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Economists’ Rx: “Sick? Stay Home!”

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Yves here. It’s a sad testament to the state of our society that economists have to study the question of whether sick leaves work. It ought to be obvious that having sick people come to work is unlikely to be a plus for the enterprise. The not-well person won’t be fully productive and has good odds of passing his ailment on to others. And it’s a loss society-wide, since the sick worker who is nevertheless required to turn up at his place of employment won’t just expose co-workers, but also people on his commute, and at places he visits, like a coffee shop. So why do employers insist sick workers turn up? The obvious reasons reflect badly on the bosses (quelle surprise!): They’d actually have to manage if an employee or two didn’t turn up due to illness, like figure out what tasks might be

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Yves here. It’s a sad testament to the state of our society that economists have to study the question of whether sick leaves work. It ought to be obvious that having sick people come to work is unlikely to be a plus for the enterprise. The not-well person won’t be fully productive and has good odds of passing his ailment on to others. And it’s a loss society-wide, since the sick worker who is nevertheless required to turn up at his place of employment won’t just expose co-workers, but also people on his commute, and at places he visits, like a coffee shop.

So why do employers insist sick workers turn up? The obvious reasons reflect badly on the bosses (quelle surprise!):

They’d actually have to manage if an employee or two didn’t turn up due to illness, like figure out what tasks might be postponed or call in someone to substitute or (horrors!) roll up their sleeves and pitch in. So much easier to play Lord of the Manor

They believe they own employees, so employees staying home is insubordination

They believe employees are conniving, so if they are taking a sick day, it’s really so they can go engage in a nefarious activity, like drive out to the nearby Indian reservation and gamble…or even vote! This sort of supervisor would regard using a banked sick day to go to the dentist or doctor or the DMV as an abuse

In other words, the resistance to providing for sick days has little to do with the economics of the business and everything to do with the view of the top brass that only employees of at least the managerial level get to exercise control over their time.

By Stefan Pichler, Postdoc, ETH Zurich, KOF Swiss Economic Institute, Katherine Wen, PhD candidate, Department of Policy Analysis and Management, Cornell University, and Nicolas Robert Ziebarth, Associate Professor, Cornell College of Human Ecology. Originally published at VoxEU

By now, it should be clear that presenteeism (going into work when sick) contributes significantly to the transmission of diseases. This column summarises current evidence on sick-pay mandates in the US and the spread of flu-like illnesses and COVID-19. Over the last ten years, states that introduced sick-pay mandates saw a decrease in seasonal flu activity by up to 30% in the first years compared to states that didn’t introduce such mandates. Introducing sick-pay mandates did not result in significant employment or wages decreases. Mandating COVID-19-related emergency sick leave also significantly reduced COVID-19 infection rates in states previously without sick-pay mandates, especially affecting low-income and service-sector employees.

The US is one of the few OECD countries that does not guarantee universal access to paid sick leave. Europeans, by contrast, take this benefit for granted. Nevertheless, more than a third of all European employees go into work when sick at least once a year (European Working Conditions Survey 2015). Moreover, also in Europe, lower sick-pay generosity can increase presenteeism behaviour and trigger relapses of illness, as shown for Spain (Marie and Castello 2020).

Our research shows that presenteeism behaviour, especially during the flu season, increases the spread of diseases. In the current pandemic, the spread of COVID-19 could be reduced if more employees had access to paid sick leave and stayed home when showing symptoms of sickness. The pandemic has highlighted the need to bolster sick leave systems and led to increases in access to paid leave in many countries (OECD 2020, Thewissen et al. 2020).

Reforms in the US

Even in the US, the COVID-19 pandemic encouraged US policymakers to reconsider their positions on paid sick leave. For the first time ever, effective from April 2020, a bipartisan majority enacted a sick-leave mandate at the federal level, as part of the Families First Coronavirus Response Act (FFCRA). Among other benefits, the FFCRA included up to two weeks of Covid-related emergency sick leave. Although the pandemic continues, the main FFCRA sick leave provisions expired at the end of 2020 as Democrats and Republicans could not agree on an extension.

But does paid sick leave really make a difference to the transmission of COVID-19 and other respiratory illnesses such as the flu? We studied this question in several peer-reviewed research articles (we discussed previous findings in an earlier Vox column; Pichler and Ziebarth 2018).  Specifically, we studied the effects of introducing sick-pay mandates in dozens of US states and cities over the past ten years. Using state-of-the-art statistical methods, we estimated the causal effect of improved access to paid sick leave – especially for employees in the service sector and lower-paid occupations – on influenza activity in the population. Most recently, we evaluated whether the FFCRA emergency sick-leave provision was effective in reducing the spread of COVID-19 in the US.

