Report: Seattle’s paid sick leave law not hurting economy

Seattle’s one-year-old mandatory paid sick leave law is not hurting the economy, according to the findings of a small business organization.

An examination of preliminary job growth, taxable retail sales data and inflation rates from King County for the first seven months of 2013 shows no negative impact on the economy. The results were presented Tuesday by the Main Street Alliance of Washington.

“King County has continued to outpace the state in job growth and Seattle has maintained its share of King County’s businesses and taxable retail sales,” said Marilyn Watkins, policy analyst with the non-profit Economic Opportunity Institute. “The economic trends that were already underway prior to passage of the ordinance have continued right along and were not affected much one way or another by the sick leave law.”

The report includes no data from Seattle specifically but it points out that about 44 percent of King County’s jobs are inside the Seattle city limits.

Watkins conceded that the recovering economy might be making up for the costs imposed on business by the Seattle law, which requires companies with four or more employees to provide paid sick leave.

One supporter of the law, which went into effect September 1, 2012, says the costs are far outweighed by the benefits.

“Of course this decision has had a financial impact on my business but it has been minimal, amounting to less than one-half of one-percent of my revenue,” said Joe Fugere, owner of Tutta Bella.

Supporters concede it’s too early to draw any scientific conclusions about the economic impact of mandatory paid sick leave. For example, the report notes, that an employee would have to work 40 weeks to earn 5 sick days and workers would not acrue the full 9 days provided until after more than a year on the job, so “some firms have not yet experienced the full impact of emplolyees having access to paid leave.”

Another report, released in August, claimed that some small businesses are already raising prices and cutting employee benefits to compensate for increased costs. The Employment Policies Institute, a non-profit group that studies employment issues, surveyed 301 service industry businesses in Seattle.

“About a third of the businesses reported no increase in the business cost, a little more than one in four, 27-percent, said it was causing a big increase and some group in between said small increase,” according to research director Michael Saltsman.

The sick leave law was written, in part, on the belief that workers should not have to show up on the job when they’re sick due to lack of sick leave benefits.

A report last month from the University of Washington found that about two-thirds of employers were not complying with the new law, so far. A large minority of businesses, about four in ten, were not aware of the law. The UW survey talks about “unintended consequences” of mandatory sick leave but concedes that it’s too early to draw conclusions about the impact of the law on business.