Saturday, February 2, 2008

Another Regulatory Feather Weighing Down Business in the District

The Accrued Sick and Safe Leave Act of 2007, which will be voted upon by the D.C. Council this week, is another case of government being nice to someone at the expense of someone else, and taking all the credit. Proudly following in the steps of San Francisco as the second major city to impose this law, the District is on the cutting edge of creating difficulties for business.

The law would force businesses in the District to pay employees for time off take for medical leave or similar purposes (e.g., if a family member is sick or to attend a school-related activity that their child is involved in). The employee would be able to be paid for up to three-to-seven days of leave per year, depending on the size of the business.

Requiring businesses to pay for this leave (many already do) will make labor more expensive, and the businesses will adjust by creating fewer jobs, cutting other benefits (medical), or raising prices. Of course, a business owner could cut his/her profits, or head across the border to Virginia where it is far safer, the restaurants are permitted to permit smoking if the free market permits it, the property taxes are lower, and the income taxes are far lower.

In addition to the costs, which appears modest to the outsider, there are the logistic issues. As Barbara Lang, President of the D.C. Chamber of Commerce, reads this bill, the law would permit employees to take leave without prior or current notice to the employer. So a cook could fail to show up two days in a row, with no prior notice... and the employer is only permitted to demand "certification" if the employee misses three days. Expect your restaurant meal to more often arrive slower after the passage of this bill!

Knowing human nature, once the paid leave days accrue-- and the employee is only permitted to take a maximum number each year, despite rollover -- we should expect the number of leave days taken to substantially increase. This policy would incentivize the taking of leave, which in turn will create further higher costs and lost productivity. Quite simply, some people will "call in sick" and take their paid vacation.

Finally, the law will be skewed against small business, despite the smaller number of leave days required of them. Small businesses do not have the political connections to draw the corporate welfare that the District government showers upon the select few. Small businesses operate on smaller profit margins and cannot spread costs among a large chain of stores. If you want North Capitol Street to be dominated by the likes of Big Bear Cafe rather than Starbucks, then oppose this bill.

This paid leave law sounds like a good idea. It sounds family-friendly. But it is another regulatory feather that threatens to break the back of small and medium-size business in the District. If the Council believes this is law such a great idea, why shouldn't businesses simply be able to send the D.C. government the bill?

1 comment:

Anonymous said...

Penny-Wise, Pound-Foolish