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Oregon’s workforce and its consumers suffer each time
that our governments impose new costs on private
businesses.
Unfortunately, our state
and municipal governments do not appear to recognize
that reality.
Last march, the members
of the Portland City Council voted, unanimously, to
force Portland private businesses to provide “paid sick
leave” to their private sector employees. The Council
followed the lead of the Seattle City Council, who in
2012 mandated that private employers located in that
city must provide paid sick leave on their private
sector employers.
The state of Oregon may
not be far behind. Two identical bills were introduced
in this year’s Oregon Legislature that would have
enacted mandatory paid sick leave on most Oregon
businesses. SB 801 and HB 3390 would have required most
Oregon employers to provide their employees with seven
days of paid sick leave each year.
Fortunate for consumers
and workers alike, these bills were not enacted into
Oregon law!
However, House Bill 3390
did receive multiple hearings, and significant public
testimony. The House Committee on Business and Labor
held a work session and passed the bill out on a party
line vote. It was referred to the House Rules Committee
where it later received a second public hearing with
even more public testimony. HB 3390 was still in that
committee when the 77th Legislature
adjourned.
The provisions of HB
3390 were very similar to Oregon’s mandatory
family-leave law. That existing law requires Oregon
businesses to allow their employees to take up to twelve
weeks of unpaid time-off each year, for illness, injury
or a variety of other family situations. The law applies
to all Oregon businesses that employ twenty five or more
people, for twenty or more weeks per year.
HB 3390 would have
required Oregon businesses that employ six or more
employees, for twenty or more hours per week, to provide
seven days of paid sick leave each year. This
legislative measure required employers to provide one
hour of sick leave, for each thirty hours worked,
starting from the very first day of employment.
The most significant
difference between the existing family-leave law, and
the proposed new law, was that HB 3390 would have
required the employer to pay the employees’ wages and
benefits while taking sick leave. The business would
have had to pay the covered employee for not working
while also paying another worker to perform the work
that the employee on sick leave would have been doing.
It would have had
virtually the same effect as a government mandated 3.3
percent pay increase for all eligible private employees.
Stated another way, it would have effectively increased
the cost of Oregon’s minimum wage, from $8.95 per hour,
to about $9.30 per hour, increasing the employers’ cost
by about $725 per employee per year. The cost for each
covered worker would have been significantly more, in
the event that the employee was earning more than the
minimum wage.
Oregon state government
currently provides more than forty different forms of
paid leave to its public employees, according to the
Department of Administrative Services. The cost of that
paid leave is estimated at about fifteen percent of
payroll. That calculates to more than one and a quarter
billion dollars per two year budget cycle, payable by
the taxpayers of Oregon.
In order to stay in
business, private sector employers must maintain
competitive costs. This is in stark contrast to
governments who pay their employees with dollars
generated from fees and taxes predominantly levied on
the private sector. When governments impose new cost
mandates, private businesses must either increase the
price for their products and services, or find savings
to reduce their costs.
Competitive market
forces often prevent businesses from increasing their
prices. Therefore, in most cases their employees are
necessarily targeted to compensate for the government
mandated increases in employee costs.
Those costs can be
reduced in several ways. Some private sector employees
will simply lose their jobs! Other employees may expect
their hours of work to be reduced. In the alternative,
they may expect to have other existing benefits reduced
or eliminated.
The largest negative
effect will be on entry level jobs that are
traditionally filled by teenagers, and those with high
school educations, or less. That segment of Oregon’s
workforce already suffers among the highest rates of
unemployment, and underemployment, in the nation.
Oregon is,
unfortunately, a national leader in high school
drop-outs. At least one third of our high school
students are failing to graduate on time, if at all.
This struggling segment of our workforce will be hurt
the most.
Private sector wages and
benefits should be established by economic factors in a
free market economy. Consumers and employees are always
the ones that pay the price when governments impose
cost-mandates, on private sector businesses. For that
reason, Oregonians should insist that their governments
depend upon the free market to establish private sector
employee compensation as well as setting prices for
commodities and services.
Please remember, if we
do not stand up for rural Oregon no one will.
Best Regards,
Doug
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