The Effect of Mandatory Paid Sick Leave Laws on Labor Market Outcomes and Health Care Utilization

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The United States is one of just two OECD countries that lacks a federal mandate requiring employers to provide paid sick leave (PSL) to their employees. As a result, some 40 percent of U.S. workers lack access to PSL. Opponents to expanding PSL cite negative employment impacts as a reason for not passing a federal PSL mandate while proponents of PSL point to improved health outcomes for covered workers. Now there is a paper that highlights the potential trade-offs involved with the expansion of PSL benefits.

In “The Effect of Mandatory Paid Sick Leave Laws on Labor Market Outcomes, Health Care Utilization, and Health Behaviors,” Kevin Callison and Michael F. Pesko rely on data from several municipalities and states that have, beginning in 2007, enacted laws that require employers there to offer PSL to certain employees.

Their results show that a PSL mandate does tend to reduce the number of hours worked and cause unemployment to rise. However, Callison and Pesko also find evidence that PSL can lead to a more efficient use of health care by shifting visits away from emergency departments (ED) to much less expensive, and often more appropriate, primary care settings. This latter point is important since, in 2013 alone, ED expenditures for working-age adults approached $40 billion.