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Shawn Vestal: Paid sick leave won’t kill Spokane businesses

Would requiring paid sick leave for Spokane workers drive businesses to Idaho?

Or is that just a herring that grows redder every year?

Against those two extremes, the evidence from other cities that have adopted sick-leave requirements suggests something milder and more mixed: some “negligible” impacts on profits, real but modest effect on prices, and limited downside in lost wages or hours for workers. The tradeoff for workers is significant, if you care about that. And if you don’t, there is a potential benefit for you as well, as someone whose food might be handled by sick employees.

So far as I can tell, the research is silent on the question of forced exile to the Gem State. Still, it seems like a safe inference – based on documented experiences in Seattle, San Francisco and Connecticut – that a paid sick-leave policy in Spokane wouldn’t create a rush for the border.

If all of the businesses that were going to be forced to move to Idaho over the years – by our minimum wage, for example – had actually moved, we Spokanoids would be looking at a 70-minute drive every time we wanted a hamburger. There would be no economy here at all.

Instead, the net number of new businesses opening in Spokane is at its highest point since 2006, and taxable retail sales are at their peak since 2005, according to the Eastern Washington University Community Indicators project. We ain’t exactly booming, but it’s clear that the continual predictions of falling skies as a result of our “business climate” have not come true.

The City Council is forming a working group to study a potential policy for earned sick leave, intended to help low-wage workers and community health, and for “safe leave” for issues of domestic violence or assault. People might oppose this for any number of reasons, I suppose – some people probably like measles in their burrito. But unqualified predictions of economic doomsday will certainly be the main argument.

On that front, we have an opportunity for comparison. Seattle adopted a sick-leave ordinance in 2012. It then hired the University of Washington to survey business owners during and after the implementation. Among the chief conclusions of the 2014 report:

• “Implementation was easy for some employers and caused temporary hassles for others.”

• “Costs to employers and impact on businesses have been modest and smaller than anticipated. … There is no evidence that the Ordinance caused employers to go out of business or leave Seattle.”

• “Overall 70 percent of employers support the Ordinance.”

Interesting. A supermajority of support among the tyrannized? No businesses fleeing for Idaho? Maybe they’re just not close enough to see the advantages.

Here’s more:

• Sixty percent of businesses said they could not quantify the impact the ordinance has had on their operations, and 24 percent didn’t even know if they were tracking the costs. So few businesses had this data that the reliability of estimates provided by those who did is limited. Still, for the 26 businesses surveyed on that question, costs ranged from zero to $125,000, with an average of 0.125 percent of annual revenue.

• The number of people employed in Seattle, which was rising in 2012, continued to rise after the ordinance was implemented. Total wages paid in the city, which were rising before the ordinance took effect, continued rising after, though the growth slowed. The study’s authors said it’s possible some employers had held down wages to offset the cost of the ordinance, though they said the evidence for this was “not strong statistically.”

• Overall, economic data for the city suggest the ordinance had “no or very moderate impact.”

In February of this year, a writer for Bloomberg News Service examined that research along with studies from San Francisco, which adopted a sick-leave ordinance in 2007, and Connecticut, which did so in 2012. He found the laws had an effect, but not a large one. In San Francisco, 14 percent of businesses said the ordinance had affected their bottom line, though they did not quantify the size of the impact.

The author cited figures for businesses that cut hours or pay to cover sick-leave costs: It was 1 percent in Connecticut, 7 percent in San Francisco, 6 percent in Seattle. He also cited survey data for the number of businesses that raised prices in response: About 14 percent in Connecticut, 11 percent in San Fran, and 8 percent in Seattle. He did not have data on the size of the increases.

Again, not nothing. But are they business-destroying, move-to-Idaho numbers? As the City Council moves ahead with its examination of this issue, we will surely hear a million times that we are sending businesses fleeing to Idaho.

Let’s keep in mind what the people who studied the issue in Seattle concluded: “Upon learning about the Ordinance, employers worried that offering the required leave would substantially increase their labor costs and generate staffing shortages. Experience allayed these fears, since workers used less time off than anticipated. The majority of employers saw no effect of the Ordinance on customer service, employee morale, predictability of employee absenteeism, or profitability.”

Shawn Vestal can be reached at (509) 459-5431 or shawnv@spokesman.com. Follow him on Twitter at @vestal13.