Paid leave: A fix for our imperfect marketplace

By Mitch Rofsky

As a business person, there is one economics lesson I learn over and over again: The marketplace is essential but not perfect.

It is not perfect in a variety of ways, but a big one is that not everyone can be a winner.

I don’t mean winner in the sense of Bill Gates or Warren Buffett.  Rather, a winner in the sense of middle class—with access to some discretionary income.

There are a variety of ways to lose—and they’re not all bad.  The marketplace creates losers of the inefficient or passé. Or the rich who make poor investments. But some consequences are so awful, such as starvation, that we, as a society, will not accept them. So we have food stamps.

No, it is not just well-heeled investors who lose. The marketplace makes losers of workers who may not have had the best education or family upbringing, and as a result don’t acquire valuable skills.  Or perhaps they just specialized in the wrong industry, developing skills that are no longer valuable.

In fact, there are a surprising number of jobs where skills aren’t distinctive and basic benefits are not provided. No matter how well or hard one works in those jobs, middle-class wages and benefits are not available.  One of the missing benefits is paid family and long-term medical leave.

A more perfect marketplace would consider the personal issues that enable a worker to excel at his or her job.  After all, if they or a family member is sick or their family has grown a little bigger, and they do what is necessary for the family, they risk losing a paycheck—or even their job.  This kind of pressure keeps them from being as productive as they can be.  Even worse, in the food industry where skills are often low and benefits non-existent, this could lead to employees working when they are sick.  Infecting the customers…and the business.

When the marketplace is imperfect, there is only one institution that can fix it: the government. Sorry, but the non-profit sector just doesn’t have the resources or the power.

The Protected Sick Time Ordinance recently implemented in the City of Portland, where my company is based, is an example. It ensures that all workers within Portland city limits are able to accrue paid and protected sick time at work.

Similarly, the proposed FAMILY Act by New York Senator Gillibrand would bring the United States in line with every other developed nation, ensuring paid leave for any worker who needs to care for a sick family member, take time off for their own long-term illness, or just had a child. It would be paid for like Social Security: Small contributions from employers and employees, about two cents out of every $10 earned, would fund benefits up to two-thirds of a worker’s pay during their time off.

Is this a burden on business?  Only if a business provides the added benefits but its competitors do not.  When certain businesses in your industry don’t offer sick pay, then it makes it a burden for you to offer it.  But when the industry as a whole offers such benefits, it is not a burden but a benefit—for all.  Healthier employees add to the bottom line through reduced turnover and training costs—and more productive employees.

Businesses are realizing this. The American Sustainable Business Council (ASBC) has met with Secretary of Labor Thomas Perez to support the Family Leave Act. ASBC represents businesspeople like me who are proving that you don’t have to choose between your investors and your employees. In fact, we believe that low-cost, simple marketplace fixes, such as having all employers offer decent benefits for every job, can play a significant role in building a more stable middle class—increasing the number of marketplace winners.

Any business owner can tell you: When workers are happy, businesses do better. If Congress wants to help businesses grow, it should pass the FAMILY Act and bring the U.S. in line with other developed countries. Businesses, employees—and the marketplace—will be better for it.

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Mitch Rofsky is President of Better World Club, Inc., America’s only eco-friendly auto club. 

This article previously appeared in The Hill.