The Cost Of Morale: Offering Paid Sick Days
As of April of this year, businesses in New York City with at least 15 employees are required to offer paid sick days. Similar laws are already in effect in cities in California, Washington, and Connecticut. Many small business owners are wondering if this is a trend that will catch on nation wide—and it if does, what effect, if any, will it have on profitability?
With the prospect of having to pay 2 people for one job—the one who is sick and the one who has to cover the shift—many wonder if mandating that businesses must offer paid sick days will hurt small businesses. Data in those cities where the laws have been in place for a while suggests that there is little effect on profitability. In San Francisco, businesses with less than 10 employees must offer 5 paid sick days and businesses with more than 10 employees must offer at least 9 sick days. However, 6 out of 7 small businesses reported no negative change in over-all profits.
This might be because small businesses, especially those with less than 10 employees, have to think of paid sick days as a numbers game. Say you have an employee that makes $10 an hour and they take all 5 sick days, that is a $400 loss over the course of a year. Now lets imagine that all 9 of your employees take every sick day, at most, your company will have a loss of $3,600. This might be a small price to pay for the boost in morale that paid sick days offer. There are tons of studies that prove that happy employees work harder at their jobs.
One way to combat possible negative effects on profitability that paid sick days might have is to implement tiered systems wherein businesses with more employees must offer more sick days than those with very few employees. Such a system is already in place in Seattle. Businesses with more than 50 employees must offer more sick days than businesses with less than 50 employees. On top of that, sick days only have to be offered to those employees that have worked at a company at least 6 months. This system protects thriving small business communities while still helping to raise overall worker satisfaction.
Lobosco Katie. “Paid sick leave won’t hurt businesses” http://money.cnn.com. 5 Feb. 2014.