California Paid Sick Days Bill Moves Forward as Studies Evaluate the Bill’s Impact

Posted on 26 June 2008

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Andrea-Buffa.gifBy Andrea Buffa
UC Berkeley Center for Labor Research and Education

On Wednesday the Senate Labor Committee approved AB 2716, the Healthy Families, Healthy Workplaces Act, which would allow all California workers to earn paid sick days that can be used to care for themselves, a sick family member, or to recover from domestic violence or sexual assault. The legislation, introduced by Assemblywoman Fiona Ma in February, passed the Assembly at the end of May.

Several studies analyzing the impact of AB 2716 have been released in recent months, including one published yesterday by the National Federation of Independent Businesses. The studies come to contradictory conclusions, so it’s worth analyzing them in depth to understand their value to policymakers who are trying to estimate the impact of AB 2716 on California businesses, workers and public health.

The most comprehensive study was carried out by the Institute for Women’s Policy Research. Valuing Good Health in California: The Costs and Benefits of the Healthy Families, Healthy Workplaces Act of 2008, published in early April, found that AB 2716 will have a positive impact on California employers and working families.

The IWPR study used data collected by the US Bureau of Labor Statistics, US Department of Health and Human Services, California Employment Development Department and US Census Bureau to evaluate the likely impact of AB 2716. These datasets provide information on workers’ current participation in paid sick days programs, their use of those policies for their own illness and injury, their work hours and hourly earnings, and their likely need for paid sick time to care for their families, to receive preventive health care, and to access services related to domestic violence and sexual assault. The basic methodology for the report was developed for an evaluation of the Healthy Families Act, as introduced in the 109th Congress in 2005, and has been used to examine paid sick days proposals in Massachusetts, San Francisco, and Washington, DC.

The study’s main findings include:

*Workers covered by the Healthy Families, Healthy Workplaces Act of 2008 would, on average, use fewer than two days of paid sick time per year for their own medical needs, excluding maternity leave.

*Workers covered by the Healthy Families, Healthy Workplaces Act of 2008 would, on average, use just one day of sick time per year for family care and doctor visits.

*If the Act becomes law, California employers would pay $1.3 billion annually for wages and associated costs to workers who take leave under the Act.

*If the Act becomes law, savings to employers would total $2.3 billion annually, mainly from reduced costs of turnover.

*If the Act becomes law, workers and their families would experience lower expenditures for health-care services, saving $7 million annually.

“Our research shows that it is possible to provide Californians with paid sick days without negatively impacting California employers. In fact, AB 2716 will save employers $2.3 million per year, mainly from reduced turnover costs,” said Vicky Lovell, Ph.D., Director of Employment and Work/Life Programs at IWPR and the report’s author.

The study released yesterday by the National Federation of Independent Businesses draws just the opposite conclusion from the IWPR study. The NFIB study, AB2716 The CA Healthy Workplaces Act of 2008: Economic and Small Business Effects, uses an input-output model to estimate future changes in jobs, output (sales), income and productivity for California by business size and industry.

Its main findings include:

• Under AB 2716, CA employers will be taxed with a $4.6B billion paid sick leave mandate.

• Within five years of implementation, CA companies will lose an estimated 370,000 jobs.

• CA small firms (under 100 employees) will lose an estimated 144,000 jobs from 2009 - 2013.

• Major job losses occur in retail trade, construction, and professional services

• All CA firms will lose $59.3B in sales within five years; small firms (under 100 employees) will lose about 36.2 percent of total lost sales volume.

How is it possible that one study finds that AB 2716 will benefit California businesses and another finds that it will harm businesses and lead to major job loss? Ken Jacobs, Chair of the UC Berkeley Center for Labor Research and Education, explains that the NFIB study starts from very high estimates of the cost to businesses of administering the program, while leaving out savings to employers through reduced turnover and improved worker health. They feed the cost numbers into the input-output model to predict employment over five years with and without the policy. They then proceed to add up the variation in employment for each of the five years.

“This is roughly equivalent to saying that if I cut down a tree in my back yard I would lose five trees over five years. A more accurate description of their conclusions would be that there would be an average of 74,000 fewer jobs a year in the state in the first five years,” Jacobs said. “If the assumed costs were brought more in line with reasonable expectations and conservative estimates of savings from reduced turnover and improved productivity were factored in, we should expect the net employment impacts would be closer to zero.”

The most significant impact of the policy will not be on jobs or employment, however, but on health. One additional study, The Public Health Impacts of AB 2716 analyzes the research literature on paid sick leave to determine the public health impact of the legislation. The report, published by the UC Berkeley Center for Research and Education, finds the following:

*AB 2716 could reduce the transmission of foodborne illness, decrease disease outbreaks in nursing homes, reduce the spread of infections in childcare settings and mitigate the transmission of seasonal influenza.

*AB 2716 could positively influence workers’ decisions to see a doctor, parents’ decisions to stay home and care for a sick child and patients’ decisions about treatment choices.

*AB 2716 has the potential to improve patient compliance with preventive health-care guidelines and chronic care management, and thus to reduce health-care spending over the long term.

“AB 2716 encourages adherence to federally-recommended infection control practices by enabling all workers – and not just salaried professionals – to take time off to recover from illness or care for an ill family member,” said Korey Capozza, a health policy analyst at UC Berkeley and the report’s author.

Links to the reports mentioned in this article:

Valuing Good Health in California

AB2716 -- The CA Healthy Workplaces Act of 2008: Economic and Small Business Effects

The Public Health Impacts of AB 2716

Andrea Buffa is the UC Berkeley Labor Center’s Communications Analyst.