Association for Public Policy Analysis & Management

In 2012, the City of Seattle enacted the second local paid sick and safe time (PSST) law in the country, which provided one hour of paid sick time for every 30-40 hours worked by an employee within city limits (Office of the City Clerk, OR 123698). From a public health perspective, access to paid sick time may decrease contagion and absenteeism in the work place, which could decrease job turnover and increase employment stability if workers are more productive at their firm. However, if providing paid sick leave is costly to employers, firms newly mandated to provide leave may pass down the cost to workers in the form of fewer hours worked, employment cuts or lower wage rates. This paper utilizes a quasi-experimental design to longitudinally examine the earnings and employment trajectories of workers covered by Seattle’s PSST ordinance in the year after the policy went into effect.

I use a triple difference strategy, which compares employment outcomes for the cohort of covered and uncovered workers employed in the quarter prior to the policy to a cohort of covered and uncovered workers observed in the data in years prior using restricted-access administrative data from Washington State’s Unemployment Insurance program. I evaluate the PSST policy on workers’ employment, hours, and earnings levels to benchmark my results with previous studies. I further estimate the effect of the PSST on workers’ employment dynamics, including job tenure, the likelihood of being hired and separated from a job, and earnings and hours volatility to contribute new information on workers employment stability as a response to the ordinance. I find no effect of the PSST ordinance on workers’ likelihood of remaining employed, their hours worked, their earnings or their quarterly wage rate in the year following the policy, but a statistically significant increase in workers employment duration. I find a statistically significant decrease in workers’ corresponding likelihood of separating from a job.

Understanding the labor market effects of a local paid sick leave law from the perspective of the worker particularly important in today’s policy context. At present, a multitude of localities and states are enacting paid sick leave laws without clear evidence of how these policies impact workers. This study contributes to the small but growing body of literature estimating labor market outcomes as a response to paid sick leave legislation (Stearns and White, 2016; Pichler and Zeibarth, 2019; Ahn and Yelowitz, 2015). Moreover, in light of the evidence from the sociological and economic literature on the changing nature of work and rising earnings volatility, respectively, this paper contributes new evidence on how public policy affects workers’ employment stability (Kalleberg, 2009; Dynan et al., 2012).