Report | Health

Paid Sick Days: Measuring the small costs for Connecticut businesses

Policy Memo #177

Download PDF

The Connecticut General Assembly is considering legislation that would require employers to provide paid sick days to employees. Similar legislation has been considered in previous years and has passed in the state’s House of Representatives and Senate in separate sessions. Connecticut’s newly elected governor, Dannel Malloy, has announced his support for paid sick days legislation.

The issue is expected to generate considerable lobbying and debate. Proponents of the measure say it provides job and income security, particularly for low-wage workers, and reduces public health risks arising from the spread of illnesses to consumers and vulnerable populations. Opponents of the measure argue that it would be costly for Connecticut employers and could lead to job reductions at a time when the state is struggling to increase employment.To date there has been little empirical research on the actual cost to Connecticut employers.

In this policy memorandum, we examine the cost of providing paid sick days to Connecticut employees in a range of industries. This paper provides concrete economic data (based on the U.S. Census Bureau’s Economic Census) to help policymakers better understand the potential costs incurred through implementation of paid sick days legislation.

Specifically it provides information on the relative size of potential costs as compared to average sales1 for Connecticut firms by industry. The data clearly show that the potential cost of providing paid sick days is in fact extremely small relative to the total sales of a firm. In addition, available research shows cost-savings for employers that provide paid sick days, largely resulting from reduced employee turnover.

Furthermore, by demonstrating that potential costs associated with implementation are very small as a share of sales, this paper provides a clearer picture of how employers might adjust to or absorb such costs. While there are a variety of strategies employers might choose to comply with the proposed new requirement, the bottom line is that costs would be so low that compliance could easily be achieved through very modest adjustments to either prices or other areas of compensation, without reducing employment.

See related work on Health | Paid sick leave

See more work by Doug Hall and Elise Gould