The Effects of Seattle's Paid Sick and Safe Time Ordinance on Workers' Earnings Dynamics

• In Event: 1-161 - Public policy as macro-level context: The effects of local labor policies on family and child well-being

Integrative Statement

In efforts to reduce inequality in workplace compensation and to promote public health, the City of Seattle enacted a Paid Sick and Safe Time Ordinance (PSSTO). The policy mandates employers to provide one hour of paid sick time for every 40 hours worked by their employees, which employees can use to for themselves to take care of a family member (Office of the City Clerk, OR 123698). This paper provides a comprehensive evaluation of Seattle’s Paid Sick and Safe Time Ordinance on workers’ earnings and hours worked, contributing new evidence on the effects of a local paid sick leave policy. If providing paid sick leave at a local level leads to less employee absenteeism and more productive employee time, the policy could lead to a decline in job turnover and greater earnings stability for affected workers and their families. However, if providing paid sick leave is costly to firms, the expenses of implementing PSSTO may get passed down to workers through lower wages, fewer hours or increased earnings or hours volatility. Given the multitude of localities and states enacting paid sick leave laws without evidence of how these policies impact workers, evaluation of the Seattle’s PSSTO can contribute relevant evidence as localities in other states and regions of the country weigh policy proposals. 

Using quarterly employer-employee matched administrative data from Washington State’s Unemployment Insurance program, I exploit the quasi-experimental design of the policy causally identify effects of the law on Seattle workers’ labor market outcomes. I utilize a difference-in-difference strategy to compare affected workers in Seattle to workers in the rest of Washington State using regional control groups. I estimate effects for workers’ earnings, hours worked, and duration employed and workers’ earnings and hours volatility. Preliminary evidence shows that Seattle’s PSSTO had minimal effect on workers’ average quarterly hours, earnings, or their likelihood of remaining employed. This suggests that the cost of providing the PSSTO did not get passed down onto workers, who are newly able to take off time to care for themselves and their families.

Author

• Hilary Wething, University of Washington
  Presenting Author