Friday, August 28, 2015

‘Mandatory Paid Sick Leave” is Immoral and Economically Destructive

Statewide mandatory paid sick leave is on the New Jersey legislature’s agenda, and the New Jersey Star-Ledger editorializes that Mandatory paid sick leave would work well for New Jersey.

The Star-Ledger cites Jersey City’s new paid sick leave law as proof that it “works”:

Fifteen months ago, an ordinance was launched that requires Jersey City businesses with 10 or more employees to provide their workers with five paid sick days a year, and - mirabile visu! - the city somehow hasn't fallen to pieces.
Just the opposite, actually.

The Eagleton Center at Rutgers has surveyed 289 businesses in town and learned that business is booming: Four out of five employers offer paid sick leave, 92 percent of them said there has been no abuse of the program, and 42 percent report actual improvement in worker productivity, better quality with hires, and/or lower turnover rates.

Oh, and say it loud and proud, Chamber of Commerce: Since Mayor Steve Fulop imposed this policy in the state's second largest city, unemployment has plummeted.

That's one answer for those who claim that mandatory sick leave will cause towers to tumble and locusts to visit the land.

I left these comments:

Those who claim that mandatory paid sick leave would cost jobs are correct, regardless of statistics. When you artificially raise the cost of hiring, the incentive to hire is reduced. This is easily proven through a little introspection. Just ask yourself: As a consumer, is cost a consideration before you buy something? Why would it be any different for employers, the “consumers” of labor?

The Star-Ledger’s flippant “Oh, and say it loud and proud, Chamber of Commerce: Since Mayor Steve Fulop imposed this policy in the state's second largest city, unemployment has plummeted” notwithstanding, the drop in unemployment proves nothing regarding Jersey City’s forced paid sick leave law. As any basic economics text will tell you, employment is affected by myriad factors. The Star-Ledger ignores all context. Indeed, the very article cited by the Star-Ledger quotes Mayor Fulop as crediting Jersey City’s drop in unemployment to the city’s “strategic approach to both attract development and new businesses.” The sick leave law isn’t mentioned in the article. So the Star-Ledger is disingenuous to even bring up the employment picture. More likely, unemployment would have improved even more without forced sick pay.

It’s also important to realize the hidden effects of job cost-escalating legislation. Such laws hamper smaller, newer, and financially strapped businesses struggling to get off the ground and/or expand. On the other hand, such laws favor larger, established businesses, such as the 62% that already have voluntary paid sick leave. New competition is thus hampered. As the other article cited by the Star-Ledger observes, more than 75% of the businesses required to pay sick time under Jersey City’s law are unaffected by the law. Fulop’s law favors established businesses that already have paid sick time. Like most economic regulation, the law is in effect a back-door subsidy to established business (which, perhaps not-so-coincidentally, tend to have the most political influence).

The most important reason why mandatory paid sick leave is bad law is because it is immoral, violating the rights of employers to set the terms of employment for the jobs they create and maintain. It also violates the rights of employees, especially young, inexperienced workers looking for an opening onto the economic ladder of upward mobility. These “silent victims” of rights-violating labor laws like mandatory paid sick leave, minimum wage laws, ObamaCare mandates, and the like, will have less chance of finding a job, if not lose a job they already have. As costs of employment are forced up, employers will demand more experience in job hiring even as they try to make due with fewer employees. Jobs—entry level jobs especially—will suffer.

It makes common and empirical sense. No matter how one cuts it, mandatory paid sick pay is immoral and economically destructive, especially for the most vulnerable—young, inexperienced job-seekers. Aside from instances of fraud or breach of contract, governments at all levels should stay out of employer-employee contracts. Such contracts are rightfully and morally a strictly voluntary matter between employers and job-seekers. Who the h--- are a bunch of politicians to dictate how other people manage their employment affairs? Government has no business dictating employment terms.

Related Reading:

Mandatory Paid Sick Time: Economically Destructive because Morally Wrong

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