TO: Hon. Thomas Middleton, Chair, and members of the Senate Finance Committee

FROM: Elise Gould, PhD, Senior Economist and Director of Health Policy Research, Economic Policy Institute

Thank you for the opportunity to discuss how the Maryland Healthy Working Families Act would impact employers, workers, families, and the general public. The Economic Policy Institute’s mission is to inform and empower individuals to seek solutions that ensure broadly shared prosperity and opportunity. I support the Maryland Healthy Working Families Act because it gives workers the ability to earn paid sick days, protecting workers’ ability to provide for and care for themselves and their families. In addition, while the costs to business owners are practically negligible, both businesses and the people of Maryland will gain from a more productive and healthier workforce.

Earned sick time is a wise investment for Maryland’s employers, workers, and the general public. The many employers that already provide paid sick leave would have a level playing field with their competitors, and all would more easily maintain a healthy workplace. While any new labor standard generates concerns about the business climate and job creation, the evidence from jurisdictions that have legislated earned paid sick days has all been positive.1 The first jurisdiction to set a paid sick days standard was San Francisco, where employers have been required to offer earned paid leave since 2007. Fears that the law would impede job growth were never realized. In fact, during the five years following its implementation, employment in San Francisco grew twice as fast as in neighboring counties that had no sick leave policy. San Francisco’s job growth was faster, according to the Institute for Women’s Policy Research, even in the food service and hospitality sector, which is dominated by small businesses and viewed as vulnerable to additional costs.2

Connecticut became the first state to enact a sick-days standard in 2011. Prior to its passage, my coauthor Doug Hall and I calculated the potential impact of Connecticut’s law and concluded that the cost of allowing employees to earn five days of paid sick leave a year would be very small relative to sales.3 If Connecticut employees with no sick leave were given the ability to earn five days of paid leave and used it as much as employees who already had access to leave, the cost was predicted to be only 0.19 percent of sales, including firms of all sizes. For employers already providing five or more days of leave, there would be no cost at all. Further, while any additional costs may be easily absorbed through small changes in other forms of compensation, hours, prices, or profits, earned sick time may actually save employers money through reduced turnover and higher productivity. A year-and-a-half after the law took effect, researchers at the Center for Economic and Policy Research found that the law brought sick leave to a large number of workers, particularly part-time workers, at little to no cost to business.4 By mid-2013, more than three-quarters of employers expressed support for the law.

There is no reason to think the impact on business in Maryland would be any different from the experiences in San Francisco and Connecticut. The Maryland Healthy Working Families Act explicitly levels the playing field among all employers, raising the quality of jobs across the board. The earned paid sick time is accrued at a reasonable pace, one hour for every 30 hours worked, capped at seven full days per year for full-time workers. Part-time workers are treated accordingly at a rate commensurate with their hours worked. This provides no extra burden to employers, and removes any incentives to reduce hours of workers who rely on full-time employment to provide for themselves and their families.

Currently, 39 percent of private-sector employees nationwide cannot earn paid sick days, and lower-paid service workers in the restaurant and fast-food industries are particularly unlikely to have this safeguard. Food service workers, health care workers, child care workers, and others who come into physical contact with the public or handle our food are among the least likely to be able to earn paid sick leave. There can be serious consequences when infected employees go to work, as happened with an estimated 8 million people during the peak of the H1N1 flu virus outbreak several years ago.

Over 700,000 Maryland workers do not have access to paid sick days.5 Expanding access will mean stronger, healthier families. Working parents are often forced to choose between staying home with a sick child and going to work. When parents cannot take off work, children are sometimes sent to school ill, diminishing their learning experience and exposing other students, teachers, and staff to infection. When employees go to work sick, they endanger their own health and the health of their colleagues while jeopardizing safety and the quality of their work. At the same time, staying home and putting one’s own health first can result in overdue bills and not having enough food to eat.

The truth is that access to paid sick time is vastly unequal. Only one-in-five workers in the bottom 10 percent of the wage distribution have access to paid sick leave, compared with 87 percent in the top 10 percent, as shown in the figure below.6 Low-income workers are the ones who can least afford to lose pay when they are sick.

You have the opportunity to give workers the ability to earn paid sick days, avoiding the choice between going to work sick or going without pay (and maybe even losing a job). Thank you for giving me the opportunity to provide evidence in support of the Maryland Healthy Working Families Act. I respectfully urge you to seize the opportunity to take the lead in quality job creation and sensible public policy and return a favorable report.

Endnotes

1. Robert Drago and Vicky Lovell, San Francisco’s Paid Sick Leave Ordinance: Outcomes for Employers and Employees, Institute for Women’s Policy Research, February 2011, http://www.iwpr.org/publications/pubs/San-Fran-PSD.

2. Kevin Miller, San Francisco Employment Growth Remains Stronger with Paid Sick Days Law Than Surrounding Counties, Institute for Women’s Policy Research, September 2011, http://www.iwpr.org/publications/pubs/san-francisco-employment-growth-remains-stronger-with-paid-sick-days-law-than-surrounding-counties/.

3. Elise Gould and Doug Hall, Paid Sick Days: Measuring the Small Costs for Connecticut Businesses, Economic Policy Institute, Policy Memo 177, March 31, 2011, http://www.epi.org/publication/pm177/.

4. Eileen Appelbaum, Ruth Milkman, Luke Elliott, and Teresa Kroeger, Good for Business? Connecticut’s Paid Sick Leave Law, Institute for Economic and Policy Research, February 21, 2014, http://www.cepr.net/documents/good-for-buisness-2014-02-21.pdf.

5. Salina Tulachan and Jessica Milli, Access to Paid Sick Days in Maryland, Institute for Women’s Policy Research, January 2015, http://www.iwpr.org/publications/pubs/access-to-paid-sick-days-in-maryland.

6. Bureau of Labor Statistics, “Employee Benefits in the United States—March 2014,” July 25, 2014, http://www.bls.gov/news.release/pdf/ebs2.pdf.