Study: Mandatory Paid Leave Harmful To Small Businesses

Date: January 14, 2016

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NFIB Research Finds Healthy Families Act Could Lead To 430,000 Fewer Jobs

According to a new study from the NFIB Research Foundation, the Healthy Families Act would be detrimental to small businesses. The legislation seeks to “establish a minimum time-off standard for paid sick leave by requiring employers with 15 or more employees to provide workers with up to 56 hours of paid leave during each 12-month period.” This leave could be used to seek medical attention for the employee or family members, and would cover both full-time and part-time employees. Assuming the bill, sponsored by Rep. Rosa DeLauro (D-CT), passes in 2016, NFIB analysis projects “the paid sick leave mandate could result in 430,000 jobs lost over a ten-year period spanning 2016 to 2025.” During that time, there would be a projected $652 billion in “cumulative real output lost.” Of all the lost jobs, 58% of them would come from small businesses, and small businesses would see 50% of the declines in output. CNBC examined the issue of the costs of paid leave, which President Obama pushed during his final State of the Union address this week, when he said, “I will keep pushing for progress on the work that still needs doing. Equal pay for equal work, paid leave and raising the minimum wage. All of these things still matter to working families, they are the right thing to do, and I won’t stop until they get done.” However, NFIB Senior Data Analyst Michael Chow explained, “Absent workers do not produce goods or services that would otherwise be produced if they are in the workplace.” He continued, “Businesses might eat the cost through lower profits, those profits going into the pockets of business owners, who are in turn consumers in the economy and will thus have less money to spend on goods and services elsewhere, driving overall demand in the economy down.”

What Happens Next

The Business Journals reported that currently the Healthy Families Act “has 135 co-sponsors in the House, but they’re all Democrats,” meaning the legislation is unlikely to progress in the current Congress. However, the measure “could become an issue in this year’s elections,” and in the meantime states might pass their own measures on paid leave.

What This Means For Small Businesses

While small business owners want to treat their employees fairly, the bottom line is that burdensome government regulations are simply too costly. In a statement on the NFIB’s new research, NFIB Illinois State Director Kim Clarke Maisch explained, “Our members work hard to provide the best benefit package they can afford. This one-size-fits-all approach is another attempt by government to get in the middle of a small business and their workers. What works for a multinational conglomerate might not work for the flower shop down the street.”

Additional Reading

CNBC Nightly Business Report also featured the study.

Note: this article is intended to keep small business owners up on the latest news. It does not necessarily represent the policy stances of NFIB.

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