5 ways to make the business case for paid sick leave
published 5.21.20
Who can afford to stay home and forgo wages? To contain COVID-19, experts recommend staying home if we feel ill. Nonetheless, only 31% of the lowest earning Americans have access to paid sick leave.
In a previous article, I highlighted paid sick leave as one of the ways in which businesses can and should react to the COVID-19 pandemic. As states start to reopen, the case for paid sick leave beyond coronavirus becomes more urgent.
If you’re trying to advocate for change at your organization, here are five financial arguments for paid sick leave post coronavirus.
#1 Business Operations and Costs
Paid sick leave can improve overall business operations in three ways.
First, instituting paid sick leave policies actually decreases the aggregate amount of days that employees need to take off due to illness. When sick employees can stay home, they effectively stop the spread of the disease at the workplace and reduce the overall number of employees that are absent. Were the policy not in place, the employees that are ill may choose to go to work to not lose the wages and thus increase the chances of contaminating others. A 2018 study found that providing paid sick leave could have saved “$0.63 to $1.88 billion in reduced (...) absenteeism costs per year during 2007 to 2014 in 2016 dollars”.
Second, paid sick leave has been found to reduce the rate of occupational injuries and reduce turnover by 50%.
Third, returning to work while sick has exponentially negative effects on productivity as more employees get sick and continue to infect others. The R0 (R-naught) is the estimate of how easily a disease transmits. The R0 of coronavirus is between 2 and 2.5: a single person will infect on average 2.5 other people. For a business with one employee that is ill, the impacts on productivity over the course of one day are enormous (note that the chart assumes only two lost days of productivity for employee, which in the case of coronavirus can be more akin to 14 days off):
These findings are supported by previous research that found that “both full- and part-time working adults without paid sick leave were more likely than workers with that benefit to attend work when ill”, confirming that they do effectively go to work even when ill and increase the likelihood of more widespread disruptions in operations. This behavior is called presenteeism. As we have seen, presenteeism increases the number of employees that are sick and has significant costs for the business. Paid sick leave is part of a robust risk management strategy for businesses today.
#2 Compliance
Paid sick leave should also be a part of a firm’s compliance strategy. Several state and local governments in the US including San Francisco, Washington DC, Connecticut, and Seattle, have already implemented measures that require employers to provide paid sick leave to some workers. Businesses planning to enter those environments needs to account for these regulations. It is important to note that once these regulations went into effect, business growth was not affected.
#3 Talent Retention
In competitive employment markets, paid sick leave can be an important part of a recruitment and retention strategy and position the firm to attract talent that places a value on work/life balance. A commonly spread myth is that workers will abuse paid sick leave policy. Research has shown that this is not the case: of those workers that do have access to paid sick leave, only 45% of them used it, and of those that did, they only took an average of 2.1 days.
#4 Future Health Costs
From a health standpoint, the same study found that workers with no paid sick leave are three times more likely to delay or forgo medical treatment than those that do have the benefit. Additionally, those that don’t have paid sick leave are less likely to use preventive health services. This can catalyze the need for higher cost health treatment in the future.
#5 Business Resilience and Investor Pressure
Overall, paid sick leave is a business investment that reduces operational costs resulting from absenteeism and productivity losses, ensures regulatory compliance, increases talent retention, and reduces the need for expensive health care treatments in the future. Investors are beginning to take notice and consider paid leave as part of a long-term strategy towards a resilient business environment.
The COVID-19 pandemic may be the catalyzing event that initiates significant movement towards paid sick leave policies that benefit businesses and employees.
We’d love to hear how these points helped you advance conversations about paid sick leave in your workplace.
By Camila Gómez Wills
Consultant
