A study commissioned by the Greater Philadelphia Chamber of Commerce (GPCC) to determine the economic costs of mandated paid sick leave on city businesses found that the bill would create a financial and administrative burden on employers and cost the city both jobs and tax revenue.
The study, written by Dr. William Dunkelberg, Professor of Economics at Temple University and Chief Economist of the National Federation of Independent Businesses, found that the additional burden on employers would cost Philadelphia businesses from $350 million up to $752 million to comply and implement the law. Furthermore, estimates of an increase in labor costs would result in a reduction in employment of about 4,000 lost jobs, which would be doubled if employers need to hire substitute workers.
The bill, #080474, requires all businesses and non-profits to provide paid sick leave for all employees working in the city of Philadelphia. The measure requires that businesses with less than 11 employees provide 5 paid sick days each year and businesses with 11 or more employees provide 9 paid sick days per year. The bill would affect more than 32,000 employers.
GPCC President and CEO Rob Wonderling said, “We commissioned this study at the request of City Council who said they did not have enough information about how this bill would affect the businesses of Philadelphia. Professor Dunkelberg’s report clearly demonstrates the enormous economic costs this bill would have upon employers. With the labor market still recovering, policy makers should focus on promoting job growth, improving the city’s business tax structure, and removing disincentives for locating businesses in the city instead of enacting mandates on businesses that drive up operating costs and create barriers for entry-level employment.”
According to the study, employers will choose not to hire additional employees (particularly the 11th employee) or reduce their workforce in an effort to lessen the effect of this unfunded mandate. Employers are also likely to reduce or eliminate other discretionary benefits such as health care, vacations or bonuses.
Dr. William Dunkelberg added “Common sense (and economic analysis) suggest that this bill will raise costs (and ultimately selling prices) in the city and discourage job creation and new firm formation. Philadelphia’s unusually high business tax rates already make it difficult for the city to compete with other jurisdictions in attracting and retaining businesses.”
A copy of the full report can be found by clicking here.
