If you were buying a car, and the dealer on one side of the street charged you $1,000 more and offered you a shorter warranty than the dealer on the other side of the street on an identical vehicle, where would you buy that car?
If you were a business, and locating on one side of the street was more expensive and imposed a more stringent set of restrictions on your operations than the other, where would you locate your business?
It’s a no brainer right? Well, don’t judge too quickly, because that sort of simple marketplace logic has apparently escaped advocates of a referendum creating a government-imposed sick leave mandate on private sector businesses in the City of Milwaukee.
The referendum, on the city’s Nov. 4 ballot, would require all private businesses in Milwaukee to provide up to nine paid sick leave days for their employees. All businesses will be forced to adapt their benefit plans and labor agreements to the parameters of this new mandate. The businesses themselves will be forced to administer the government-imposed time and record-keeping structure. And any business not complying will be subject to a complaint-driven enforcement and sanction process overseen by City Hall.
Before voting on this referendum, city residents should be clear about a few things:
- First, no one is arguing against sick leave. Good employers know their workers are their most valuable resource. Many businesses have sick leave or paid time off policies every bit as generous as this ordinance. However, government mandating a one-size-fits-all paid sick leave structure hurts both employers and employees. It hamstrings employers’ ability to tailor their benefit packages to their own unique competitive realities, and it also prohibits them from flexibly tailoring their benefits to individual preferences of the workers they are trying to recruit and retain.
- Second, money does not grow on trees. Every business has only so much income in its budget for employee compensation – salary, benefits, vacation, paid sick leave, health care, etc. The costs related to an increase in the number of paid sick days has to come out of some other slice of that compensation pie. For some employers, it will mean offering less vacation or increasing the employee share of their health insurance or reducing the amount the company contributes to their employees’ pensions. For others, it will come out of wages or the elimination of jobs themselves. Paid sick leave costs businesses money. That money will come from somewhere else in their employee compensation mix. Would you prefer an extra couple paid sick days, or would you rather have a little more salary or a more generous health plan? For different individuals in different life situations, that answer is going to be different. Why then would we want government to mandate the same answer for every worker in the city?
- Finally, this is not a drill. This measure will cost Milwaukee jobs. We live in an increasingly competitive global marketplace. Mandates like this make a difference in where jobs locate. In fact, organized labor and the governor of Ohio pulled a similar measure from the ballot there because they were terrified about the job-killing impact it would have on their state economy. If they were that concerned about this idea applied on a statewide basis, how much more acute should our concern be over this measure applied on a city of Milwaukee-only basis? This mandate will make Milwaukee a more expensive place to do business – plain and simple. It will create a perception of Milwaukee as a place where city government is willing to micro manage and mandate costs and conditions on business. In short, passage of this ordinance will be an instant red flag to any company looking to locate or grow their operations, sending a strong message that Milwaukee is not open for business.
Since 2000, the Milwaukee metro area has seen employment decline by roughly 13,000 jobs. In the last year alone, 4,300 jobs left Milwaukee. With the national economy slumping, competition for jobs is fiercer than ever. Passage of the paid sick leave mandate is the wrong policy at the wrong time. It will leave our city economy badly damaged, and put thousands of Milwaukee workers out of jobs and longing for the days when their biggest employment worry was the number of paid sick days they received.
Steve Baas is the governmental affairs director of the Metropolitan Milwaukee Association of Commerce.