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Lawmakers Push Yet Another Drain on California Employers Stretched to the Breaking Point – Pacific Research Institute

Lawmakers Push Yet Another Drain on California Employers Stretched to the Breaking Point

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Senate Bill 616 would require employers to increase the number of paid sick days from three – “an equivalent of a 1.2% tax on wages,” says one mid-size business owner – to five, while also preventing employers from retaliating when workers use their sick days.

If California policymakers set out to punish and in some cases eventually destroy small businesses, they would add to employers’ already heavy burden by nearly doubling the number of paid sick days they have to provide.

Which is exactly what they are doing.

Senate Bill 616, passed on Sept. 1 by the Assembly Appropriations Committee and now awaiting a vote of the full Assembly, would require employers to increase the number of paid sick days from three – “an equivalent of a 1.2% tax on wages,” says one mid-size business owner – to five, while also preventing employers from retaliating when workers use their sick days. (In the bill’s original text, the increase was seven days; it was cut to five through an amendment.)

The bill would also boost the number of paid sick days an employee can roll over to the next year to seven from the current three, which bill author Sen. Lena Gonzalez says “​​is just not enough.”

​​“COVID-19 presents a perfect example of why expanding paid sick leave is not simply good public policy, but a dire necessity,” says the Long Beach Democrat, who is not related to, but shares a last name with the author of the cruel Assembly Bill 5 that was intended to kill gig work in California, and seems to be developing a similar affinity for handing legislative gifts to labor unions.

The other Gonzalez, now a union boss at the California Labor Federation, says that when Sacramento first passed a law mandating paid sick days,  “we knew … three days wouldn’t be enough.”

Maybe the intentions behind SB 616 are noble. Its stated purpose is certainly popular with voters. More than three-fourths “would support a national paid family and medical leave policy that covers all workers,” says ​the National Partnership for Women & Families. According to Navigator “four in five Americans support paid family and medical leave.”

But in practice, the law could set off a series of harmful outcomes.

For now, the bill is just another piece of paper in the Capitol, still awaiting action in the Assembly. However, should it become law, we should expect:

  • A reduction in workers’ pay “by approximately the cost of providing the benefit” as “companies respond to higher benefit costs.”

When San Francisco instituted a paid sick leave requirement in 2007, it “​​brought modest benefits,” says a Cato Institute report, but also carried “significant costs.”

The authors cited a 2011 Institute for Women’s Policy Research study, which “found nearly 30% of” San Francisco’s “lowest‐​wage earners reported layoffs or reduced hours, with employers unable to offset the cost through price hikes alone.” A 2016 study of Connecticut’s sick‐​leave policy found a “sizable decrease in labor demand” as a consequence of the state mandate.

Employers already provide roughly 75% of all workers with some type of paid sick leave. But the gravy train is never long enough for unions, so SB 616 is a piece in what veteran columnist Dan Walters says is one of a number of “high-stakes drives by union officials to gain new members and more benefits for those members.” It matters not that few states place a heavier burden on small businesses than California. What matters to the unions is making sure lawmakers drain businesses on their behalf, even if doing so stretches those businesses to the breaking point and beyond.

Kerry Jackson is a fellow with the Center for California Reform at the Pacific Research Institute.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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