Curing Maine’s sick business climate

In Maine, debates over the business climate follow a predictable pattern. Opponents of workplace regulation routinely argue that new laws would make our state an even more undesirable site for business expansion. Supporters of regulations often speak of an overarching public need, but they too seldom articulate the ways that regulatory inadequacies can undermine a state’s business climate. One welcome and thoughtful exception to this tendency is a recent Maine Center for Economic Policy essay, “Paid Sick Days are a Workplace Necessity,” by MECEP Associate Director Lisa Pohlmann.

Nationally, paid sick days are not required. Here in Maine, 53 percent of private-sector workers have no paid sick leave. Business leaders in Maine often argue that the absence of regulations on sick days renders Maine businesses more flexible and competitive. But Maine pays a price for its laissez-faire attitude toward sickness in the workplace. Workers who lack paid sick leave often come to work despite illness because they cannot afford to do otherwise. Research shows that when workers do have paid sick leave, fewer come to work with contagious diseases. When sick workers come to work, not only their workplace but many other workplaces potentially suffer. One worker with the flu is likely to infect two of every 10 co-workers. Infected co-workers may in turn infect children, day care workers, customers and other families. Workers who contract the flu in turn miss an average of 2.25 days of work.

Other studies show that providing paid sick days minimizes the spread of the flu. Providing paid sick days would improve the business climate in Maine by helping to enhance the health of the men and women who staff our businesses. But now I can hear the free-marketers among readers asking the obvious question. If healthy workplaces are so good for business, why regulate? Sensible firms will give their workers paid sick days and will prosper at the expense of those retrograde owners who do not acknowledge the benefits.

I see two problems with this classical libertarian perspective. As with most defenses of pure free markets, it assumes perfect information, in this case that all workers and firms are fully apprised of the epidemiology of infectious diseases and of the benefits of paid sick leave. In the real world, however, information is not so uniformly distributed. This society is especially bad at spreading information about preventive, often not-profit-generating, approaches to disease. One of the secondary benefits of debates over regulation and often of regulation itself is the dissemination of information about public-health issues.

Second, a major problem with the libertarian scenario is that when an individual employer does provide enlightened sick-leave policies, he or she bears the full cost of these policies but the benefits spread well beyond the individual workplace. This asymmetry makes another good case for the imposition of a standard on all employers. A uniform standard levels the playing field by forcing all employers to pay for benefits that serve all workplaces.

The United States is virtually alone among major industrial democracies in its parsimonious attitude toward both paid vacations and paid sick time. In These Times columnist David Moberg points out that up until the late ’60s and early ’70s, both the United States and Western Europe had achieved reductions in working hours and more paid sick leave. In the ’70s, however, “the pattern then drastically diverged, with Europeans getting more vacation time, around the same time that U.S. income inequality began growing. In the United States, corporations gained the upper hand against workers and their declining unions, and the Democratic Party started shifting away from working class concerns.”

Paid vacation time and sick leave are just as important to quality of life as are goods and services. Europeans value these and are happier on average than are American workers. Conservatives charge that Europeans pay for this happiness with a declining economy, yet this case is far from clear. Europe’s job stagnation owes at least as much to tight European Central Bank monetary policy as to workplace regulations. In addition, European worker productivity (measured as goods produced divided by hours worked) has made faster gains than ours over the last quarter-century and now often exceeds ours even in absolute terms. In any case, the “success” of the U.S. economy is overstated, based as it is on unsustainable consumer, fiscal and balance of payments deficits.

Here in Maine, Rep. Jacqueline Norton, D-Bangor, has proposed an act that requires employers with 25 or more employees to allow workers to earn one hour of paid sick leave for each 30 hours worked up to a maximum of nine days per year. Norton’s proposal would enhance public health and also serve as an instrument of more humane, collaborative and competitive workplaces. Workers would enjoy a substantial incentive to hold their jobs, and the sick days they receive would in turn benefit other employees and businesses. In the long run, healthy and satisfied workers are the best business climate.

John Buell is a political economist who lives in Southwest Harbor. Readers may contact him at jbuell@acadia.net.