DC audit of paid sick leave doesn't tell much about effects on business

Last week, the Economic Opportunity Institute and PubliCola linked to an audit of the DC Accrued Sick and Safe Leave Act of 2008. Both posts say that the audit shows the "sky isn't falling," but it doesn't actually show much at all.

The audit's look at paid sick leave's effect on business is secondary to its look at compliance with and administration of the act. Indeed, the audit found only that "intermittent District government employees did not receive paid sick leave," "hardship exemption rules were not finalized," and "91% of employers complied with the posting requirement."

But, one of the stated objectives of the audit was to "assess the economic impact of the Act on the private sector." Later the report clarifies that it looks only at whether mandating paid sick leave encouraged businesses to move out of DC or discouraged businesses from locating in DC.

Not only did the audit take a very narrow view of what the economic impacts of the policy might be, its methodology does not seem particularly rigorous. The auditor sent questionnaires to 800 businesses located in DC in 2012 and asked:

  • "Would the requirement to provide paid sick leave benefits cause you to move your business from the District of Columbia?"
  • "In 2007 did your business provide paid sick leave benefits?"
  • "In 2012 did your business provide paid sick leave benefits?"

The report does not say how many businesses returned the surveys. According to the report, 87.5 percent of respondents said that they would not move out of DC because of the law. It doesn't seem surprising that businesses currently located in DC wouldn't move out of the city because of a policy enacted five years ago. Presumably, most would have already done so; if so, this report would overstate the number of businesses staying put. There doesn't seem to have been an attempt to talk to businesses that left DC after 2008 to see if paid sick leave was a contributing factor to the decision.

The report continues, "According to District businesses [sic] owners interviewed by the Auditor, the paid sick leave requirement of the Act did not discourage owners from establishing businesses in the District." If they say so. There's no indication they talked only to businesses new to DC since 2008, and they certainly didn't talk to businesses that could have located there but didn't.

Because paid sick leave laws are so new (the first, in San Francisco, has been effective since 2007), there are few studies of their effects. (See this brief for more information on paid sick leave, including a review of other studies.) What little information the DC audit relays is questionable in its methodology. Supporters of paid sick leave shouldn't be heartened by it.

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