Early Friday morning, Austin City Council approved an ordinance that forces every business to provide paid sick leave to its employees. These entitlements have been shown to harm all citizens, especially the employees they’re intended to benefit.
During roughly five hours of public testimony Thursday night, proponents told the city council a variety of alleged benefits of the entitlement: improved public health, savings for employers, and greater justice and equality for employees. The Austin Democratic Socialists of America were in large turnout to support and speak for the mandate, and former State Senator Wendy Davis made an appearance to testify. She claimed the entitlement would also help women get access to abortions.
“Women in this state have to endure at least a two-day process in order to seek abortion care,” she said. “They are put in a position of either missing two days of work or making a decision about their reproductive autonomy.”
Similar mandates across the nation have not only failed to produce the basic benefits promised, but have instead given rise to negative consequences for everyone affected. At the council meeting, Jessica Milli of the Institute for Women’s Policy Research cited her organization’s study that reportedly showed little or no harm to businesses, yet this study has been proven as skewed and subject to misinterpretation.
One of the reasons why the mandate fails to protect employees is that it forces an additional cost upon businesses, who will in turn have to cover that cost by raising prices, reducing employee wages and benefits, or reducing the number of employees. These effects have been demonstrated repeatedly in other cities across the country.
Ultimately, the underlying question is: who protects the employee, specifically those who don’t have paid sick leave? Government mandates have proven to fail time and time again.
On the other hand, competition in the market is one of the core principles proven repeatedly to protect employees and consumers from exploitation. Famed economist and professor Walter E. Williams gives an example in his column What Protects Consumers and Workers?
“What motivates a grocery store manager to have sales, introduce new products and services, and incessantly search for other ways to please us and make us loyal customers? The easy answer is that the manager seeks greater profits, but profits cannot be simply decreed because he has no power to force us to shop at his store. He must lure us into his store, pleasing us more than our next best alternative—his competitor down the street.”
The same principle applies when an employer is seeking an employee. Businesses have a natural incentive to use additional resources to gain a greater competitive edge in the market place for labor. That often means higher employee wages and benefits.
Nobel Prize-winning economist Milton Friedman further expounds on how open competition is the common man’s most valuable and effective protection against exploitation, and how any time open competition is diminished, or government-imposed costs are added to businesses, this protection is eroded.
“Every group in our society that wants to get a privileged position tries to protect itself from competition by others. The workers try to protect themselves from competition from other employees by forming unions, getting government licensure, having arrangements under which they can limit the number of people who can get certain kinds of jobs. Producers try to get protection against competition by having employers’ organizations, forming monopolies, cartels, or by getting the government to impose tariffs, or restrictions on imports, or to give them special advantages of other kinds.
So all of us, we are all of us the same way. We want to avoid competition. And yet it is the competition that effectively protects us in our various forms. It protects the worker by providing alternative opportunities for employment. It protects the employer by providing alternative employees. It protects the consumer by providing alternative products.”
Austin has passed a mandate that adds costs to businesses. History shows that, rather than helping the workers it claims to help, it will harm both them and consumers. Unless reversed, only time will tell the magnitude of damage to the city’s citizens, economy, and particularly its most vulnerable in the labor market.