Policy Today: Paid Sick Leave

 

In this episode of Policy Today, Kriss and I talk about paid sick leave. We also just published a policy brief on the topic.

New brief: Mandating Paid Sick Leave in Washington

We have a new policy brief today: Mandating Paid Sick Leave in Washington.

Briefly:

  • HB 1356 would require employers statewide to provide a paid sick and safe time benefit.
  • The amount of leave would be dependent on the size of the employer.
  • All businesses with more than four FTEs would be affected.
  • Employees could use three days of paid sick leave before having to document their illness.
  • Anyone (not just employees) could sue employers for violations.
  • The limited economic literature on the impacts of such mandates is inconclusive.
  • Seattle employers report no change in presenteeism even with paid sick leave in place.
  • Small businesses are more likely to be affected by this mandate.
  • Paid sick leave is an additional labor cost that, combined with other costs, would make Washington less competitive.

Latest In Focus

 

Above is the latest episode of our In Focus podcast. In it, Kriss and I talk about:

You may subscribe to our In Focus and Policy Today podcasts here.

Teenagers, athletes, and the minimum wage

On Tuesday, the House passed HB 1355, which would increase the state minimum wage to $12. (See our special report for more.) As Jim Camden of the Spokesman-Review notes,

House Republicans tried repeatedly to change the bill, offering 13 amendments for things like lower teen wages, taking a longer look at inflation or varying the wage around the state to account for differences between the boom economy of the Central Puget Sound and high unemployment in some rural areas. Most were ruled outside the scope of the bill by House Speaker Frank Chopp and didn’t receive a vote; the few that did were rejected on partisan splits.

In the Senate, SB 5422, which would allow employers to pay teenagers at a rate of 85 percent of the minimum wage, was passed by the Commerce and Labor Committee last month.

Meanwhile, HB 1930 would essentially exempt the Western Hockey League from state labor laws — including the minimum wage. Washington has four teams in the league, and they are currently being investigated by L&I on child labor grounds. (Here’s some background.) I have no opinion on whether these athletes should be treated as amateurs or employees, but I do think the bill presents an interesting contrast to the teen training wage bill.

HB 1930 was passed unanimously by the House Labor Committee. The Seattle Times quoted House Majority Leader Pat Sullivan:

“Those are students who decide they want to participate in the Western Hockey League, they choose that pathway for themselves,” Sullivan said, later adding: “I think the system actually works pretty well.”

Another Seattle Times story notes,

Some of Washington’s prominent Democratic labor leaders have supported the proposed exemption. Sells, the House Labor Committee chairman, and Labor Committee member Rep. Timm Ormsby, D-Spokane, are among the lawmakers signed on to the bill.

“This is something that will maintain opportunities for our amateur athletes and help them advance their careers,” said state Rep. Marcus Riccelli, D-Spokane, a bill sponsor. “I think it’s a pretty strong collection of folks from those (organized labor) areas who are collectively saying we don’t want to take anything away.”

Six sponsors of HB 1930 and its Senate companion also sponsored bills to raise Washington’s minimum wage.

Seems to be a bit of a disconnect here. If requiring the league to do things like pay the minimum wage would reduce opportunities for the players and hinder their career advancement, what happens to the prospects of non-elite-athlete teenagers if the costs of hiring them rise?

The impacts of a bad reputation

U.S. Labor Secretary Tom Perez talked recently about how a good reputation can trump a good location when it comes to trade. Washington’s ports had enjoyed an advantage due to their location as a good access point to and from Asia, but the result of the West Coast ports work slowdown may be that that they are seen as unreliable.

Indeed, the Puget Sound Business Journal writes that

The biggest East Coast ports had 10.2 percent more growth than the biggest West Coast ports in the fourth quarter of 2014, compared to a 1.6 percent difference from the year before. . . .

Some of that diverted cargo will never come back.

“With each labor event, some diverted cargo has not returned, and this seems to be the case for some West Coast ports coming out of this most recent contract negotiation,” according to Fitch [Ratings].

Additionally, the story notes,

The Port of Seattle is mostly just a pit stop as goods make their way around the country.

While the Port of Seattle doesn’t track exactly how much cargo shipped through the harbor moves outside the state, most of it is shipped elsewhere, said spokesman Perry Cooper.

When cargo isn’t staying in Washington state, shippers have less incentive to use Washington state ports when others are more reliable.

In a 2013 report, we looked at the competition faced by our ports and noted that

31 percent by value and 13 percent by weight of all goods exported through Washington ports originated outside of the state of Washington.

On the question of how long it will take for port activity to get back to normal, the PSBJ story says, “it will take no more than three weeks to clear backlog at the ports of Seattle and Tacoma.”

The Wall Street Journal writes about one way to get freight moving:

Port terminals are developing new ways to organize cargo at the docks and systems for getting that cargo moving off the docks as quickly as possible. Software developed by a local technology startup called Cargomatic, a sort of Uber for moving cargo around the Los Angeles region, serves as one creative solution.

Privatization and comparative advantage

This is a great story on a part of Washington’s economy: The boutique booze boom in Washington. It begins by talking about Westland Distillery’s Emerson Lamb:

“It has been our stated goal to put Washington state on the map as the world class place to make single malt whiskey alongside Scotland,” said the 25-year-old Lamb.

