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Panic and Paid Leave

At National Review Online, my intrepid Mercatus Center colleague Veronique de Rugy and I argue that the coronavirus pandemic presents no good reason for government to try to engineer more paid sick leave than the market already supplies. (Note that our argument is not that more workers ought not have as part of their employment packages the fringe benefit called “paid leave.” We argue only that only the market can reliably determine which workers find it worthwhile to have this fringe benefit and which do not find it worthwhile. Because paid leave is a cost to employers, obliging employers to supply more of it will necessarily reduce workers’ take-home pay or other fringe benefits. It makes no more sense, in short, to mandate that more workers be supplied with paid leave than it does to mandate that more workers be supplied with ‘free’ footwear, with ‘free’ food, or with ‘free’ finger-painting lessons.)

Here’s a slice from Vero’s and my piece:

Of course, it’s true that when workers without paid leave don’t work, they aren’t paid, so they may be reluctant to stay home even if they start to exhibit symptoms. It’s also true that if more workers had paid sick leave, fewer sick workers would show up to work and fewer people would become infected. Considered in isolation, this outcome is, of course, good. But it cannot be considered in isolation.

Obliging companies to permanently provide paid sick leave to workers who don’t currently have it would impose eventual reductions on their take-home pay. The provision of such benefits isn’t costless. We can be sure that in the long run — after the coronavirus fades from the headlines — mandated paid leave would inflict a pricey and permanent toll on workers who would prefer to receive more of their compensation as take-home pay and less as paid leave. Such workers, being disproportionately low-income, would be the least able to bear even marginal reductions in take-home pay.