Proposal for Paid Sick Leave

Context

Reference to a current Michigan bill or law that relates in some way to your proposal:

Why this proposal will make a difference in the lives of students of all ages across Michigan, or a significant subgroup (by age, background, economic status, and/or region, etc.) of students in Michigan: This proposal plans to make a difference in the work force of Michigan, as I plan to narrow the gap between the top 1% and the bottom 99%. The income inequity problem in Michigan ranks one of the worst. My aim through this proposal is to allieviate the poverty symptoms of the poor. Despite the overall improvements in the economy, the improvements do not necessarily extend to the bottom 99%. 

How and where did you learn about the issues underlying your proposal?

Understanding that Michigan has a terrible distribution of wealth between the elite 1% and the bottom 99%, my research primarily focused on solutions that could be applied to Michigan. Having many friends that grew up in Michigan, I better realized the different stereotypes that most major cities carried with them, such as Bloomfield Hills and its relatively wealthy population. I first looked at Ann Arbor to assess how wealthy this area was compared to the rest of Michigan. One can clearly see that there are few concentrated cities that hold most of the wealth, and how there is not a substantial class in between the rich and poor. Thus, my assumptions were better solidified with the findings of my research.

How has your service activity influenced your thinking about this proposal?

After working at the Ann Arbor Arts Center, I developed a broader view on what determines small and large businesses. In my volunteer hours, I devoted my time to help organize the center's finances. As I sifted through the numbers, I began to amalgamate a better picture of how well the center was performing throughout the 2016 fiscal year. Despite being classified as a non-profit entity, the Ann Arbor Arts Center employed roughly 15-30 workers and still managed to have financial flexibility. The expenses incurred to obtain outside pieces of art were sometimes surprisingly large. If this non-profit entity could earn the amount of capital to finance these artworks, I figured that employee benefit packages for paid sick-leave could be a reasonable compromise between employer and employee. 

Link to your media artifact(s) giving background on the issue:

Consultations

Talk directly with at least 3 real live people who have special knowledge about this topic or the impact your proposal would have, and summarize their comments. These may include people appearing in your media artifact (video, podcast, etc.).

CONSULTATION 1:

3 question phone interview with Senator Jim Ananich.

1. What are the current laws in Michigan that govern sick leave? If there aren't any laws addressing it directly, what laws should include this solution?

 There are no direct laws governing sick leave policies in Michigan. Under Michigan's Compiled Laws Section 408.471, employers may give sick leave as a fringe benefit. Our bill would directly address the sick leave policies.

2. What are the effects of paid sick-leave in other states such as California and Connecticut? What makes you believe that Michigan is fit to implement this policy?

In Connecticut, many were concerned of the possible effects from this mandatory paid sick-leave. However, we saw after a couple of years that marginal costs were additionally incurred on employers. I think this would impact lower socioeconomic classes drastically and help the overall Michigan economy.

3. What are the major arguments against this policy?

Many Republicans oppose this bill and do not see any fruits if this upcoming bill were to pass. They strongly believe the importance of having favorable business conditions for the Michigan economy. We need to be accountable for other citizens suffering from the lack of welfare programs.

CONSULTATION 2: 

Phone interview with Wendy Block, member of Michigan Chamber of Commerce

Do you see paid sick-leave a better alternative to minimum wage increases?

Current political movements to raise to minimum wage to $15 an hour are picking up supporters in Michigan. If this were to happen, then more job cuts and unemployment would rise. I also do not see that paid sick-leave as an alternative. Companies may be nuisanced with this legislation and may not be compliant with these guidelines, thus losing effectiveness.

Do you think that this recent bill, called "Paid Sick Leave", pushed by Senator Ananich will be passed?

No. This bill was raised earlier and did not receive sufficient signatures in the past. They think they have an opportunity this year, but that's also what they thought last year. If this were to pass, employees could possibly lose benefits in other areas such as retirement and insurance. 

What do you think would be the best way to improve Michigan's economy?

