Minimizing Contagion by Providing Paid Sick Leave

When you are sick, your co-workers want you to stay home.  If you will be paid on such sick days, how many people will abuse this and take more vacation days when they are actually healthy?  If nobody would abuse this right, then society would be better off because the sick who stay home would recover quicker and co-workers would not be exposed to contagion risk. Below the fold, I report a new Institute for Women’s Policy Research report that claims that providing paid sick leave would save New Yorkers a fair bit of money and sneezing. The “Freakonomics” research question here is; what types of people abuse sick leave and how can peer pressure and other strategies be used to minimize such “cheating”?

The links here do not work:  The report is available here.
February 16, 2012
Contact: Caroline Dobuzinskis,, 202.785.5100
Access to Paid Sick Leave Would Save New Yorkers
Nearly $30 Million in Public Health Costs
Washington, DCThe Institute for Women’s Policy Research (IWPR) has released a new fact sheet showing that universal access to paid sick days in New York City would reduce health care costs by $39.5 million annually, including $28.4 million in public health care dollars. Currently, the city has approximately 1,580,000 employees, or about 50 percent of all workers, who lack paid sick days.
The public health benefits of paid sick days are substantial. Providing access to paid sick days not only protects the public who may come into contact with an ill employee, but also allows workers to better care for their own health and the health of their families. After accounting for demographic factors and chronic health conditions, access to paid sick days is a statistically significant predictor of lower likelihood of delaying medical care and fewer visits to hospital emergency departments.
“Paid sick days help people to address their medical needs in a timely fashion without using hospital emergency departments, improving health outcomes and reducing the cost of health care,” said Kevin Miller, study author and Senior Research Associate at IWPR.
Paid sick days allow employees the time to visit a doctor rather than having to resort to more urgent and expensive emergency room care if a condition persists or worsens. Delaying medical care can aggravate chronic health conditions or increase the severity of critical health conditions or injuries. Previous IWPR research shows a net savings of $826 per event treated at a primary care physician rather than a hospital emergency department.
Paid sick leave legislation proposed in New York City would require businesses with 20 or more employees to offer 9 sick days a year and smaller businesses to offer 5 days. When last introduced, the bill had 35 sponsors in the New York City Council—which is one more than required to overcome a potential veto by the mayor—but Council Speaker Christine Quinn did not allow the Council to vote on the bill.
At a national level, IWPR research found that access to paid sick days would save $1 billion in reduced emergency department use, half of which comes out of taxpayers’ pockets through coverage under public health insurance programs.

Author: Matthew E. Kahn

Professor of Economics at UCLA.

20 thoughts on “Minimizing Contagion by Providing Paid Sick Leave”

  1. The best way to prevent cheating is to allow employees to roll over unused sick days, and to provide partial pay-out for these days upon retirement or resignation. In this way, employees who save up their sick leave know that if they need a month or two off for a serious medical procedure, their wages for that time will be covered.

    The key is to not provide too little remuneration for unused days (or people will be encouraged to use up their days by lying prior to leaving the organization) and to not provide too much payment (or people will be encouraged to save their days and go to work sick). The intent is to encourage people to save their sick time for when they really need it and for them to view their banked sick leave as one more reason to remain with their employer.

    It is also nice to allow employees to donate days to others in dire need, if they choose to do so.

    By viewing sick leave as part of compensation, companies will retain workers and reduce absenteeism. Employees should be rewarded for behaving honestly, not for behaving dishonestly, and the security of knowing a catastrophic medical matter won’t bankrupt you also relieves stress on the employee–not a measurable improvement in health, but likely to reduce actual illnesses nonetheless.

  2. The basic problem here, at least in my experience, is that most cases where taking paid sick days would be highly cost effective, by preventing colds and the flu from spreading, are cases where going to the doctor doesn’t make a great deal of sense; If you’ve got a cold, there’s not really anything a doctor can do for you, ditto for the flu unless it’s caught implausibly early.

    And yet, to take advantage of the paid sick days I do in fact have, I need a note from my doctor… Unless I’ve made my deductable for the year, much of the pay for the sick day doesn’t go to me, it goes to my doctor! While I’m forced to sit around in a waiting room sneezing on other people, instead of lying in bed getting some rest.

    1. Not all employers are so short sided.
      My current work place, you get sick days off, period. It’s easier for us, since it’s possible for many of us to work from home.

      Have not used a note from a doctor in a huge number of years.

    2. I’ve worked for at least a dozen companies as a professional and
      I never once needed a doctor’s excuse to take sick leave. Nor my
      better half, for what 10 companies over a quarter century? Brett
      has always claimed he was an engineer… maybe not?

      1. Ok, can somebody explain why, every time I include links to my patents, the comment vanishes?

        1. If I’m not mistaken there is a 2-link limit in comments, otherwise it goes to moderation purgatory where it may remain indefinitely.

        1. Absolutely awesome! I apologize Brett, I was wrong. At one time you were
          a productive engineer. However, you’re (we might infer) now working for a
          company where patented engineers need a doctor’s excuse to miss work, for even
          a day, from the flu. It is rather interesting to learn that crappy companies
          treat their most important employees this way, in 2012.

          Single payer is perhaps not as far off as I had previously thought.

