During my testimony to the Labor Committee on Feb. 22, Sen. Julie Kushner (D-Danbury) challenged Yankee Institute’s analysis on how a trio of paid sick leave bills — S.B. 7, S.B. 12 and H.B. 5166 — would negatively impact Connecticut small businesses.
She says a survey of academic research from the National Partnership for Women and Families (NPWF) shows that paid sick leave is, to quote her, “beneficial to businesses, quite contrary to [Yankee Institute’s] position.”
However, the truth regarding paid sick leave is more nuanced.
Since 2012, most state employers with 50 or more Connecticut employees are obligated to provide employees with one hour of paid sick and safe leave for every 40 hours worked, and up to 40 hours per year. Yet the proposed bills aim to reduce exemptions for employers with 49 or fewer employees. This would dramatically expand the number of businesses burdened with paid sick leave.
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In defending paid sick leave, Kushner is likely referencing the NPWF’s brief released last November, “Paid Sick Days Are Good for Business,” that makes four general claims about sick leave’s benefits to businesses. It will be helpful to examine how Connecticut businesses responded in 2012-13, so we can gauge how they might respond to an even stricter measure in 2024.
Most of the NPWF citations quote national statistics, but NPWF did cite a 2014 survey of 251 Connecticut businesses. The Center for Economic and Policy Research (CEPR)’s survey “Good for Business? Connecticut’s Paid Sick Leave Law,” touches upon all three NPWF claims.
NPWF Claim #1: The majority of employers support existing paid sick day laws.
The classic democratic logical fallacy expressed here (which can be equally applicable to Republicans or Democrats) is hardly a way to run a state. Indeed, CEPR found that while 76.5% of Connecticut employers supported the paid sick days law back in 2012, 23.5% did not.
At one time, the majority of Connecticut employers may have indeed “support(ed) paid sick days laws.” But that’s just good old crony-capitalism. If, as a big business, I already offer paid sick days, but my small business competitor doesn’t, of course I will support mandated paid sick day laws. It forces a new cost onto my upstart competition.
And there are reasons to believe that while Connecticut’s business community may have favored the status quo for the original level of paid sick leave, most do not support expansion. A 2024 Hartford Business Journal poll found that nearly two-thirds of respondents (62%) opposed expanding paid sick leave. A very tenuous “majority” indeed.
NPWF Claim #2: Businesses report no impact on their bottom line or experiencing growth after paid sick days laws take effect.
NPWF’s brief states that “the vast majority of Connecticut employers saw minimal effects on cost,” and did not increase prices or reduce employee hours. The democratic fallacy is again on display. After the 2012 legislation, CEPR found that 53.2% of Connecticut establishments reported some form of a cost increase to CEPR, including 22.2% reporting an increase of at least 2%.
To legislators who have never started or run a business (of which there are many in Connecticut’s Legislature), it may seem puzzling why 15.5% of Connecticut businesses increased prices; 10.6% reduced employee hours; and 5.6% either reduced operating hours, wages or quality of service. To make matters worse, 39.9% of Connecticut businesses found it difficult or somewhat difficult to do extra record-keeping involved in tracking paid sick leave, hardly surprising for a state with so many small businesses employing a handful of workers each.
[RELATED: CT Family and Medical Leave vs. Paid Leave: Here’s what to know]
The number of regulations that Connecticut could implement that would “only” hurt one-third of businesses is endless, but is a pretty poor strategy for long-term growth in Connecticut.
NPWF Claim #3: Communities and businesses thrive in cities with paid sick days laws, economic growth is a recurrent outcome.
The NPWF report praises other cities like New York and Seattle that have also passed a version of paid sick leave. Strikingly, no mention is made of “Connecticut, the first state to enact a paid sick days law,” from the previous claim. NPWF’s national audience isn’t likely to be aware that Connecticut had the lowest per-capita personal income increase from 2009-21 of the 50 states. New York and Seattle are one thing, but Connecticut’s combination of policies during the Malloy Administration’s tenure, including paid sick leave, didn’t work very well for economic growth.
Ultimately, all of Sen. Kushner’s and the NPWF’s claims are based around the central premise that we ought to legislate whatever the majority agrees with. While that strategy may be good enough to win legislative elections, following that plan without heed to unintended consequences could be disastrous for Connecticut newest, most innovative small business communities.
David Flemming is Director of Policy & Research at the Yankee Institute.