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Testimony to
The New York City Council Committee on
Civil Service and Labor
Hearing on Intra # 97-A regarding mandatory sick time

Presented by
Tom Minnick, Director, Center for Human Resources

March 22, 2013

Chairman Nelson, members of the Committee on Civil Service and Labor and other City Council members, my name is Tom Minnick and I am the director of the Center for Human Resources at The Business Council of New York State, Inc.

The Business Council is the state's largest business advocacy organization and we represent more than 2,600 private sector employers across New York State and
in the five boroughs. On behalf of these members, I appreciate this opportunity to provide you with our views on intro # 97-A which would mandate private employers in the City of New York to provide up to five days of paid or unpaid sick time per year.

The Business Council urges the City Council to reject this proposal. Here's why.

Mandated leave will increase absenteeism

Economics makes the case that work incentives matter. In a 2009 New York Times article, Casey Mulligan, economics professor at the University of Chicago, wrote that the International Monetary Fund studied American and European employees' absence from work for sickness from 1995 to 2003. The report found that  the average European was absent from work for sickness more than American workers. In the Netherlands, Norway and Sweden specifically, workers stayed home sick twice as often as American workers.

Yet, no study has found that Europeans are sicker than Americans. Some have argued the contrary. So, why would European workers stay home sick more  than their American counterparts? The answer is that mandated government social insurance systems in Europe reward employees' absence. Certainly, under such systems, sick workers are less likely to go to work when they are sick, but employees who are not sick are more likely to be absent saying they are sick. The labor market responds to the governments' sick leave program reward of paid absence by keeping European workers home more often. Don't do that here in New York City.

Employment-related mandates punish responsible employers

The Partnership for New York City's 2010 employer sick time study, analyzed by Ernst & Young, found that 88% of the city's private sector workers have access to paid leave that can be used when they are sick. It further broke it out to 95% of the employees of large  New York City employers and 80% of employees of small New York City employers.

The proposed legislation punishes the vast majority of responsible New York City private and non-profit employers who already provide paid time for absences by forcing costly administrative changes in current policies. This includes organizations with workforces across city, state and national boundaries that will have to consider significant changes to such current well thought-out, generous and time-tested policies and programs.

In addition, employers with employees represented by labor unions are disadvantaged in collective bargaining negotiations before the first proposal is ever presented. A bill such as this creates a distorted and artificial minimum bargaining position, always to the advantage of the labor union. Employers and their workers, or unions representing their workers, are better positioned to provide a workable solution to time off needs, not governmental one-size-fits-all mandates.

In our experience, many of those small businesses that do not provide a formal sick leave program will work with their employees on a paid or unpaid arrangement that works for both the employee and the small business owner.

This local government unfunded mandate puts city businesses in an uncompetitive position

Private businesses and non-profit organizations in the five boroughs compete with others both in and out of New York State. For years, they have toiled under a significantly heavier tax, fee and regulatory burden than their competitors outside of the city line. The additional costs, regulatory burden and administrative requirements of this proposal will further impede competition and hinder the already slow recovery. Don't put New York City businesses in this position. If there is to be further debate, discussion and action around mandated government paid leave and paid time off, let it be at the federal level so that the effect would be consistent and spread across industries and geography.

Economic recovery is driven by new private sector investment and job growth, not new mandates and regulations

It is instructive to look at the state labor department's Quarterly Census of Employment and Wages.

When I testified here in November 2009, the city's unemployment rate was 9.8%. A year later  in November 2010, it was 9.1%, then 9.2% in November of 2011 and 8.6% in November 2012. In January 2013, it stood at 9.9%. At best, this is not a trend that inspires confidence and stability.

In November 2009, the city's labor force stood at 3,962,900. A year later in November 2010, it was down 30,300, then up 45,900 in November 2011and up 14,900 in November 2012. In January 2013, it stood at 4,027,800, up by 34,400. This constitutes a net employment gain of 64,900 jobs, or 1.6%, over a 3+ year period. I don't think that this demonstrates a very robust road to recovery.

Year Unemployment%  Employment Net Gain/Loss
11/2009 9.8% 3,962,900  
11/2010 9.1% 3,932,600 (30,300)
11/2011 9.2% 3,978,500 45 900
11/2012 8.6% 3,993,400 14 900
1/2013 9.9% 4,027,800 34 400
Net employment gain of 64,900 jobs or a 1.6% gain over a 3+ year period

 

Employers in New York City and around the state need to create many more jobs to put the unemployed back to work and to keep up with a growing population. The alternative is a continued loss of young, talented people across the borders to areas with more competitive economic climates and greater economic opportunities.

Speaker Quinn has it right as she remains objective, considers the economic facts and makes the right decision, for the city's citizens, businesses and their employees, to hold off a vote on this legislation.

We believe that the city council needs to reduce the cost burdens it imposes on the private sector and job growth.

Only private sector employers can create real jobs that will offer out-of-work New Yorkers hope and opportunity. But, those private employers are being drowned in a sea of taxes, fees and new costs which discourage job creation. Those jobs will come only with economic growth and that growth can't happen until government clears obstacles such as this out of the way.

It is inconceivable that the City Council would impose a new unfunded mandate on the backs of struggling city  employers, just when New York City, facing high and protracted unemployment levels, needs more private sector job growth. It makes no sense that the City Council is stepping forward to propose a burdensome new requirement with  new added costs on the very same business owners they turn to for those new jobs.

Thank you for the opportunity to testify today.