Lamb’s declaration, which would have drawn fall-off-your-barstool-laughter a decade ago, is not only gaining traction among distillers but has also set off a race to deliver the first great single malt in Washington state — and to grow the barley to make that happen.

Indeed, researchers from Oregon State University to Washington State University have confirmed what Lamb and farmers have long suspected: that the maritime climate here mirrors that of Scotland, where some of the world’s best single malts are made.

According to the article, Washington has the most micro distilleries in the country — a situation that was brought about thanks to the Legislature getting the state out of the way in 2008 by making it easier to open a distillery.

The story notes that liquor privatization brought craft distillers new challenges because they no longer have the ease of dealing with the state monopoly rather than various individual stores. One would think that the competition required by privatization has helped to strengthen the distillers in the business. Separated the wheat from the chaff, if you will.

Even better, it seems that privatization has made distillers focus on what might be Washington’s comparative advantage:

Many believe single malt, uncommon in America, is one way to get onto those shelves.

Many Northwest distilleries believe they can dominate the single malt category much like Kentucky has dominated the bourbon market. The Northwest has better growing and aging climate to make single malt than other regions, they say.

In June 2010, after planting more than 1,000 different types of barley and wheat around Western Washington and other areas, WSU’s Jones concluded that the maritime climate from Vancouver, Wash., to Vancouver, B.C., is ideal for growing the barley strains that have low protein and high starch, the same types that produce a “complex flavor — sweet, but not white-sugar sweet,” he said. “You can compare it to a maple syrup … It has a very natural sweetness.”

This means new opportunities for farmers as well:

There are only a handful of regions around the world that have the right climate to grow this type of barley, Jones said. . . .

“There was zero winter barley planted in Skagit County five years ago. Today, there’s at least 5,000 acres,” Jones said. Nearby counties are also starting to grow barley.

(On that point, per USDA, Washington ranked 4th in the nation in barley production in 2013.)

Rules proposed for Seattle’s minimum wage

The City of Seattle has released proposed rules for implementation of the $15 minimum wage. According to the Seattle Times, the public comment period is open until March 6.

The minimum wage ordinance takes effect April 1; it will gradually increase the minimum wage in Seattle to $15 (and index it to inflation) depending on the size of the employer and whether the employee receives tips or medical benefits. All employers will have to pay the same minimum wage by 2025. Below is a chart from the city showing how this will work.

blog.022515

Under the proposed rules, employers must pay employees who are under 16 an hourly rate that is at least 85 percent of the new city minimum wage. The rules specify that service charges are not tips. Additionally, if an employee is jointly employed (e.g. with a staffing agency and another company), the amount he is paid depends on the size of the larger employer.

Here is our recent report on the minimum wage.

Reputational damage at the ports

As an addendum to my earlier post on the deal at the ports, NPR has a good interview with U.S. Labor Secretary Tom Perez. On the impacts of the slowdown, he says,

There is so much collateral damage occurring. . . . You are playing with fire because, yes, the West Coast ports have the advantage of location, location, location. But you know what — location, location, location is not enough if you have a bad reputation, reputation, reputation. . . . In 2015 businesses have options.

Education roundup

The AP reports that some are now estimating that the cost of complying with the McCleary decision on education funding could be in the ballpark of $6 billion. That number includes not only K-3 class size reduction, full day kindergarten, and materials, supplies and operating costs, but also takes into account that

. . . the 2012 court ruling also called on the state to quit relying on local school levies to fill holes in the state budget.

The Washington Education Association estimated that statewide districts spent $1.6 billion in levy dollars during the 2013-14 school year on the salaries of teachers and other school employees.

Data provided by the staff of Rep. Ross Hunter, D-Medina, chairman of the House Appropriations Committee, show local levies contributed an average of $60,000 per administrative salary and an average $10,000 per teacher and para-educator salary during the previous school year.

Under the high court ruling, it could be construed as a violation of the state Constitution to continue to pay those salaries out of local levy dollars instead of with money from the state budget.

“You can fix almost all of this by screwing around with property taxes,” Hunter explained.

As Kriss mentioned in the latest episode of our In Focus podcast, state Rep. Reuven Carlyle has a modest proposal to reconsider the state’s paramount duty:

In our state, the romantic image of strong funding from the state government has not been realized. Political impasse over generations has created a system with unconstitutional funding structures, relatively poor student outcomes and great inequality.

A case can be made that Washington’s top-down approach disconnects schools from their natural, strongest base of support—local families and communities.

He compares Washington’s method of funding K-12 with that of some of our global challenge states. We did the same in a report a few years ago: Comparative Analysis of School Funding. Carlyle also writes,

Today, early learning and higher education are more than ancillary, they are core to our desire to educate the whole child and whole person. We cannot have a system where “the paramount duty” is only K-12 and leave the other aspects of education as second class citizens. It doesn’t work for kids, parents, business or an educated civic society.

Speaking of higher education, Steve Mullin of the Washington Roundtable has a good op-ed on the topic:

Fortunately, in the last few years the Legislature has begun to address this problem by increasing higher education funding, especially in high-demand programs, and helping the institutions avoid additional tuition increases.

The next big challenge comes this legislative session.

The Washington Supreme Court’s 2012 McCleary decision requires the legislature to significantly increase its investment in K-12. It will squeeze the state general fund. And, in a difficult budget environment, higher education – which doesn’t have the same constitutional or legal protections as other spending categories – could end up on the chopping block.

(See also our recent brief on higher education.)