Safety Net

Paid Sick Leave Helps Businesses Profit, Study Finds

Companies that offered paid leave experienced greater profit, improved employee morale, better business performance, and better employee retention.

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When it comes to paid leave of any type — whether it be paid time off for sick days, personal days, or time off after welcoming a child — the United States is abysmally behind the curve. A 2022 survey found that out of every nation on Earth, the U.S. ranks dead last in providing compensated days off — and that’s because, here in the U.S., despite mounds of evidence showing how vital paid sick days are to workers and their families, employers are not required by any federal statute to provide them.

But a new study from researchers at Florida Atlantic University and Cleveland State University has found that providing paid sick leave isn’t just good for workers — it’s good for business too. That should come as no surprise: Last year, more than 350 businesses, collectively worth over $750 billion, published an open letter pushing the government to finally provide federal, job-protected paid leave to workers across the country, citing economic benefits and boosted morale.

The researchers examined data collected over 22 years that compared sick leave policies with both short- and long-term business outcomes, accounting for business size, industry, and any state or local sick-leave mandates. They found that not requiring employees to choose between their health and their paycheck was just plain good business sense. Employers that provided paid sick days experienced greater profit, better business performance, higher employee morale, increased employee retention, and fewer instances of “presenteeism” — when employees come to work sick.

“Considering the weight that has been given over time to the potential harm of paid sick leave to business, we were surprised to find so little evidence to support this concern,” said lead study author Candice Vander Weerdt, Ph.D., a faculty member in the College of Business at Cleveland State University. “Aside from small increases in worker absence, what we found was actually the opposite, a trove of evidence suggesting paid sick leave is linked with favorable business outcomes.”

Indeed, the study found that when provided sick leave, instances of employees coming to work sick were diminished.

Presenteeism can cause on-the-job injuries and the spread of contagious illnesses, resulting in even more time off for more workers and decreased worker productivity overall. According to the study authors, presenteeism costs businesses in the U.S. billions of dollars each year, which could be significantly reduced if paid sick time became the norm.

“Although increased absence from work is a serious concern for policymakers in the debate of paid sick leave, our study showed absences from work, while disruptive to business, also may limit the spread of contagious disease in the workplace and thereby lessen presenteeism, reduce occupational injury, and promote a quicker return to optimal employee functioning,” said Patricia Stoddard-Dare.

The researchers also noted that while 92% of the highest earners (highest earners were defined as those in the top 25% of income) have access to paid sick leave, just under half of the earners in the lowest 25% have the same benefit. One study found that workers lost $28 billion during COVID-19 because they didn’t have access to paid leave — lower-wage workers were hit hardest of all.

These workers generally have public-facing jobs in retail, food service, and hospitality. Presenteeism in these sectors could result in a more substantial threat of contagious illness spreading to customers and consumers. Workers have less money to weather unpaid days off as well.

Evidence showed that paid leave in these sectors resulted in fewer incidences of contagious disease, not only in the workplace but throughout entire communities in areas with local or state paid leave laws.

“We hope our study findings will help to inform a wide variety of stakeholders and assist them to better prepare for both routine and unexpected health interruptions while safeguarding business well-being,” said Stoddard-Dare.

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