          1. Russell, your last comment comes all the way back around the circle to the point of the original post by Matthew Kahn. Brett was concurring with the idea that a more liberal policy about using sick leave would be good for the company, good for the patient, good for morale, and good for general public health. And in spite of that, in many places (not just Brett’s) there are Simon Legree policies to make sure no employee can ever get over on the company for a day’s pay, so all those aforementioned benefits are subverted by company paranoia about cheating employees.

          2. In my 30 years, I’ve only worked for two employers, so it might have been the luck of the draw. And neither employer has been fanatical about enforcing that clause in their employee handbooks. (Particularly if it was obvious you were coming down with something when they last saw you.) But it was there, none the less.

            And I still am a productive engineer, despite sub-optimal sick leave policies.

          3. @Brett, so it’s a policy that is selectively applied. If you are on the good side, they let it slide.
            If they want to get rid of you, they have an opening.

            However, your experience does blunt the point you made earlier about “Unless I’ve made my deductable for the year, much of the pay for the sick day doesn’t go to me, it goes to my doctor!” since you don’t actually have to get a doctor’s note.

            As for 30 years, two employers – your experience there diverges from mine. 20 years, 13 employers (counting an acquisition as a new employer.)

    3. The reason some companies require a doctor’s note is that they expect sick days to only be used when necessary. Of course this policy conflicts with human nature as well as raising the issues you mention, and I think a lot of employers have come to realize it causes problems for them as well. People will go to work and expose others rather than deal with going to the doctor, defeating the purpose of offering the benefit. For example, my wife can’t get a same-day appointment at her doctor for something like cold or flu, because her doctor is too busy to work in an appointment for something she can do very little for. Then there’s employee resentment over a benefit policy, which I would imagine wouldn’t sit too well with the one offering the benefit.

      I think a lot of companies have moved to treating sick leave a lot like other paid time off — they consider it part of the compensation package and expect you to use it. It’s been seventeen years since I’ve needed a doctor’s note. Where I work now, you are expected to schedule vacation days in advance, and “sick days” can be used for paid time off when you can’t give advance notice. It’s a use it or lose it policy (including vacation time) with no rollover, but nobody is expected to lose it. Accounting has actually called me to ask if I wanted to use paid time off to cover a missed work day or even an hour or two when I’ve needed to leave early for a dental appointment, etc.

      Reading the OP, I was struck by the nine day proposal. That’s a lot of sick days for one year. If employers are forced to provide it, it will no doubt come at the expense of vacation time, I would think. For many, it would consume almost all of it. Even five days for small companies is more than I get (four, which I find to be adequate).

      1. “Reading the OP, I was struck by the nine day proposal. That’s a lot of sick days for one year. If employers are forced to provide it, it will no doubt come at the expense of vacation time, I would think. For many, it would consume almost all of it. Even five days for small companies is more than I get (four, which I find to be adequate).”

        Four sick days would not be enough if you were also responsible for a small child.

        1. Good point. My wife babysits when the grandchildren are out of school. Nine days probably aren’t enough.

  3. I got caught in a job where there were a lot of benefits. Cadillac benefits. Sick days and vacation days were a real problem. The first holiday season, I fought sick days and shortage of staff as they used vacation days.

    I changed the long term disability policy to start after six months, I bought a short term disability policy that started within 2 or 3 weeks of disabling illness. I fixed the maximum accrual of sick days to the number needed before short term disability kicked in.

    I instituted a policy of not allowing vacation to roll over from year to year. To sweeten the taste I bought out all excess vacation at the current pay rates just before xmas.

    I promised to fire any person who came to work sick for any reason.

    My sick leave usage dropped like a rock even for employees that had the maximum already.

    My vacation usage moved to the summer when the flow of patients was down and I didn’t wind up short staffed.

    The employees would force another employee to go home if they sneezed or coughed badly in the office.

    Medical office and the doctors couldn’t understand my “send employees home” policy. I had patients coming in with broken bones and serious conditions that should never have been exposed to any sickness by the office’s employees.

  4. I’m, er, amused by Matthew’s assumption. What evidence is there that cheating on sick days is a problem for employers that offer ready ability for employees to call in sick? In particular, where’s the evidence that on days when employees call in sick even though they might not meet the specific diagnostic criteria of disability or contagion, that their net contribution to production would be positive if they came in that day? (And that, of course, is leaving out the question of whether productivity through the rest of the year might be affected by “cheating”, i.e taking sick days when not strictly meeting the diagnostic criteria. A 5% increase in average productivity, for example, would completely wipe out the ostensible costs of “cheating” on day a month.)

  5. My company has an annual limit on freebie sick days, and demands a doctor’s note for more. There are no upper limits, if the doctor so orders, so there is no need to bank.

    This policy seems reasonable to me, but I am generally healthy, and have never gotten to the doctor’s note stage.

  6. If you pay on sick days, but not as much as for working – let’s say 75% – somebody with flu will stay home, and maybe a shirker will come to work for the extra 25%? And then as Scrooge suggests – you get ten days of 75% on your own say-so, after that, the doctor’s note? We are looking for incentives to work unless you are sick, but not to work if you are shedding virus and a generally pestilential hazard to your coworkers..

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