Paid Sick Time: Healthy for Philadelphia Workers and Businesses

Amy Traub, Director of Research

Drum Major Institute for Public Policy

Introduction and Overview

More than 210,000 working Philadelphians do not have a single paid sick day. As a result, they are more
likely to come to work sick and send their ill children to school or daycare, contributing to poor health,
the spread of contagious disease, and lower workforce productivity. As the flu season approaches,
Philadelphia cannot afford to have employees coming to work sick.

This study documents the scope of the problem in Philadelphia and examines a potential solution: San
Francisco’s successful 2007 ordinance guaranteeing all workers the right to earn paid sick time. It
contributes to a growing body of research finding no evidence that job growth or business growth has
been harmed by paid sick leave as a citywide workplace standard San Francisco. The policy provides a
meaningful benefit to workers while improving public health and workplace productivity.

The study closes with an analysis of how a San Francisco-style paid sick leave law would impact
Philadelphia. We conclude that legislation like the Promoting Healthy Families and Workplaces Act
currently before the City Council would extend this basic workers’ right to more than 200,000
Philadelphians without negatively impacting job growth or business growth.

Key Findings
• For every five private sector workers in Philadelphia, two of them have no access to paid sick time.
Among the Philadelphia workers without paid leave:
o 38,600 health care and social assistance employees, including people who work with children
and the elderly
o 36,300 restaurant and hotel industry workers, including those who prepare food.

• San Francisco guaranteed all working people the right to paid sick time with no evidence of negative
impact on business or employment:
o Since the ordinance was implemented in 2007, job growth in San Francisco (up 3.5 percent
since the first half of 2006) has consistently been higher than in neighboring counties (down
3.4 percent over the same period) that do not guarantee paid sick time, despite the recession.
o The number of new large and small business establishments in San Francisco has also
outpaced the surrounding counties since the paid sick time ordinance was implemented.

• Guaranteeing paid sick time in Philadelphia would not harm employment or business growth.
o Industries like food service and construction that are least likely to offer paid sick time make
up a greater share of San Francisco’s economy than they do in Philadelphia. If guaranteeing
paid sick time harmed jobs or businesses, we would expect this damage to be greater in San
Francisco than in Philadelphia. Yet no negative economic impact is evident.
The Problem: More than 210,000 working Philadelphians have no access to paid sick
days, contributing to poor health, the spread of contagious disease, and lower employee
productivity. As the flu season approaches, Philadelphia cannot afford to have employees
coming to work sick.

When working people without paid sick days become ill, they are faced with an unfair decision: they can
either come into work and risk infecting those that they come into contact with, or they can call in sick
and lose a day’s pay (and in some cases risk losing their job). Additionally, these workers are unable to
take time off in order to care for their children when they become ill. Parents must decide whether to send
their sick children to school and daycare or face the consequences of missing work.

No one in Philadelphia should have to make this choice. Unfortunately, low wage workers living
paycheck-to-paycheck are the least likely to have paid sick days, and can least afford to miss work, no
matter how ill. For every five private sector workers in Philadelphia, two of them do not have any access
to paid time off for illness.1

When sick workers don’t take time off, their illnesses may become worse, and workers suffering from
infectious disease like influenza or hepatitis may spread it to coworkers, customers, and clients. Spreading
disease is a particular concern in the health care and social assistance sectors, where workers at hospitals,
nursing homes, and daycare centers come into daily contact with children, elderly people, and patients
who may have compromised immune systems. Yet an estimated 38,600 Philadelphia health care and
social assistance workers lack access to paid sick time, more than any other industry in the city’s
economy.2

Another public health threat stems from the large number of Philadelphia food service workers who don’t
have paid sick time. Of the 46,500 employees working in Philadelphia restaurants, hotels, bars and
cafeterias, just 22 percent have the opportunity to take time off when they become ill or need to care for a
sick family member, according to national trends.3 That leaves an estimated 36,300 food and hotel
industry workers in Philadelphia without paid sick time. The following chart illustrates the number of
employees citywide without paid sick time by industry.

1
Authors’ calculations based on data from the Bureau of Labor Statistics’ Quarterly Census of Employment and Wages using
methodology and national industry-level paid sick days coverage rates developed by the Institute for Women’s Policy
Research.
2
See above. Employees in the health care and social assistance sector are actually more likely to have access to paid sick time
than workers in most other fields, but national trends show 29 percent of them still lack this benefit. Because such a high
proportion of Philadelphians are employed in health care and social assistance, this sector contains the greatest overall number
of Philadelphia workers without paid sick time.
3
Ibid.

