Connecticut Employees in their 20s lost $850 per year in annual income according to a new study on the impact of paid sick leave (PSL) laws. The study by Employment Policies Institute was done by Dr. Thomas Ahn, an assistant professor in the economics department of the University of Kansas. Dr. Ahn compared his Connecticut data to the five surrounding New England states and other controls for relevant economic factors that may have affected the region’s employment outside of the law. The report looked at multiple years of Census Bureau data (2012-2014) to measure the impact of PSL laws in the state. The study shows that there are clear monetary impacts, particularly for younger workers. The data also shows a loss of productivity due to a spike in absenteeism.
Connecticut was the first state to enact laws requiring private companies to provide sick leave to its employees. States like California, Massachusetts, and Oregon have also enacted sick leave laws, but Connecticut has the most data due to their early adoption of this law. Municipalities have also enacted PSL laws. The study found that younger, less skilled workers felt the brunt of it. The study states:
“While older employees seem largely un-impacted by the law, younger employees in Connecticut aged 20-34 saw a 24-hour reduction in annual hours worked. 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.”
It goes on to say:
“Currently, most of the empirical evidence of the impact of mandated paid sick leave is based on studies from Northern Europe ( Johansson and Palme, 1996, 2002; Olsson, 2009; Ziebarth and Karlsson, 2010, 2014; Puhani and Sonderhof, 2010). These studies find that a more generous paid sick leave results in more worker absenteeism. This increase in absenteeism has been corroborated recently with U.S. research finding that a worker that has paid sick days will take about 1.2 more days off from work, compared to similar workers without this benefit (Ahn and Yelowitz, 2016).”
These policies usually negatively affect young, low skilled, and no skilled workers. The study also found a rise in absenteeism of 1.2 days per year, “Notably, these absences do not tend to occur in times of the most severe influenza outbreaks—suggesting that employees may be using the benefit even when they’re not sick.” This, of course, is a loss for productivity for businesses large and small. The loss is likely to be passed on to the consumer in higher prices or absorbed by less hiring or automation.