Our organization believes that Michigan would best be benefitted if we draw in outside businesses. With emerging technology companies expanding in the Detroit area, we would like to provide favorable business conditions for these companies. The paid sick-leave could scare these employers away, something we don't need right now.

CONSULTATION 3:

Conversation with Peter Ruark, member at Michigan League of Public Policy

What do you think needs to be improved the most in Michigan's economy?

Ever since early 2000s, Michigan faced rapidly increasing unemployment and poverty among several communities. Government authorities have not been responsive to this problem. They need to be take better responsibility of these overlooked problems faced by a huge proportion of Michigan citizens.

Do you think paid sick-leave would better these individuals?

This bill has been trying to get pushed for a while. It picked up pace last year but fell through in the final days. I think this would largely help people with low income earners by helping them recover some days of work and possibly could save them from their jobs.  

Prospectus:

Describe the specific issue or problem, being sure to provide sufficient context so that someone less familiar with the issue has a sense of the bigger picture, but know that your focus here is on a more detailed spelling out of the specific problem or issue that you’ve identified. (250 words minimum)

After considering the wide income gap that exists between the rich high middle class and everyday citizens that continues to grow everyday, I believe that implementing a statewide earned paid sick leave legislation could ameliorate this widening gap. In 1979, the top 1% accounted for 9% of total income in the state; 34 years later, the statistics double as the elite class contributes 18% of the state's total income and other Michigan residents saw their incomes decline. Today, Michigan ranks 11th in the nation in income inequality; the top 1% makes 22 times more than the average citizen. Clearly, policies up to this point have not done enough to defeat this inequality. 

Pairing the stark disparity in income levels with a recovering economy in Michigan, more needs to be done to improve these statistics. Implementing earned paid sick leave in Michigan should incur additional costs for suppliers of laborers (the elite middle class that comprises the 1%). Other recommendations to improve the income gap includes investments in primary and secondary education, as well as improved child care. However, these policies do not provide immediate impacts to the economy and are rather long term remedies to the problem. A policy that would affect a majority in the labor force is enacting an earned paid leave guideline. By the nature of economics, the supply of labor in the labor force market would be cut back. Although this decreases the quantity of workers employed, this would make the labor market more competitive as the price of wages increase. What I propose covers the labor force on a large scale, and imposes minimal burdens to the higher class. 

Potential Solutions:

Describe three reasonable, feasible potential solutions or approaches that would help address this problem.

SOLUTION 1:

Embedding Paid-Sick Leave Policy in Employment Contracts

In this solution, I suggest that policy is set up to mandate employers to adequately notify and make a formal agreement with their employees regarding sick-leave compensation policies. Through this proposal, I aim to eliminate confusion between employers and employees regarding sick-leave compensation when the guidelines are unclear. Furthermore, I would like to aid the general public by having the employers support their employees' wages when they are barred from work due to reasonable emergency circumstances. This policy considers people who are heavily dependent on their jobs as the major source of income and are unexpectedly coerced out of work due to illness. These groups of people include single parents, mothers and financially insecure employees. If the standard of living improves substantially from the lower classes, the income gap would be bridged closer and possibly stimulate the emerging economy in Michigan. I suggest that the language of this policy on employment contracts should be uniform across all industries. Likewise, the amount received should be equal to the approximate wage the employee would earn on that day had he come into work.

However, one thing that must be considered is the distinction between big and small businesses. Big businesses that employ over 50 workers should be held liable to this proposal, whereas smaller businesses can be exempt to provide financial flexibility to the local owners.

Definition on Business Sizes: http://support.spikescavell.com/faqs/what-is-the-definition-of-small-medium-and-large-business-within-the-observatory/

This solution also considers the costs incurred by the employer, which are minimal; employers would be required to modify their employment contracts to adequately include a paid-sick leave notification and formally agree to negiotated terms regarding paid sick-leave.  

