Editor’s note: This commentary is by Robert Roper, the president of the Ethan Allen Institute. He lives in Stowe.
[A]t a recent press conference Gov. Peter Shumlin and Speaker of the House (and gubernatorial candidate) Shap Smith, flanked by some “socially responsible” businesses called for a new law mandating that all employees offer a paid sick leave benefit to their employees. This issue will be at the top of the priority list when the Legislature returns to Montpelier in January.
This is essentially a $14 million tax on poor, small financially vulnerable enterprises throughout Vermont. It’s also a pretty cynical move on the part of the folks advocating for it.
Let me say straight away that offering some sort of paid time off to recover from a cold or deal with a personal issue is a smart benefit for any businesses to voluntarily offer for the purposes of enticing and keeping quality employees. And, most do one way or another, formally and/or informally.
Those that don’t – and this is where our politicians either don’t understand or don’t care – simply can’t afford it. It’s much like purchasing health insurance. Very few would argue it’s a bad idea to purchase health insurance. Over 90 percent of Vermonters have it. The fraction of people who don’t have it don’t have it because they genuinely don’t have the money to buy it. The same is true of small business that genuinely can’t afford to pay people who aren’t working.
The Legislature seems to think that every business has an endless source of cash stuffed in treasure chests hidden away in the attic. The truth is that small businesses are, like people, diverse. Some are poor, operating hand to mouth and struggling each month to make payroll. This can be particularly true of entrepreneurial businesses that are just starting out. Many owners of such businesses don’t make much more, or even make less than, their employees. Mandates such as this come directly out of their take-home pay.
We have to recognize that the deli or the daycare provider may only have enough money on hand to pay one person to prepare the food or look after the children, and not enough to pay a temporary replacement plus the person calling in sick. Is that unfortunate? Yes. Is it reality? Also yes.
Do we want someone with the flu making our sandwich at the local deli, or looking after our kids when we drop them off at daycare? Of course not. But we also have to recognize that the deli or the daycare provider may only have enough money on hand to pay one person to prepare the food or look after the children, and not enough to pay a temporary replacement plus the person calling in sick. Is that unfortunate? Yes. Is it reality? Also yes.
So, why is this paid sick leave mandate a cynical ploy on behalf of its advocates?
First, this announcement by the governor and speaker ironically came about the same time that Gov. Shumlin called for the Legislature to prepare for level-funded budgets in 2016. If the state recognizes that it can’t afford to do more than it’s currently doing, why can’t they recognize that many small business may be in exactly the same boat? This is really just a way to levy a hidden $14 million “tax” without having to call it that or be accountable for it in an election year.
It is cynical on the part of those “socially responsible” businesses because the ones advocating for paid sick leave already offer it. It’s no skin off their bottom line if the mandate passes – but it will kneecap their competition by saddling them with a cost they can’t afford. Maybe even knock the competition out of business. These folks get to appear all high and noble on the stage while actually putting the screws to the upstart entrepreneur next door.
If these politicians and established businesses really think all employees should automatically receive compensation for days they do not work then the state should raise $14 million in new taxes (or cut other programs), establish a transparent and accountable program, and write checks to those workers or their employers based on financial need.
I wonder how those “socially responsible” businesses would respond to implementing something like the current health care claims assessment, taxing them each time they pay out a sick leave benefit to an employee with the proceeds going to help other businesses that are struggling financially and genuinely cannot afford to offer paid sick leave on their own? I suspect their tune would change dramatically.
Mandating hidden taxes like this is cowardly, as well as bad policy. A survey by Vermont Business Magazine recently revealed that 20 percent of small- to medium-sized business owners in Vermont have “put plans in motion during the past 12 months to move their residency outside Vermont,” and 45 percent of respondents to the survey have considered moving. Is it any wonder?