Causal Effects of Better Access to Paid Sick Leave for Low-Income Employees

First, when states mandate employers to provide paid sick leave, employees’ access to paid sick leave significantly improves. Second, because of improved access, sick workers use the new benefit and are more likely to stay home (Maclean et al. 2020). This reduction in presenteeism behaviour lowers the spread of contagious diseases, as reduced social contact reduces transmissions to co-workers, customers and other people, for example, on the way to work (Pichler and Ziebarth 2017).

The findings are consistent when we study influenza-like illnesses, where we find a decrease in seasonal flu activity by up to 30% in the first years after state governments mandate sick-pay access (Pichler and Ziebarth 2017, Pichler et al. 2021). Moreover, we find that COVID-19 infection rates were significantly reduced, with an estimated decrease of 56% in the weeks following the introduction of FFCRA emergency sick leave (Pichler et al. 2020).

Figure 1 illustrates the decline in influenza (Pichler et al. 2021). The figure plots differences in rates of influenza-like illnesses between states that introduced sick-pay mandates (treatment group) and states without sick-pay mandates (control group) in the US. To illustrate the effect of increased access to paid sick leave, the figure normalises the introduction of sick-pay mandates at time 0 on the horizontal axis. This mapping is also normalised so that at time -1, this proportion corresponds exactly to 0. The vertical axis shows the differences in flu cases between states with and without a mandate. We observe flu dynamics in the 36 months before and after the introduction of the mandate.

Figure 1 Mandate effects on influenza

Economists’ Rx: “Sick? Stay Home!”

Figure 1 shows that in the 36 months before the introduction of sick-pay mandates, the flu rate differential between the two groups of states is roughly zero. However, after the mandates are enacted, we observe a decrease in the proportion of flu cases, which averages slightly more than five influenza cases per 1,000 doctor visits. As the overall flu case average is 18 cases per 1,000 doctor visits, this represents a decrease of one-third over the 36 post-mandate months, where the public health benefit increases over time. In the first 12 months, we observe an 11% decrease in flu cases.

Figure 2 shows the effects of the FFCRA emergency sick-leave provision on COVID-19 infection rates, following a similar model described in Pichler et al. (2020). As FFCRA was introduced for all states at the same time, we needed a different statistical ‘identification’ strategy to isolate the causal effect of the emergency sick-leave provision. We compare states with existing sick-leave mandates (control group) to states where workers gained access to paid sick leave for the first time thanks to FFCRA (treatment group).

The FFCRA was signed into law on 18 March 2020 (first vertical line) and became effective on 1 April (second vertical line). Here, too, we find a significant decrease in COVID-19 cases as a result of improved access to paid sick leave for low-income and service-sector employees. The decrease is about 400 cases per state and day, which sums to about 15,000 prevented cases per day for the entire US.

Figure 2 Mandate effects on COVID-19

Economists’ Rx: “Sick? Stay Home!”

Do Sick-Pay Mandates Harm the Economy?

There will always be critics of sick-pay mandates. Their main arguments are that such mandates harm the economy because they drive up wage costs and incentivise shirking behaviour. We investigated this argument in another research study – again for the US using the introduction of state and city-level mandates. Specifically, we compared wage and employment dynamics in cities and states that introduced mandates to comparable cities and states without a change in the law. The result: we did not find any evidence for significant employment or wages decreases (Pichler and Ziebarth 2020a).

Outlook

Unfortunately, the evidence presented here was not sufficient to convince the US Congress to mandate sick pay beyond 31 December 2020. However, the new Biden administration is likely to consider such a nationwide law, and the majority of voters (also Republicans) have long supported a federal sick-pay mandate (Pichler and Ziebarth 2020b).

In Europe, there exists basically universal coverage of paid sick leave. However, in Europe as well, to prevent the spread of contagious diseases, employees should more often use sick leave and work-from-home options, especially when they have cold and flu symptoms. Needless to say, this is particularly true during the current pandemic. One of the few positive side effects of this pandemic is that flu cases have plummeted to a level that is not statistically significant from zero (Hills et al. 2020) – which also impressively demonstrates how carelessly we once dragged ourselves to work with symptoms of sickness. Thus, the next time our throats scratch or we sense a fever emerging, we should stay home with a good conscience. It helps us all.

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