SOLUTION 2:

Earned Paid Sick-Leave

In this solution, I look to push forward a earned paid sick-leave policy where employees are able to earn the hours to be exempt from work due to illness, while protecting their finances of the days missed. Employers are able to cap off the amount of days employees have access to and minimizes the burden placed on employeres. Furthermore, this provision differentiates itself from other paid sick-leave laws that freely entitles employees to these exempt days; employers are able to split the costs of paid sick-leave with their employers by making their employees earn the accessibility to these benefits. This solution aligns the employees interests with those of the employers, by incentivizing the merits of consistent attendance at work. If a bill were to be passed, provisions regarding business size should be considered to make employee-size thresholds that allow small businesses to forgo the high costs of these benefits. By protecting small businesses from these costs, this bill would promote the well-being of Michigan's emerging economy. With a 21% of Michigan's population earning less than $40,000 a year, it is evident that a significant group of people would benefit from this solution by building their financial flexibility into their work schedules. This legislation could mirror that of other states which have implemented paid sick-leave policies; in California, employees can accrue one hour for every 30 hours worked into a paid sick-leave account. The legislation should also consider the employee's eligibility to receive these benefits. These qualifications include a minimum of 30 working days within a year, benefits starting 90 days after employment, and what conditions are permitted for an employee to leave. Likewise, employers are able to cap their losses by limiting their benefit package to a maximum of 48 hours accrued. 

Statistics On Michigan's Income Map: http://www.city-data.com/income/income-Ann-Arbor-Michigan.html#mapOSM?mapOSM[zl]=6&mapOSM[c1]=44.58775&mapOSM[c2]=-86.41554500000001&mapOSM[s]=income3&mapOSM[fs]=false

California Paid Sick-Leave Policy: https://www.shrm.org/resourcesandtools/tools-and-samples/policies/pages/california-paid-sick-leave-policy.aspx

SOLUTION 3:

Use State Taxes to Fund Paid Sick-Leave

This solution shifts the focus of financing from employer-employee relationship to an exogenous source of funds from government. In this proposal, Michigan residents could use their tax dollars paid to government to fund their days for paid sick-leave. If the total taxes collected were equally allocated separate businesses to finance checks paid to employees, employers would be subsidized to provide employees these benefits. This would benefit low-income earning residents by using the higher middle class residents' tax dollars to help finance these costs. Despite the goals that this solution tries to achieve, wealthier Michigan residents may not witness as many benefits that low-income residents receive and would arguably seek that these tax dollars be spent elsewhere. Similarly, Michigan government authorities may not have as much financial freedom to spend these tax dollars on this bill, especially after recent investments to recover the damages from the Flint water crisis.  Looking into the budget itself, most of the state's spending goes to health care and education, followed by human services. With aggresive bills to cut health care costs proposed by Trump's office, this could be an area where health care spending can be reallocated to wage relief. The state spent $52.2B in total expenses, and 35.3% of that figure ($18.4B) goes to health care. This is a huge opportunity if the executive branch continues to seek ways to cut on health care spending.

Michigan 2016 Budget Ending FY Sept. 2016: http://www.michigan.gov/documents/budget/CAFR_FY_2016_550912_7.pdf

Reaction or advice from a Topic Coordinator:

You must solicit a critique from a topic coordinator, and explain the impact that advice has had on the final draft of this proposal.

Orian Shkrobut : In our meeting, Orian elaborated on specific aspects my proposal should consider, and encouraged me to clearly define and focus on the big picture. The main problem I am trying to solve is the income gap heavily present in Michigan.

In my first solution, he helped me realize that simply disclosing a paid sick-leave policy in employment contracts do not do enough to solve the problem. As a result, I chose to make this solution more aggresive by enforcing employers to finance this policy. At the same time, I included exemptions from smaller businesses from this policy which would remove any lags in this growing economy.

The second solution helps employers in comparison to the first solution in that employees have to earn their hours of leave, rather than simply being granted these days. Similar to the first solution, I included the California anecdote as a guidance for the restrictions and eligibility of this benefit package. 

