Monday, June 13, 2011

Bill Dunkelberg bait-and-switches Inquirer readers about the sick-leave bill

I'm not really decided about the merits of Philadelphia's proposed law to require employers to provide sick leave. I'm instinctively for it, and there's reason to believe it wouldn't have the deleterious effects its opponents suggest. Still, there's a lot of reason to believe it's not easy to do business in Philadelphia, and a lot of that has to do with local government regulation.

But sometimes opponents make such misleading arguments that it gets easier to choose sides. That's the case with today's Inquirer column from Bill Dunkelberg, a professor of economics at Temple University.

Here's how he starts:
Philadelphia universities clearly produce more graduates than we can use, so we "export" them. The Philadelphia region specializes in the production of drugs and graduates (among other things). It is silly to think we could keep most of them.

Graduates will stay only if there are jobs to be had. Yet Philadelphia is hostile to new business creation. The wage tax, the gross-receipts tax, the Department of Licenses and Inspections, and poor city services are just a few of the things that discourage job creation.

Now, City Council wants to put another nail in the job-creation coffin - a requirement that firms provide each employee a "paid sick days" benefit.
There's an implication here that the sick days benefit will chase away Philadelphia's best and brightest—that it will so thoroughly kill the creation of new jobs that folks from Penn, Drexel, Temple, Villanova and all the other universities will have to leave town in greater numbers than they already do.

But does that make sense? If you go by Dunkelberg's examples, I'd say no:
For a small restaurant with 10 employees, paying $10 an hour on average, this could add up to serious dollars. Let's say it creates $7,000 in additional annual expense. To make this up, firms with, for example, a 10 percent profit margin, would need to generate $70,000 in new business to cover the increase in costs.

For the small competitive firms that provide most of our jobs, this is not chump change.
Certainly not, but ask yourself a question: If you're a grad of Penn, Drexel, Temple, or Villanova, is a $10-an-hour restaurant job going to keep you in Philadelphia? In most cases, the answer is no.

In fact, if you think about the types of jobs the majority of those grads will be looking for, one thing is probably self-evident: those jobs probably come with sick leave benefits. Does Comcast make its employees come in with the flu or stay at home without pay? The pharmaceutical companies? The hospitals? That's where a lot of Philadelphia's brightest young workers are going.

In fact, I'd suggest that Dunkelberg uses the $10-an-hour example precisely because those kinds of jobs—physically laborious, low-paying—are actually the kinds of jobs that are targeted by the bill, where sick leave isn't generally offered, and where employees could really use it. These aren't university-grad jobs; in lots of cases they're not even high-school grad jobs.

Dunkelberg is on safer ground when he argues the other possible economic consequences of the bill. (Although his suggestion that Philadelphia workers are itching for an opportunity to rip off their employers is contemptible, as it is when every other opponent makes it.) But Dunkelberg clearly wants you to think that the bill will chase high-education high-wage jobs away from Philadelphia. Since those jobs generally already provide such benefits, that result is unlikely. And Dunkelberg surely knows that.


MB said...

Thanks for your post! Paid sick days have been shown to save employers money through less turnover and higher productivity. To learn more about sick days in Philadelphia, you might want to check out

KhabaLox said...

Well, I waited tables for a while with my college degree, though I could of course done that anywhere.