Wednesday, August 20, 2008

Sick days mandate would make Ohio sicker

The National Federation of Independent Business/Ohio (NFIB) has conducted a study to evaluate the impact of the so-called Healthy Families Act, otherwise known as 'sick days Ohio,' and the results are not good.

According to the evaluation, this mandate on employers to provide seven paid sick days could result in the loss of 75,000 jobs. It would also place a $1.17 billion burden on the state's employers in costs of providing those days and the administration of the proposed law.

Surprisingly, roughly 20% of the job losses would be in companies with fewer than 20 employees - firms that are exempt under the proposal. Not surprisingly, many of the job losses are from labor-intensive sectors like food services, eating and drinking places and general retail trade.

The study extrapolated lost sales as result of the impact implementation of this law would have: $9.4 billion from 2008-2012.

(My Eye On Toledo interview with Ty Pine of NFIB on NewsTalk 1370 WSPD begins half-way through the show.)


Of course, proponents for the mandate say this study is not reliable because it was done by NFIB. From today's paper:

Dale Butland, spokesman for the Ohioans for Healthy Families coalition, questioned the NFIB's internal study, noting it assumed a worst-case scenario that every eligible employee would use all seven days every year. He noted the U.S. Bureau of Labor Statistics has shown that 54 percent of those with paid sick leave now don't use a single day in an average year.

"The conclusion flatly contradicts two independent studies that have been done, one by Policy Matters of Ohio [in Cleveland] and the Institute for Women's Policy Research [in Washington]," he said. "Both studies found that employers would save money.

"They looked at things this study did not," he said. "They looked at less lost productivity because sick workers tend to be less productive than healthy workers, and because there would be less spread illness in the workplace, faster recuperation times, and improved retention of skilled employees."

First, I continue to be amazed at the description of one group being biased while another group is not. NFIB's study is not independent, but the one done by Policy Matters of Ohio is???? The board of Policy Matters of Ohio is comprised of liberals and labor unions - no bias toward the mandate there, I'm sure.

Additionally, the Policy Matters report uses data provided by Institute for Women's Policy Research, so is it really two 'independent' reports?

Then there are the authors. For Policy Matters study:

Amy Hanauer is founding Executive Director of Policy Matters Ohio. In addition to running the organization, she studies work, tax policy, energy policy, gender and racial disparities and other issues for Policy Matters. Hanauer has a Master’s of Public Administration from the LaFollette Institute at University of Wisconsin, Madison and a B.A. from Cornell University. She is on the board of trustees and executive committee of the national think tank DÄ“mos and on the national advisory committee to the Economic Analysis and Research Network.


Bruce D. Phillips was appointed senior fellow in Regulatory Studies at the NFIB Research Foundation in October 2000. He analyzes the impacts of regulations on small firms using a new proprietary model that measures both direct and indirect regulatory costs. In addition, Phillips works in various applied policy areas, using both NFIB surveys and other government data to study policy areas such as labor regulations, health-care costs and tax policies as they affect small firms.

From 1979 to 2000, Phillips served in a variety of capacities with the Office of Advocacy of the U.S. Small Business Administration, directing contract research and building both private and census-based databases to study the structure of small firms. ... Phillips was also a senior professorial lecturer in the School of Business Administration at Georgetown University in Washington, D.C., from 1985 to 1994.

Phillips received a bachelor's degree in economics (magna cum laude, Phi Beta Kappa) from Queens College of the City University of New York. He completed his M.A. in economics, as well as his doctoral studies, at the University of Maryland.

Based upon their backgrounds, which author do you think has the more scholarly research on the issue?

Finally, there are the studies themselves.

Butland says his studies looked at 'lost productivity, illness spread in the workplace and retention of employees.' Those are subjective aspects of a mandate and rather difficult to measure. Contrast those evaluations with this background on the study from NFIB:

"The study was conducted using the Business Size Input Model program of the Regional Economic Models, Inc. input-output system. The system produces short- and long-term forecasts for detailed industry sectors when external shocks are applied. Specifically, the model estimates future changes in jobs, output (sales) income and productivity for Ohio by business size and industry by comparing forecasts without change to forecasts with change (the mandate). The shock in this research is the additional sick leave costs, which are calculated to represent one percent of employee compensation (based on federal Bureau of Labor Statistics compensation data), as well as record-keeping and bookkeeping expenses. Note that overtime and replacement worker costs are not included in the cost analysis and would substantially increase the costs of the mandate if applied. Moreover, the research does not account for the additional costs placed on employers who currently provide paid sick leave but must comply with the additional administrative mandates." (emphasis added)

Policy Matters report methodology is documented and lists surveys, interviews and estimates. Both reports are linked, so you can review the methodologies and make your own determination.


Both Policy Matters and NFIB are non-profit, non-partisan organizations.

NFIB is an organization of businesses and they must, in order to maintain credibility, be realistic and honest in critiquing the impact of potential laws. Their mission "is to promote and protect the right of our members to own, operate and grow their businesses."

Policy Matters sees inequality in the economy and works to correct it by providing a 'more fair' economy in Ohio. Their mission "is to conduct high-quality research promoting decisions which benefit our whole community. Given the challenges of a rapidly-changing economic system, rising wage inequality, new issues in education and changes in the way work is organized, it is imperative that high quality research focuses on creating an economy that works for everyone.

When comparing the information coming from the groups, it's important to remember that their lack of partisanship (Republican/Democrat) cannot be confused with a lack of philosophy or a lack of bias. Just because you claim to be non-partisan, it does not mean that you do not have an agenda and produce research that supports a pre-conceived conclusion. Evaluating the methodologies wil tell you whether or not the information being presented is objective.


Having evaluated the so-called Healthy Families Act, I'd already concluded that the mandate was anti-business, costly and would do more to harm Ohio's struggling economy than it would to help it. The NFIB study provides documentation that the expected negative impact is real. With headlines like "Jobless rate worst since early 1990s," we certainly don't need to compound the problem.

Even Gov. Ted Strickland recognizes that passage of this mandate would be bad for Ohio so he was trying to work out a compromise. That effort appears to be failing as businesses stand their ground and tell him any mandated paid sick time will be opposed.

The other day I had a phone call from a fellow blogger in Kentucky. He'd been to a local chamber of commerce meeting and was questioning a statement made there: that businesses were beginning to look more favorably at locating in Ohio since we reformed our business tax structure. This is good news for Ohio.

But any gains we may see as a result of those tax reforms will be for naught if we replace previously onerous taxation with onerous benefit mandates in the form of the so-called Healthy Families Act.

Even California rejected mandated paid sick days - and Ohio must do the same.

No comments:

Google Analytics Alternative