The third solution considers financial support from the government. To further explain how government spending could be reallocated, I decided to take a deeper look into Michigan's budget. From there, I decided that health care cuts could be a source of funding for this policy.

Research process:

Describe your research process — indicate who you talked to (including but not limited to consultants), what you read, what your thinking was, how it changed over time, and how your consultants changed your thinking. This description of your research process definitely could include “dead ends,” or ideas you had that didn’t ultimately bear fruit.  In short, we want to know what you did and how it led to your legislation, and we also want you to give us a window into your thought process.

Pondering the wide income gap that has exacerbated in the state of Michigan, I focused on ways to improve the welfare of lower level employees. My initial thoughts included a repeal on prevailing wage in Michigan; however, this would mainly affect those in the construction industry and did not see this as a solution that encompasses all workers of low class. My second idea stemmed from raising the minimum wage, similar to those in San Diego and New York. Digging deeper into the topic, I found numerous results where unemployment actually rose in certain services industries and did not think that raising the minimum wage was a fit solution for Michigan when recent findings show that Michigan's employment is surging. 

Filtering through other possible recommendations outlined by associations , I found a unique solution regarding paid sick-leave that was previously applied to a few states including California, Connecticut and Massachussets. If people are able to build financial flexibility through these programs, the income gap could materially be bridged closer together. This law would help protect lower-end workers in most circumstances and I found this to be a relatively holistic solution to other alternatives. After speaking to two topic coordinators, I made adjustments to my solutions to better attack the main problem of "population income disparity" and focus on how to seamlessly integrate the proposal in Michigan's current economy; this narrower scope allowed me to research what businesses would be affected by said proposal and how this initiative would be funded. 

Author contributions:

Please delineate--in detail--who made what contributions to the process and to the finished proposal? Who took on which responsibilities in researching ideas, drafting language, etc.? 

N/A

===FORMAL PROPOSAL===

The sections below should comprise your final proposal language, submitted for consideration by your peers and potential inclusion in the MSC Platform.

Preambulatory clauses

These set up the PROBLEM, but not the solution.

WHEREAS.... the Michigan's overall economy has grown by 4.2% after the '08 Recession, top 1% of the popuation experienced an income growth of 26.3% while the income of the bottom 99% stayed stagnant at .3% growth. The top 1% earns nearly 22 times the income of the bottom 99% population, showing the lack of improvements for this socioeconomic class's standard of living.

WHEREAS.... White residents represent 80.2% of Michigan's population, the remaining 19.8% consist of other ethnicities; of these minorities, 87.5% are stuck in poverty. 25% of Michigan residents earn low-wage jobs, indicating a signicifcant population who are succeptible to financial insecurity. Clearly, minorities have been suffering poverty while the top 1%, who are mostly white, continues widen the income gap with above-average growth. If these impoverished classes are forced to leave work due to family or other emergencies, they risk losing their only source of main income.

WHEREAS.... With rising work participation rates in the women population in Michigan and more equal pay compared to men, women are not guaranteed maternity leave from their employers. Despite these improving working conditions for women, they face a risk if forced to leave work due to children constraints.  

Operative clauses

These describe in detail, the solution you are proposing (not the problem itself; those should go in the "Whereas" clauses above).

THEREFORE BE IT RESOLVED....

1.  ...by requiring employers to provide paid sick-leave benefits for certain employees. Smaller employers that employ less than 10 employees may be exempt from providing these benefits through government tax credits that subsidize these benefits. Employees may accrue one hour of paid sick-leave for every 30 hours worked; small business employers can cap the number of hours for paid sick-leave at 40 hours, and other large business employers can cap the benefits at 72 hours. Employees may be able to roll over their employee benefits but are not able to use more than 40 or 72 hours annually based on their employer's classification of small or large business. The pay rates that feed into sick-leave benefits would be what the employee would normally earn on a typical day of work.