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Last year’s H1N1 influenza outbreak is a pertinent reminder of the dangers of contagion and the
difficulties workers without paid sick leave face. When the first cases of H1N1 virus were confirmed in
Philadelphia, numerous publications from the city Department of Public Health urged residents to “stay
home from work, school, and errands when you are sick. You will help prevent others from catching your
illness.”4 But for most restaurant workers, retail employees, and home health care workers, saying home
is simply not an option economically. As Philadelphia approaches another flu season, the city must act
quickly to ensure that sickened residents can afford to miss work.

The Solution: Paid Sick Leave Ordinance

In 2007, the city of San Francisco became the first place in the U.S. to require that employers provide
their workers with paid sick days. The law guarantees that every person working in San Francisco will
receive paid sick leave, including temporary and part-time employees.

• Employees begin to earn paid sick leave after 90 days of work in the city. Beyond that point, they earn
one hour of paid sick leave for every 30 hours they work

• Employees that work for companies with fewer than ten employees can amass a maximum of 40 hours
of paid sick leave at any one time; those that work for larger companies are limited to 72 hours of paid
sick leave at any one time under the ordinance (employers are free to offer more generous policies if
they choose).

4
For example, see: Philadelphia Department of Public Health, “Facts about Swine Flu: What to Know and How to Stay
Healthy,” April 2009.

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• Paid sick leave may be used to recover from a personal illness or injury, seek medical care, or provide
care for a family member or other person (the employee must designate this person in advance).

• Employees can take the leave in hourly increments and must be paid their hourly wage or an
equivalent fraction of their salary.

• Employers are prohibited from retaliating against employees who use paid sick leave.

• A poster notifying employees of the ordinance in six languages must be posted at all workplaces.

• Employers who are found to have unlawfully denied paid sick leave must pay the employee four times
the value of any leave withheld as well as any additional back pay owed and must reinstate the
employee if they were fired

• The city’s Office of Labor Standards Enforcement enforces the law and employees can also sue under
the statute.

Impact: 116,000 workers guaranteed paid sick leave, employment and business
growth are not harmed
The success of San Francisco’s policy is easy to illustrate: 116,000 workers who previously lacked the
benefit now have paid sick days. Additionally, the business groups that had initially opposed the
ordinance in San Francisco admit that it has posed few problems for their members.

Before the ordinance was passed, a study by the Institute for Women’s Policy Research (IWPR) projected
that it would cost the city and its employers $33.5 million each year in additional wages, payroll taxes,
and administrative expenses.5 These costs, which amount to $5.56 per week per newly covered worker,
were a major source of business opposition to the ordinance. However, IWPR also projected that the
benefits of guaranteeing paid sick days would amount to $7.64 per newly covered worker per week,
achieved by decreasing employee turnover, improving productivity and reducing the spread of disease.
Ultimately, San Francisco was projected to see a net gain of $12.5 million annually.6 In addition, the
Urban Institute conducted extensive interviews in 2008 with a number of business owners in San
Francisco, and concluded that “by and large, most employers were able to implement the paid sick leave
ordinance with minimal to moderate effects on their overall business and their bottom line."7

At the Drum Major Institute for Public Policy, we have closely tracked the city’s employment rate and
rate of business growth since the law was passed.8 We found that in the three years since San Francisco
became the first city in the country to implement a paid sick leave law, job growth there has consistently

5
Vicky Lovell, “Valuing Good Health in San Francisco: The Costs and Benefits of a Proposed Sick Leave Policy,” Institute for
Women’s Policy Research, July 2006.
6
Ibid.
7
Shelley Waters Boots, Karin Martinson, and Anna Danziger, “Employers Perspectives on San Francisco’s Paid Sick Leave
Policy,” The Urban Institute, March 2009.
8
John Petro, “Paid Sick Leave Does Not Harm Business Growth or Job Growth,” Drum Major Institute for Public Policy,
September 2010.

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been higher than in neighboring counties without such an ordinance. Total employment in San Francisco
increased by 3.5 percent between the first two quarters of 2006, immediately before the passage of paid
sick leave, and the first two quarters of 2010, the latest period for which data is available. In contrast, total
employment in the five neighboring counties cumulatively fell 3.4 percent during the same time period.

