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Would Obama’s Paid Sick Leave Proposal Actually Work? Look to San Francisco.

President Obama speaks about increasing family leave for working Americans with Mary Stein (R) and Amanda Rothschild (L) after having lunch at Charmington's Cafe in Baltimore, Maryland, January 15, 2015.
National Journal
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Rebecca Nelson
Jan. 20, 2015, 11:03 a.m.

Pres­id­ent Obama’s call to Con­gress last week to pass paid sick leave laws for work­ers marks a re­newed push to make fam­ily leave the norm in the U.S. In Tues­day night’s State of the Uni­on ad­dress, Obama’s ex­pec­ted to ex­pound on that pro­pos­al, en­cour­aging pas­sage of a man­dat­ory paid sick leave meas­ure and ask­ing Con­gress for more than $2 bil­lion for states to cre­ate their own pro­grams.

Among its de­veloped peers, the U.S. is the only na­tion without a na­tion­al re­quire­ment for paid sick leave. But in San Fran­cisco, the first U.S. jur­is­dic­tion to en­act such a law, the prac­tice is nearly a dec­ade old. The city’s or­din­ance stip­u­lates that work­ers ac­crue one hour of leave per 30 hours worked. The bill Obama en­dorses, the Healthy Fam­il­ies Act, fol­lows the same rules, and al­lows for up to sev­en days of paid leave (San Fran­cisco’s ver­sion al­lows for up to either five or nine days, de­pend­ing on the size of the com­pany.)

San Fran­cisco first en­acted the or­din­ance in 2007. And in the years since, the city’s work­ers—and busi­nesses—have reaped the be­ne­fits.

“San Fran­cisco’s eco­nomy is boom­ing,” Jim Laz­arus, seni­or vice pres­id­ent for policy at the San Fran­cisco Cham­ber of Com­merce, told The New York Times last year about the ef­fects of the city’s sick leave law.

Like the de­bate over rais­ing the min­im­um wage—a policy Obama pro­posed in last year’s ad­dress—crit­ics ar­gue that a na­tion­al paid sick leave law would hurt busi­nesses’ bot­tom lines. To com­pensate, they’d have to cut wages and jobs.

“If they could af­ford it, they would,” Helen Darling, pres­id­ent of the Na­tion­al Busi­ness Group on Health, told The Wash­ing­ton Post about such a law.

But Laz­arus told The New York Times that the ef­fect on em­ploy­ers has been “min­im­al.” San Fran­cisco em­ploy­ers back him up: In a 2011 study on the ef­fects of the law, six of sev­en re­por­ted no neg­at­ive im­pact on prof­it­ab­il­ity.

For work­ers, the policy has sig­ni­fic­antly boos­ted mor­ale; ac­cord­ing to a Decem­ber study in the Amer­ic­an Journ­al of Pub­lic Health, firms that in­sti­tuted a sick leave policy after the San Fran­cisco law passed were more likely to re­port high­er mor­ale.

“They value their jobs more,” Arindrajit Dube, an eco­nom­ics pro­fess­or at the Uni­versity of Mas­sachu­setts at Am­h­erst and a coau­thor of the study, told Na­tion­al Journ­al.

It’s not just em­ploy­ees. Over­whelm­ingly, em­ploy­ers in San Fran­cisco sup­port the policy—a find­ing that sur­prised the study’s au­thors. While busi­nesses may have been hes­it­ant to im­ple­ment a paid sick leave policy on their own, Dube said that once they’d had ex­per­i­ence with it, 72 per­cent of the em­ploy­ers they sur­veyed sup­por­ted the policy.

The San Fran­cisco policy hasn’t been without prob­lems. Dube and his team found that to com­ply with the law, some em­ploy­ers have had to cut oth­er com­pens­a­tion, such as va­ca­tion days. Stan­ford eco­nom­ist Nick Bloom told Na­tion­al Journ­al that, un­der a fed­er­al policy, this phe­nomen­on could be more det­ri­ment­al in a part of the coun­try that’s not ex­per­i­en­cing such eco­nom­ic growth.

“The ex­tent to which there’s been any cost, in that it’s maybe slightly more ex­pens­ive to em­ploy people, it would not be very ob­vi­ous, be­cause we’re boom­ing eco­nom­ic­ally,” Bloom said. “Take parts of the Mid­w­est that are still in heavy re­ces­sion—they may struggle more if there’s a na­tion­al sick leave policy.”

But Bloom said the be­ne­fits of paid sick leave out­weigh the costs. And though it may be more dif­fi­cult for oth­er re­gions to ad­apt, it makes more sense to im­ple­ment a policy on the fed­er­al level than just city-by-city.

“If there are two cit­ies, and one in­tro­duces gen­er­ous sick leave and the oth­er doesn’t, you risk that mo­bile busi­nesses may ac­tu­ally move to­ward the city that doesn’t have the sick leave policy,” he said. “Com­pet­i­tion between loc­a­tions to at­tract busi­nesses can lead to a race to the bot­tom.”

Like all the pro­pos­als Obama will ad­voc­ate in Tues­day’s ad­dress, the paid sick leave meas­ure will face a Re­pub­lic­an-con­trolled Con­gress bent on fight­ing the pres­id­ent. Should law­makers look to San Fran­cisco’s ex­ample, though, they may like what they see.

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