Mandatory paid sick leave: How has it worked in San Francisco?

When San Francisco four years ago became the first city in the country to require employers to offer paid sick leave to their employees, it was considered controversial because of the host of unknowns that came alongside: Would employees abuse the privilege? Would it cost too much for businesses? What unintended consequences would show up?

Now, the Institute for Women’s Policy Research has released a survey of how the policy has worked for the first four years, during which city employers added 59,000 employees – 17 percent of the city’s work force – to the rolls of those receiving that benefit. The results released Thursday, generally favorable according to analysts, are important for where the idea might go elsewhere in the country and as background in the national debate over health-care policy.

The study of 727 employers and 1,194 employees found that two-thirds of employers support the law. It found that it is rare for employees to misuse paid sick days and that workers tend to save them for emergency use and thus end up using far fewer than the maximum allowed.

“This report is the first empirical research on the effects of these policies, and that’s why it’s really important and could have a very decisive impact on efforts to promote similar policies on the municipal, state, and federal levels,” says Nancy Folbre, a professor of economics at the University of Massachusetts.

The US is one of the few rich nations that doesn’t mandate any form of paid sick leave, she says, with about 40 percent of workers lacking coverage. For part time, civilian, and low-wage workers, the percentage of those with the benefit is even lower, less then 33 percent, while about 90 percent of public-sector workers are covered.

San Francisco’s ordinance requires employers with employees who work in San Francisco – regardless of where the company has its headquarters – to provide them with one hour of sick time for every 30 hours worked. Milwaukee and Washington, D.C., have passed similar legislation requiring most employers to require a minimum number of paid sick leave days.

“A lot of small business owners were really freaked out when this first went into effect, especially smaller retail stores and restaurants,” recalls Sam Mogannam, owner of Bi-Rite Market, who employs 110 workers at two locations. He says many restaurants passed the extra costs right on to consumers with $2 to $5 service charges or 2 to 3 percent price increases. “I don’t hear too many griping about it any longer,” he says.

He says the added cost for him is about $110,000 per year, but that the staff loves the flexibility about what used to be the highly stressful situation of sick leave and vacation time. For him, that makes for a better work environment and better service.

A boost for morale

“It’s made a highly positive impact on staff morale. I think it’s a win/win situation for employees and employers,” he says.

Other findings include:

• Despite the availability of as many as nine sick days under the ordinance, the typical worker used only three paid sick days for the year and a quarter of the workers used zero sick days.
• More than half of San Francisco employees under the ordinance reported benefiting from it either because their employer became supportive of using the sick days, the number of sick days provided increased, or they were better able to care for themselves or family members.
• Parents with paid sick days were more than 20 percent less likely to send a child with a contagious disease to school than parents who did not have paid sick days.

“Besides being more compassionate and kind, it is definitely clear from a health perspective, that if the system gives us a work environment that is not filled with sick people, everyone is better off,” says Elizabeth Dowdell, an associate professor of nursing at Villanova University in Pennsylvania.

Winnie Chang, a 31-year-old optometrist assistant, says she has been working since she was 16 and never got paid sick leave before. “I have not heard of any employers who are not happy about it,” the optometrist assistant says.

Further study required

But Dion Lim, COO of SimplyHired.com – a job-search engine – says the findings need to be looked at more carefully before other cities and states jump to do likewise. He says the number of variables makes the issue far more complex than simply stated results can articulate.

“People need to look at the specific results for which kinds of companies reported doing better under this ordinance, which did worse, what size the companies are, how cyclical their business is, and what is the state of the overall economy,” he says. Usually, smaller companies have a harder time with this than larger companies, he notes.

“San Francisco is anomalous in many ways because of its many-tiered economy. This study is important for what it says but also for what it doesn’t say, which is that there certainly has not been a big backlash against mandated sick leave.”

Ms. Chang says that many people she knows working in San Francisco are not even aware of the policy and so don’t take advantage of it.

“There needs to be more education of what this is about and how to use it,” she says.