Wednesday, December 31, 2008

Waukesha takes low road in opposing sick pay benefits

The Waukesha Chamber of Commerce has announced that it plans to join the Milwaukee Metropolitan Chamber of Commerce in aggressively opposing Milwaukee's sick leave ordinance arguing that it would create a "negative business climate for the region...."

On November 4th Milwaukee residents by more than two to one approved a binding referendum that requires employers to provide their employees with paid sick days. Milwaukee joined San Francisco and Washington D.C. as the third city requiring sick day benefits.

Under the new law a full-time worker would earn a minimum of one hour of paid sick leave for every 30 hours worked, or nine days a year. Businesses with 10 or fewer employees would be required to provide 5 days a year to full-time employees.

For most of the past decade Waukesha's employers have experienced labor shortages. Until the recent economic downturn, businesses reported that the biggest obstacle to expansion was a shortage of skilled workers.

Increasing compensation by providing additional benefits such as paid sick leave makes employment more attractive. It builds employee loyalty which increases productivity.

Henry Ford understood this basic truth when a century ago he established the $5 day, doubling the average manufacturing wage. Ford's 300% turn-over rate vanished as increased compensation bought increased loyalty from Ford's employees.

The Waukesha Chamber of Commerce knows that if Milwaukee-based firms provide their employees with paid sick days it will make it harder for Waukesha firms that do not provide these benefits to compete for workers.

Companies can compete based on high-volume, low-cost production or they can compete through innovation, quality production and high levels of service. The Waukesha Chamber of Commerce is committed to a low-road strategy that might help some firms prosper in the short run, but will not create a thriving regional economy with shared prosperity.

4 comments:

Sean M. Sweeney said...

I could not disagree more with your post. I do not think that Waukesha's Chamber of Commerce joining in on the MMAC's lawsuit is a tactic designed to promote the so called "race to the bottom", but rather is supporting the MMAC in fighting an irresponsible and badly written law.

It should not be a government mandated, and impossible to regulate and enforced policy to provide sick leave. Instead, it should come from the businesses themselves if it makes sense to do so. Your example of Henry Ford implementing the $5 work day actually perfectly makes the point I am making. Mr. Ford realized he could gain a competitive advantage by getting the best employees. He did not do this out of some altruistic ideal, he did it to get the best workforce possible for his company.

Legislation such as this, does not benefit anyone in the long run, and just adds more red tape and difficulties to the lives of business owners. Enforcing a paid sick leave would directly raise the cost of each employee. Now, for every 30 hours worked, the employer is required to pay 38 hours to this employee, effectively raising the hourly cost of this employee. This means that the employer can afford to hire less employees, thus putting pressure on higher unemployment.

Finally, the most ironic part of all, is that a majority of the people who would benefit from this law are low income people working in lower end fast food and retail. Raising the cost of their employment is going to cause the owners of these businesses to raise prices to recoup the difference, thus the very people who shop at these locations (low income people) will be subsidizing their own sick leave.

Allow businesses to do what is best for themselves and their employees and everyone will be better off.

Michael Rosen said...

Sean,

In your comment you argue that paid sick leave benefits should not be mandated, but "...come from businesses themselves if it makes sense for them to do so."

Self- regulation was the cornerstone of the Bush administration’s failed approach to regulatory matters. It didn’t work any better in preventing the importation and sale of lead contaminated toys than it did in regulating the nation’s financial markets.

Unfortunately business owners have often opposed legislative changes that improve the lives of workers and the community. As a result citizens have turned to democratic processes to redress grievances that business owners refused to address.

Child labor was rampant at the beginning of the Twentieth Century. While children were cheaper to employ and less likely to organize unions than adult workers, their employment was not healthy or good for nation’s development. It made sense to eliminate it. But the business community fought against child labor laws arguing, as they are today about paid sick days, that it was governmental interference in the marketplace.

The business community opposed establishing a minimum wage, anti-discrimination laws, unemployment compensation, workers compensation, Social Security, etc. All made sense and have actually contributed to increased productivity and national competitiveness. But business owners aggressively opposed them. They only became law because the state which sets the rules of the marketplace mandated them

In the 1990’s business lobbyists used the very same arguments now being used against paid sick days to oppose raising the minimum wage. But after states and even cities raised their wages above the national minimum, economists found that the Chicken Little scenarios of the opponents did not occur: that incremental increases in the minimum wage did not increase unemployment or cause minimum wage paying firms to lay people off.

San Francisco enacted a paid sick leave ordinance in 2007. However, despite an economic downturn affecting all counties in the Bay Area, San Francisco maintained a competitive job growth rate that exceeded the average rate of nearby counties.

Internationally, of the twenty most competitive economies, only the United States does not guarantee its workers paid sick leave.

Ensuring that workers don’t have to choose between their jobs and their families is the right thing to do. It also is good for business. While the legislation will certainly increase compensation costs, studies suggest that it will more than pay for itself in increased productivity employee stability and reduced replacement and training costs.

Laissez faire economics, “…allowing businesses to do what is best for themselves and their employees” as you put it, has not always lead to increased competitiveness or socially optimal outcomes. Sometimes, citizens must utilize democratic processes like referendums to ensure their rights.

Anonymous said...

Sean M. Sweeny said: "Allow businesses to do what is best for themselves and their employees and everyone will be better off."

We had a time as such during the beginning of the industrial age. Do you not remember how when businesses were doing what was "best for themselves" they ran sweat shops, forcing children as young as 3 to toil 18 hours a day for pennies? Do you not remember the 6 day work week, the inexistence of breaks, holidays, safety regulations or the myriad of other autrocities against workers?

Businesses have only one fundamental: make profit. There is no conscience outside of that goal, and that is WHY workers were forced to unionize and the government to legislate. The economy we are suffering now is a direct result of de-regulation. Sorry Sweeney, but I have no desire to lose the weekend, OSHA, health insurance, or the many other benefits businesses would LOVE to cut if left to their own devises without oversight.

Signed,
Schnook's Youngest Kid

Anonymous said...

Here, Here Dr. Rosen! We had many points in history in which businesses were left to self regulate. What a wonderful time those eras were, huh? No weekend, no health care, children as young as five working on looms because their fingers were nimble enough to twine up the spindles, men dying of black lung in their 30's. Oh ya - you can REALLY (sarcastic emphasis) trust businesses to do the right thing by their employees, this must by why history is so ripe with the only real victories for workers' rights being won by unions & strikes - not given out of the capitalist CEO's heart.

-Schnook's Kid