Testimony on Paid Sick Days before the New York City Council

Nancy Rankin

Testimony Before the New York City Council Committee on Civil Service and Labor
March 22, 2013

Hearing on Int 97-2010 A, the “Earned Sick Time Act”

Thank you for the opportunity to testify today in support of the “Earned Sick Time Act,” legislation urgently needed to enable working New Yorkers to take care of their health without sacrificing their pay and putting their jobs at risk. I am the Vice President for Policy Research at the Community Service Society of New York, a 170 year-old organization that addresses the root causes of economic disparity through research, advocacy and innovative programs.  I have led the research that first identified the widespread lack of paid sick days among low-income New Yorkers, and documented the hardships and adverse health impacts that result for people like Paulina Cac Lux.

Paulina was a cashier at a large supermarket chain making $7.25 an hour. Think about someone handling every one of your food items as it comes down the conveyor belt, someone you would not want working sick. She took off a few days when she came down with the flu, and had her meager minimum wage pay docked. When she got sick a few months later, she asked for a day off to see the doctor. She was told that she was “always sick” and fired on the spot.

You’ve heard lots of other stories like Paulina’s this morning. What I am here to tell you is that these are not isolated stories. Well over a million working people in New York City today are denied even a few paid sick days a year, a basic labor standard that most higher-income earners, and all of you, take for granted.

Latinos are the least likely of any racial or ethnic group to have access to paid time off when illness strikes because of their overrepresentation in low-wage occupations in the restaurant, food, retail and non-union construction industries.  Because 56 percent of Latinos live below twice the federal poverty level, the loss of even a few days’ pay means serious hardships. Latinos literally cannot afford to get sick.  Moreover, Latinos have high rates of chronic health conditions, like diabetes and asthma, associated with poverty. Their lack of paid sick time makes it harder for them to get timely care needed to manage these ailments, so too many end up sicker in costly emergency rooms.  These and other research findings are described in a report released by CSS this week.

Now I know that some speakers have said lack of paid sick days is not really a problem. The report prepared for the Partnership for New York City by Ernst & Young, claims that 88 percent of the city’s private sector workers have access to paid leave that they can use when they are ill, though perhaps not to care for a sick child. The trouble with this estimate is that it is not based on a representative random sample, but on responses from a self-selected group of 708 employers, with an average size of 585 employees.  Most very large businesses do provide paid leave, at least to their salaried and higher-paid workers. But our findings, based on more than ten years of annual surveys conducted for CSS by Lake Research, using random-digit dialing and adhering to standard scientific survey methods, reveal a different picture. Forty-three percent of working New Yorkers—and 62 percent of low-income working New Yorkers—do not have paid sick leave. But you do not have to rely on just our research. Data from the Bureau of Labor Statistics shows virtually the same figure for low-wage workers: according to the March 2011 National Compensation Survey for the metropolitan New York region, 60 percent of workers in the bottom wage quartile do not receive paid sick leave. And it is these low-wage workers we are most concerned about. These are the workers for whom losing even a few days’ pay means serious hardships. A recent Economic Policy Institute study found that three and a half days of unpaid time off is equivalent to a family’s grocery budget for an entire month (Gould, et.al., June 2011).

Fears have been raised that paid sick days should not be passed now because it could burden small businesses that are hanging on by a thread and might cost New Yorkers jobs.  I would like to respond to that.

• First, the measure now exempts mom-and-pop shops, with fewer than five employees from having to provide any paid sick leave. While this may sound like a small category, it actually excludes 64 percent of New York City’s 220,034 business establishments.

• Second, the cost is minimal.  The Institute for Women’s Policy Research estimates providing paid sick time to newly covered workers under this bill will average just 18 cents an hour. Looked at another way, the Economic Policy Institute estimates the cost would range from .06 percent to .54 percent of sales depending on the industry sector.

• Third, there is no evidence that the small costs of paid sick days would cause job loss. None.  A substantial body of rigorous economic research on the minimum wage has demonstrated that the additional labor costs associated with minimum wage increases have not resulted in a decrease in employment. The cost of paid sick days would be less than the cost of recent and proposed minimum wage increases. Moreover, there is no evidence that paid sick days policies already in effect in other places have been detrimental to business. A study by economist Arindragit Dube found that over 80 percent of San Francisco employers said their paid sick days ordinance—which is wider in scope—has had no effect at all on their bottom line. This is because a law creates a level playing field, so no business is at a competitive disadvantage and much of the costs can be passed along.  In fact, this is the argument for having a public policy covering as many businesses as possible.  It means that the good actors will not be undercut by those willing to force their workers to come in sick and jeopardize their own health, that of customers, co-workers and commuters. Arbitrary carve-outs are not good public policy because they allow unfair competition and are more difficult to implement, as a practical matter.

• Fourth, the argument that small businesses would be burdened assumes that the entire cost would have to come out of employers’ pockets. That is not the case. As just explained, once a law creates a level playing field the small costs, of the order of magnitude being considered here, can easily be absorbed through minor adjustments in operations, prices, or compensation.
In short, even in bad economic times a paid sick days law will not be detrimental to business for the reasons I just outlined.  In fact, providing greater financial stability for working families helps neighborhood businesses grow. What drives the shoe store owner to hire the next worker or open the next shop is not cutting government regulations, but a long line of customers at the cash register who can afford to buy new shoes.

Nevertheless, fears about the economy may have resonated in 2009 when this bill was first introduced.  But now it is 2013. New York City is no longer in a recession. Crain’s business newspaper reported just this month that, “The city’s economy last year added 84,600 private sector jobs, according to the state Department of Labor. The gains capped a remarkable two year run in job growth and were followed by strong numbers in January.” (Crain’s, March 7, 2013).  And the New York Times reported March 4th that “corporate earnings have risen at an annualized rate of 20.1 percent since the end of 2008, but disposable income inched ahead by [only] 1.4 percent annually over the same period, adjusting for inflation.” So yes, some folks are hanging on by a thread, but it’s not business that’s hurting; it’s the working people who are hanging on by a thread. It is time for the City Council of New York to stand up for them and throw them a lifeline of support.

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