, personal time off-days that they can use for vacation, illness, or other purposes. Many employers without formal policies give leave on a case-by-case basis, to prevent contagion.

It is admittedly hard for workers without paid leave to stay home when they are ill and for single parents, often mothers in low-wage jobs, to look after sick children. But it would be even harder for these workers to lose their jobs altogether and be unemployed. In October 36% of the unemployed had been out of work for over six months, and finding work is a challenge.

The International Franchise Association estimates that the Healthy Families Act would cost an average franchise business-typically a fast-food restaurant or a motel--$800 to $1,000 a year for each employee, plus additional costs for "temporary staff, additional record-keeping, burdening co-workers with increased workloads, or the loss of business due to decreased productivity caused by absent staff."

Local restaurants, clothing stores, and computer repair shops are exactly the sort of businesses that might not give sick leave today, and would offer fewer jobs tomorrow if sick leave were required. Teenage unemployment stands at 27%. If Congress passes a sick leave bill, teenagers and others looking for entry-level jobs will have even more difficulty finding a job.

The real crisis that grips most Americans of working age is not swine flu but the economy, and the fear that jobs will vanish tomorrow. When members of Congress go home for Thanksgiving recess, constituents will tell them not to make the economy worse. That common sense prescription means Congress should abandon required sick leave, and instead focus on how to put America back to work.

Diana Furchtgott-Roth, former chief economist at the U.S. Department of Labor, is senior fellow and director of Economics21 at the Manhattan Institute. Follow her on Twitter: @FurchtgottRoth.   

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