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Legislature wants to mandate our way to prosperity

Legislature wants to mandate our way to prosperity
SACRAMENTO — A high-profile bill that would require all of California’s nonunion businesses to provide paid sick leave to their employees remains alive. There’s little question that this type of bill that mandates new benefits is becoming more common as progressive legislators gain traction in the Capitol.

In support of AB 1522, its author, Assemblywoman Lorena Gonzalez, D-San Diego, argues that “Taking unpaid sick time leaves workers vulnerable to losing their jobs in an economy with a stubbornly high long-term unemployment rate.” A person who takes three unpaid days off loses the equivalent of a month’s worth of groceries, she added.

That’s no doubt true. Working fewer days leads to lower pay — and that’s especially problematic for lower-income workers. But the broader policy question is whether state-imposed mandates are the proper way to give people the higher incomes that they want. Everyone would like to have paid days off (and lots of other things, too), but opponents of the bill say that adding mandates will only exacerbate that stubborn unemployment problem that Gonzalez bemoans.

In its letter to legislators, the California Chamber of Commerce points to the aftermath of a paid-leave law that went into effect in Connecticut in 2012. Of 156 businesses that were surveyed, about two-thirds of them detailed various benefits they cut to compensate for the extra costs. Most of the businesses said they would cut back on hiring and some even laid off workers.

Managers aren’t necessarily stingy — but if costs go up in one place, they have to go down somewhere else. And business critics of the bill point to many other costs that are going up these days (higher taxes through Proposition 30, an increased minimum wage, costs related to Obamacare, etc.) Adding yet another benefit isn’t going to come without some concurrent efforts to offset labor costs.

The Chamber of Commerce has given this bill the “job killer” moniker, and the group has been remarkably successful at killing most such-named bills because of the costs they impose on business. But this bill was placed on the Senate Appropriations suspense file, where legislation is sent if it imposes significant costs on the state treasury. The state Department of Finance says that it would impose millions of dollars in annual costs on the Department of Industrial Relations, which would need additional labor commissioners and attorneys to monitor compliance.

The state should also expect to pay $14 million a year in leave benefits for home workers who take care of disabled and elderly people as part of the In-Home Supportive Services program — meaning this bill comes with potential direct costs for taxpayers.

Some of the worst lawsuit-happy elements have been removed, but current language still creates a “rebuttable presumption of unlawful retaliation if the employer denies the leave request or takes an adverse employment action against any employee who has used paid sick leave,” according to a Republican legislative analysis.

Instead of punishing businesses, the Chamber of Commerce argues that any new legislation should provide incentives for them to offer new benefits. That critique touches on the main question here: Does government inadvertently worsen the problems it tries to fix, at least when it comes to mandating pay and benefits?

The more costs and hurdles it imposes, the harder it is for those businesses to afford to provide the jobs and benefits workers want. Even advocates for such bills know that the money has to come from somewhere.

Californians hear a lot about the Texas approach v. the California approach, in an increasingly silly soundbite-driven debate. But that’s shorthand for the real choice, which is between those who think that costly edicts improve workers’ lives and those who want to free businesses to be as successful as possible — and figure that a booming business climate is the best way to eradicate poverty.

Supporters of the Gonzalez bill are cautiously optimistic that it will pass out of the full Senate. If it does, the rest of us should be less optimistic that the Legislature will learn the right lessons about how to tame the state’s intractable unemployment problem.

Steven Greenhut is California columnist for U-T San Diego. Write to him at steven.greenhut@utsandiego.com.

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