The Other One Percent
New sick leave rule is cumbersome for all, but benefits few.
The Obama administration has now issued its 13th executive order primarily aimed at government contractors. This one, which was released on Labor Day, would require government contractors to provide seven days of paid sick leave per year. But when you get into the specifics of the order, it becomes yet another case of well-intentioned policymaking run amok.
Let’s start with the premise or, perhaps more appropriately, the “evidence” behind the order. According to the White House, there are some 300,000 people working on government contracts today, mostly in the janitorial and food services sectors, who do not get paid sick leave. As a matter of fairness, it is easy to understand why that bothers a lot of people. Of course, some of that may be the result of the extraordinary downward pressures on costs that we have seen in recent years. Many of those contracts may well result from sealed bid competitions or other low-price buying choices by agencies that reward the wrong behaviors.
But that’s an issue for another day. The key evidentiary point is that some 300,000 are facing hardships they shouldn’t have to face. At the same time, in virtually the same breath, the White House also estimates there are total of 28 million Americans working on government contracts. While a huge number, it might be accurate if one accounts for the total employment of every company, including manufacturers of all kinds, that has government contracts. And every one of those companies, whether any of their employees are among that 300,000, will have to create, staff and manage a new compliance capability to report their adherence to the directive. In other words, to provide a benefit to the 1 percent, the administration is mandating a new, extensive and highly prescriptive reporting and compliance regime that covers 100 percent.
Beyond the questions such an evidentiary imbalance raises, there is a range of specific issues which were clearly not considered in the development of the rule. For example, many progressive companies, including in the government contracting ecosystem, have created an array of flexible leave options for their employees to choose from. What happens to the company (or its employees) that has a “leave bank” for its employees, which enables them to choose how they want to use their leave in any given year? Those leave banks may not “qualify” under the executive order, even though they accomplish the same objective.
It is also not at all uncommon for companies, particularly in the professional services and consulting world, to actually have no defined sick leave. Instead, employees take leave at their discretion; it is fully expected that they will do so responsibly. And they get paid for those days they take off. Here again, even though the practice achieves the same goals as the executive order, it may not qualify.
Put more succinctly, even as we discuss with more frequency and seriousness the importance of “evidence-based policy” it would seem that this logical concept has not permeated the offices of those writing these executive orders, including this one on paid sick leave and the granddaddy of them all, the Fair Pay and Safe Workplaces order.
Moreover, the process of developing executive orders is neither consultative nor transparent. Its parameters and scope are determined by a small, inside cadre that all too often lacks the breadth or depth of understanding and knowledge needed to ensure the order achieves its goals without imposing unnecessary burdens and costs. On the other hand, as damaged as the legislative process is, when done well, it is structured to at least air the various alternatives and identify potential unintended consequences of any given proposal. And while we are all well aware of the gridlock that has gripped Congress in recent years, work does get done. Thus, it is disconcerting to see the executive order lever pulled as a first, rather than last resort, as is the case here.
So, once again we are left with an EO that is appealing in sound bites but is going to be enormously costly and complicated to implement. There will be those who will say that despite its weaknesses, it will help 300,000 American workers. And they may be right. But the question they haven’t taken the time to ask is whether it is the only or the best way to do so. On that count, the evidence clearly suggests otherwise.
Stan Soloway is president and CEO of the Professional Services Council.