Monday, July 25, 2011

The Downside of Mandated Sick Leave

Michael Saltsman published an excellent article about Connecticut's mandated sick leave in today's Wall Street Journal.  Connecticut, under Governor Dan Malloy (D), has mandated sick leave for all Connecticut employers. Saltsman shows why this policy will destroy jobs and harm the state's poorest workers.  The propaganda that supported the new law used statistical means and medians, making claims such as "the average employer did not find that they had to reduce employment levels." But this use of measures of central tendency reveals misunderstanding of how economies work.

All employers are different.  About 70% of Connecticut employers already gave sick leave, and 70% said in surveys that mandated sick leave would not affect them.  Rather than the average, the marginal employer, such as a bodega, which is deciding whether or not to hire a part-time, low-wage employee, had been less likely to offer sick leave. This kind of employer will reduce employment and fringe benefits, including training. It will stop hiring less-qualified employees, forcing young people into European-style permanent unemployment.

The people whom Governor Malloy and the Democrats have hurt are the poorest and most vulnerable: high school dropouts who need to develop platform skills that will enable them to function in honest jobs.  Some will now remain in permanent unemployment, dependent upon the State of Connecticut for welfare.

As well, the claim that low-margin employers will benefit from the mandate, made by the law's supporters, is nonsensical. Once again we see Progressives grinding the poor under their Gucci heels. They do so by claiming that they help the poor, when in reality they are helping crony socialists, labor unions, attorneys, and large employers, whose smaller competitors cannnot afford to offer benefits.

The states that have seen employment decline the most, have the most income inequality, and have the largest rates of exit, like New York, are the same states that have passed regulations that harm small employers at the expense of large, reducing the economy's dynamism by freezing out new and entrepreneurial firms and ideas.  It is not surprising that academics, who benefit directly from the socialist gravy train, generally support such measures.

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