President Obama sure has strange way of encouraging employers to hire more lower- and middle-income employees. The president who never ran a business wants to make hiring workers even more expensive.
In his State of the Union address, the president said, “I’ll be taking new action to help states adopt paid leave laws on their own,” and then challenged Congress to pass legislation that “gives every worker in America the opportunity to earn seven days of paid sick leave.”
And that’s on top of forcing employers to provide health insurance and pushing for a 40 percent increase in the minimum wage.
Not only is the president economically naive, he is factually misleading. In his SOTU address, Obama said, “And since paid sick leave won where it was on the ballot last November, let’s put it to a vote right here in Washington.”
Obama makes it sound like paid sick leave is a very popular measure that is gaining momentum in the states and so Washington should get on board. The National Conference of State Legislators has a different take.
NCSL staff published an update of paid leave’s current status on January 16, in anticipation of its inclusion in the SOTU. According to NCSL:
“Connecticut, California and Massachusetts are the only states currently requiring businesses to provide paid sick leave to their employees. The Connecticut and Massachusetts laws provide for up to 40 hours of sick time per calendar year.”
“Three states, California, New Jersey and Rhode Island, offer paid family and medical leave, allowing all employees to take time off with pay for the birth or adoption of a child or to care for a family member with a serious health condition. Benefits are funded through employee-paid payroll taxes and based on a percentage of pay.”
So to put this in perspective, five states are doing what Obama wants. But three of those states—Connecticut, Massachusetts and New Jersey—have the highest per-capita income in the country, and companies may be better able than other parts of the country to absorb the additional costs. Of course, all five are some of the bluest states.
But there’s more. The three states that provide paid sick leave only require 40 hours (i.e., five work days). Obama wants seven days, not five.
And the three that provide paid family and medical leave finance it by an employee-paid payroll tax.
Obama says that 43 million people would benefit from paid sick leave, which if true—you can NEVER take what this president says at face value—would be about 40 percent of the full-time wage and salaried labor force.
The majority of those 43 million will be lower- and middle-income hourly workers—the very people Obama’s “middle-class economics” (whatever that means) is supposed to help. Most higher-income and salaried workers are already given sick leave or, increasingly, “paid time off” (PTO).
The cost to employers of this new entitlement would vary depending on the job. According to the Bureau of Labor Statistics (BLS), the median service-sector worker makes $508 per week, but that’s for a five-day week. Obama wants seven days, so about $710 per employee.
Construction workers’ median income is $786 per week, according to BLS, so seven days would cost employers about $1,100 per employee.
And while it’s easy for proponents to claim that’s not much money and employers should be able to afford it, that’s not all.
Added Health Care Costs — Rates vary significantly by state and other factors, but Obamacare-qualified health policies for an individual cost an average of $4,700 a year. If an employer required to provide health coverage pays, say, 70 percent of that figure, that’s an additional $3,300 per year. So now we’re closer to $4,000 additional annual cost per worker.
New Minimum Wage Laws Proposed — And, of course, Obama wants to push the minimum wage up to $10.10. That amount—which is $404 per week—is less than the median service sector wage, but it would still affect many lower-paid workers. Essentially, forcing an employer to pay $10.10 an hour rather than $7.25 will add about $6,000 a year to the cost of a single minimum wage worker.
Add all three together and Obama would drive up the price of some workers by $10,000 a year—for a person who might have been making an annual income of only $15,000 to begin with.
Here’s my question for liberals who back these proposals: At what point do YOU think an employer says enough’s enough? I won’t hire any more, or, I’ll have to lay off some workers I currently employ.
Every one of us makes decisions daily about what we spend our money on based on the price and what we believe we can afford. And we all decline to buy some things that we would have bought at a lower price, because the price is too high. Why do liberals think employers are any different?