NCPA - National Center for Policy Analysis

Obama's Paid Sick Leave Policy Will Hurt Workers

January 22, 2015

President Obama's State of the Union address Tuesday night called for seven days of paid sick leave for American workers. That policy may sound nice, but NCPA Senior Fellow Devon Herrick says that the workers the president is purporting to help will ultimately pay the price for the policy.

Why? When employers are forced to pay mandatory benefits, they won't just accept the new costs -- they will find ways to shift those costs. If employers must provide seven paid sick days to their employees, Herrick says they will reduce paid vacation days or will lower compensation in order to make up for the additional labor costs imposed by the government mandate. He cites research from one of the president's own advisors showing that mandatory benefits reduce worker wages and suggests that the policy could reduce the employment prospects of the employees that are most likely to stay home and care for sick children.

Instead of mandating paid sick leave, Herrick suggests expanding health savings accounts (HSAs) and allowing workers to use their HSA funds to replace lost income from sick days, without being exposed to a "non-medical use" penalty. Currently, workers can withdraw HSA funds to make up for income lost to sick days, but they're hit with a 20 percent penalty as well as traditional income taxes.

Source: Devon Herrick, "The NCPA Fact Checks Obama's Health Policy Address during SOTU," NCPA Health Policy Blog, January 21, 2015. 


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