Report: Connecticut's Paid Sick Leave Policy Costs Young Workers

Young workers lose $850 per year in income

Connecticut Gov. Dannel Malloy / AP
August 5, 2016

Connecticut’s paid sick leave law has led employers to reduce benefits, cut hours, and slow hiring, according to a new report.

University of Kentucky economist Thomas Ahn found that businesses face rising costs associated with a 2012 state law mandating paid sick leave. Younger workers bore the brunt of the increase in labor costs, which lowered their take-home pay by over $850, according to his research.

"While older employees seem largely unimpacted by the law, younger employees in Connecticut aged 20-34 saw a 24-hour reduction in annual hours worked," the report states. "For a part-time employee in the service industry, that’s the equivalent of roughly one lost week of work per year. These employees lost $850 per year in annual income, the equivalent of 3.5 fewer pre-tax paychecks for someone working part-time at the state’s minimum wage."

The law also hurt employers and job seekers. Absenteeism increased by "1.2 days per year," leading to staffing shortages as a result of paid leave. Some businesses slowed hiring to deal with lost shifts; roughly 20 percent of 86 employers surveyed in 2013 reported that they "had reduced hours or staffing levels."

Connecticut was the first state to mandate paid sick leave in 2012. Its legislation has served as a model to other states and localities that have adopted the policy. Oregon and California each passed a bill, while New York City and a number of other Democratic strongholds have adopted the policy. Connecticut Gov. Dannel Malloy touted the policy as a step forward for the progressive movement at the Democratic National Convention in July.

"We were the first state in the nation, five years ago, to pass paid sick leave—and guess what? Not only are workers protecting their health, but also they're protecting the health of the people they serve—and overwhelmingly the businesses they work for approve of paid sick leave," he said.

The Democratic Party’s new platform calls for mandatory paid sick leave to be passed at the national level.

"Democrats will make sure that the United States finally enacts national paid family and medical leave," the platform says. "We will fight to allow workers the right to earn at least seven days of paid sick leave. We will also encourage employers to provide paid vacation."

Ahn said that such changes would not come without costs for workers and consumers. He compared Connecticut’s labor market to neighboring New England states, controlling for inflation and Connecticut’s relative affluence. He found that less-experienced workers logged fewer hours and had fewer hiring opportunities in Connecticut than in neighboring states.

"The Connecticut law disproportionately impacts young workers," the report says. "Reduced work for these workers may have long-term consequences as experience and building up human capital through learning-on-the-job are especially important for these recent entrants into the workforce."

The Employment Policies Institute commissioned the study. Michael Saltsman, the group’s research director, said that the report demonstrated the unintended consequences of paid sick leave for workers.

"This study counters the fiction that paid sick leave mandates are cost-free policies," he said in a release. "Due to their role in reducing job opportunities, and their apparently minimal workplace benefits, mandatory paid sick leave policies may be a cure worse than the disease."

Published under: Connecticut , Economy