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Federally Mandated Paid Sick Days: A Benefit Entrepreneurs may not be Seeing

Posted on May 28, 2008 by Ellen

Regardless of political affiliation, in times of economic uncertainty, governments traditionally become more involved; i.e. more legislation, rulemaking, enforcement, and influence.  The situation today is without exception.  At the same time Federal Reserve Chairman Ben Bernanke finally orated “recession”, various departments at various levels of government increased their involvement in the economy.  Multi level policy making not only means that various levels of government will act, but their actions will affect multiple levels of society.  Realizing Bernanke is known best for his research on inflation and the Great Depression, leaves little surprise that the Federal Reserve bailed out Bear Stearns.  Similarly, with the ferocious presidential contest of only Senators that has engaged even the traditionally uninvolved lower socio-economical and vulnerable members of society, it seems timely that Congress is now working with the mortgage lenders on loan forgiveness instead of foreclosure as a cost savings strategy.  These policies coordinate to create an economic stimulus by reducing the individual burden of market participants. 

Senator Ed Kennedy has vowed to call a vote on the Healthy Families Act soon that would allow “7 days of sick leave with pay annually for employees working 30 or more hours per week; or a pro rata number of days or hours of sick leave with pay annually for employees working less than--(A) 30 hours per week on a year-round basis; or (B) 1,500 hours throughout the year involved.”.  On the campaign trail, both Democratic frontrunners Hilary Clinton and Barack Obama express support for mandatory sick days.  This is not officially labeled as part of any of the candidate’s economic stimulus plan, if there is one, but it does have characteristics of a stimulus.  This legislation would give sick days to part time employees, and lower level employees which are not currently entitled to paid sick days.  It creates happier, more productive lower level employees, in an economically stressful time requiring increased efficiency.  For a single mother of two working two part-time jobs, paid sick days could be the difference between eviction and a healthy family.  

Some question the rationale behind mandating employers to implement costly benefits in a recessional time of cutbacks, slimming margins, and dwindling profits.  These situations leave this legislation ferociously unpopular in the small business community, but it is worth another look; you might actually see it has some positives.  Employee rights are a tool in the government’s artillery to create economic stability and consumer confidence; a tool that an individual small business owner cannot brandish with the same far reaching impact. In fact, if one small business owner decided to implement paid sick days in a recession, they would be forced to raise prices to cover costs.  However, without the competitor’s participation, the small-business-owner-with-the-paid-sick-days will be dominated by their competition, and might even be pushed out of the market completely.  In all actuality, the negative effects of rising costs related to mandated employee benefits are minimal.  Business owners would be forced to raise prices together and pass on increased costs elsewhere, thereby decreasing the burden to individual businesses.  Meanwhile, the small business owner will benefit from the well-known positive impacts of employee benefits, while not having to shoulder the burden alone.  Governments have the supremacy to equally mandate improvements to the bottom rung employees, and produce far reaching positive economic impacts. 


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