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Study examines effects of San Francisco paid sick leave policy, finds low-wage workers especially benefited

As paid sick leave policies gain momentum across the country, a new study finds that such policies do indeed improve worker morale and have little overall effect on employer profitability.

Published in the December issue of the American Journal of Public Health, the study examined the effects of a 2007 paid sick leave policy in San Francisco, which became the first U.S. jurisdiction to enact a paid sick leave ordinance. (A number of states and cities have followed San Francisco’s lead — most recently Massachusetts, which passed a statewide earned paid sick leave policy by ballot measure earlier this month.) The San Francisco Paid Sick Leave Ordinance requires employers to provide paid sick leave to all workers, including part-time and temporary employees, with the leave accruing at one hour for every 30 hours worked after the first 90 days of employment. To conduct the study, researchers analyzed the 2009 Bay Area Employer Health Benefits Survey, which included interviews with hundreds of for-profit firms with more than 20 employees.

The study found that with passage of the paid sick leave ordinance, the proportion of businesses with a sick leave policy increased from 73 percent to 91 percent, with much of the gain among firms with fewer than 100 workers. By 2009, 99 percent of workplaces with more than 20 employees in San Francisco offered paid sick leave. In addition, businesses within San Francisco made the benefit available to a larger portion of employees than firms outside the city, with 76 percent of small firm employees, 91 percent of medium firm employees and 86 percent of large firm employees eligible for paid sick leave. Study authors Carrie Colla, William Dow, Arindrajit Dube and Vicky Lovell write:

The movement to ensure minimal access to paid sick leave has been likened to the campaign to enact the minimum wage: an effort to establish a floor below which no employer or worker may fall. When paid sick leave policies are targeted at vulnerable workers, such as mothers earning low wages and workers who have a lot of face-to-face contact with the public, such as restaurant employees, these campaigns present a compelling image. Congressional proposals to create emergency paid sick leave policies to reduce the spread of the H1N1 virus in fall 2009 cited the potential importance of paid sick leave in protecting public health, and public opinion polling shows very high levels of support for paid sick leave policies.

In San Francisco, low-wage workers, in particular, benefited from the paid sick leave ordinance, especially those working in the food service and accommodation sectors, the study found. Businesses in those sectors were significantly more likely to have introduced a new paid sick leave policy in response to the ordinance when compared to other sectors — for example, 35 percent of restaurants surveyed added a new sick leave policy versus 16 percent of businesses in other sectors. Still, researchers found that although businesses that employed high numbers of part-time workers, new workers and Hispanic workers were more likely to enact a new policy in response to the city ordinance, they were also less likely to offer sick leave both pre- and post-ordinance. Another interesting finding: By 2009, nonunionized firms were more likely to offer sick leave than those with unionized workforces.

Positive changes in employee morale are often touted as a benefit of paid sick leave, and the study findings underscored such messaging. Researchers found that firms that implemented a new sick leave policy were more likely to report a boost in employee morale. In addition, firms that enacted major changes in response to the ordinance also reported a decrease in presenteeism (coming to work while sick). However, firms that enacted a new sick leave policy were also more likely than firms that didn’t change their leave policy to report reductions in other employee benefits, such as less vacation time, pay raises or bonuses. Also, firms that instituted a brand new policy in response to the ordinance were more likely to report negative impacts on profitability, though the researchers noted that the “majority of firms did not report lower profits because of the mandate.” Overall, nearly 72 percent of all firms surveyed supported the paid sick leave policy.

In their conclusion, the study authors called for additional research on paid sick leave, such as its effects on employer costs, employee retention and health care spending, noting that sick leave policies could be key contributors in reducing the spread of disease.

“There are health benefits to be gained by the adoption of a paid sick leave policy: reducing spread of influenza and infectious diseases in the workplace and childcare facilities and allowing workers to visit physicians, which may reduce unnecessary hospitalization and subsequent sickness absence,” the researchers wrote.

To request a full copy of the study, visit the American Journal of Public Health.

Kim Krisberg is a freelance public health writer living in Austin, Texas, and has been writing about public health for more than a decade.