The Drum Major Institute study also found that the number of business establishments has grown more
rapidly in San Francisco than in neighboring counties since the implementation of paid sick leave.
Between 2006 and 2008, the number of business establishments in San Francisco grew by 1.64 percent
while the number of establishments in the neighboring counties fell by 0.61 percent. Business growth was
greater in San Francisco than in neighboring counties for both small and large businesses and in the
industries widely considered to be most impacted by paid sick leave: retail and food service. These
outcomes are consistent with research from the Center for Economic and Policy Research which
concluded that there was no relationship between unemployment and government-mandated paid sick
leave.9

Today even the strongest business opponents of paid sick leave admit that the policy has not been the
economic disaster they initially predicted. The Golden Gate Restaurant Association has called the law
“successful”10 and “the best public policy for the least cost,”11 acknowledging that employees have not
abused paid sick leave. And recently a top official at the San Francisco Chamber of Commerce, another
original opponent to paid sick leave, admitted that “it has not been a huge issue that we have heard from
our members about… I don’t think it’s quite on the minds of employers.”12 This admission echoed an
earlier statement from 2008 in which a spokesperson for the San Francisco Chamber of Commerce had
admitted that “we really have not heard much about it being a major issue for a lot of businesses.”13

Implications for Philadelphia: 210,000 people would gain paid sick leave at minimal
cost to business
San Francisco’s well-documented experience shows that a city can successfully require employers to
provide paid sick leave to their employees without disruption to business activity or employment growth.
Philadelphia’s proposed legislation, the Promoting Healthy Families and Workplaces ordinance, could be
expected to have similar effects, improving public health and contributing to the well being and financial
security of 210,000 working Philadelphians who currently do not have paid leave.

If guaranteeing paid sick time had any negative impact on employment or business growth, we would
expect to see it in San Francisco to a greater extent than in Philadelphia. This is due to the relative
proportion of workers in each city who lack paid sick time. Compared to Philadelphia, a much larger
proportion of San Francisco’s workforce can be found in the sectors least likely to provide paid sick time,

9
John Schmitt, Hye Jin Rho, Alison Earle, and Jody Heymann, “Paid Sick Days Don’t Cause Unemployment,” Center for
Economic and Policy Research, June 2009.
10
Stephen Singer. “State pushes law to require paid sick days,” USA Today. August 20, 2008.
11
James Warren. “Cough If You Need Sick Leave,” BusinessWeek. June 3, 2010.
12
Aaron Rutkoff, “Will Sick Days Cost Billions for NYC Businesses? San Francisco Says No,” Wall Street Journal’s
Metropolis Blog. May 13, 2010.
13
Kelly Spors. “Should Employers Be Required to Give Paid Sick Days?” Wall Street Journal Blogs. August 25, 2008.

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such as the restaurant industry and construction. Meanwhile, a much larger proportion of Philadelphia’s
workforce is in health care and education – sectors in which a greater percentage of employers already
provide paid sick time – than in San Francisco. This does not detract from the urgent need to guarantee
that all 210,000 working Philadelphians without paid sick time receive it: it does indicate that if paid sick
leave harmed job growth, the effects would be magnified in San Francisco. Yet even with a larger
proportion of the workforce affected, San Francisco’s paid sick leave ordinance was found to have no
negative impact on business.

Philadelphia’s experience will differ from San Francisco’s in the terms of how any legislation is enacted,
implemented, and enforced. In San Francisco, the paid sick leave ordinance was passed through a popular
referendum. Sixty-one percent of the voters approved the legislation. In Philadelphia, the Mayor and City
Council could simply pass an ordinance that enables all working people to earn paid sick days. In San
Francisco, the Office of Labor Standards Enforcement enforces labor laws that are specific to the city,
such as the paid sick leave law. Philadelphia, on the other hand does not have this type of agency:
accordingly, Philadelphia’s proposed sick days law authorizes the Mayor’s Office of Labor Relations, or
such other office as the Mayor or Managing Director shall designate, to enforce the law.

According to national polling data, 86 percent of Americans support laws guaranteeing paid sick time and
75 percent believe paid sick days are “a basic workers’ right.”14 The experience of San Francisco proves
that there is no good reason not to enable Philadelphia’s workforce to exercise this right. Despite the dire
predictions of gloom and doom, job growth and business growth in San Francisco remain strong. The
lesson for Philadelphia is clear: a healthy workforce and a healthy business environment can coexist.

14
Tom W. Smith and Jibum Kim, “Paid Sick Days: Attitudes and Experiences,” National Opinion Research Center at the
University of Chicago, June 2010.

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