2. ... by specifying under which circumstances employees are allowed to use their accrued hours. "Family" emergencies would include circumstances to care of step children, biological or adopted children; biological or step parents; legal marriage partners; parents and siblings of marriage partner; grandchildren. The employee may also be used to take treat any physical or psychological illnesses he or she is experiencing. Paid leave includes but is not limited to vacation days, personal days and time paid off.  For employees to be considered eligibile for these benefits, employers may require that they have been employed for at least 6 months with the employer. 

3. ... by not permitting employers to require secure replacement worker when using their sick-leave benefits. Similarly, an employer may not be forced to fire employees for using these benefits. An employer may not interfere with employees using their benefits that they have accumulated, giving employees full discretion when to use their benefits. However, an employer may require notice from employee prior to taking time off from work. 

4. ... by developing many district-based marketing teams to ascertain that employees are aware of legislation changes associated with paid sick-leave. 

Counter-arguments:

What are three reasonable arguments against this proposal?

1. An increase in unemployment may arise from this legislation. If employers incur this additional cost to provide this benefit, the supply of jobs available ultimately diminsh. As a result, the quantity of employees in the workforce also drop and increases the unemployment rate. This may lag the growth prospects in Michigan's recent economy surge.

2. With higher associated costs incurred from this legislation, employers of global brands may be hesitant to expand their business in Michigan. As a result, higer-level job opportunities could be even more limited; 

3. One problem that this legislation doesn't solve is drastically bettering the lives of people who are in extreme poverty. Those earning the minimum wage or barely above will not experience a pay raise that will better cover their finances. This provides short term shortages for these employees. As a result, this legislation will not do enough to lift the bottom 99% high enough to dramatically close the income gap.

Costs and funding:

What will your proposal cost (in direct expenses, lost tax revenue, lost economic opportunity, and/or non-monetary costs)? How will you pay for your proposed legislation? Where will/could the funding for your proposal come from?  Who might object to dedicating resources to your proposal (competing interests)?  

The proposal will mostly incur a cost towards employers that are deemed large businesses. These costs will accrue up to 72 hours annualy times the normal pay rate per employee, or three days worth of work. The government will subsidize small businesses through tax credits that they reimburse to the employers. This will cost 40 hours annually times the pay rate per employee, or two full days worth of work that the employee would earn. 

After calculating the total benefits potentially available to the 33 most common jobs in Michigan, this legislation could cost employers at least $2.15 billion dollars. This amount could be shared by government when subsidizing small employers. The average wage from the most common jobs in Michigan is $16.64, showing an opportunity to improve the welfare of lower wage employees.

References:

These can include websites or other information you have found about the issue.

http://www.mlpp.org/michigan-income-inequality-11th-worst-in-nation-wealthiest-1-make-22-times-more-than-rest-of-workers

https://www.bloomberg.com/view/articles/2015-02-04/sick-leave-doesn-t-hurt-business-says-business

 

Repeal on Prevailing Wage: http://www.mlive.com/news/index.ssf/2017/01/senate_kicks_off_2017_with_bil.html

Raising The Wage: http://www.sandiegouniontribune.com/business/columnists/dan-mcswain/sd-fi-minimum-wage-job-losses-restaurants-20170406-story.html

Michigan Employment: http://www.freep.com/story/money/business/michigan/2017/01/18/michigan-unemployment-ticks-up-5-percent/96734670/

Paid Sick-Leave Laws by State: http://www.paidsickdays.org/research-resources/current-sick-days-laws.html?referrer=https://www.google.com/#.WOarnVMrKHo

Income Inequality : http://www.epi.org/publication/income-inequality-in-the-us/

Michigan Poverty Statistics: https://www.michigan.gov/documents/mdch/Poverty_380428_7.pdf

- https://spotlightonpoverty.org/states/michigan/

Michigan Population Demographic: https://www.infoplease.com/us/comprehensive-census-data-state/demographic-statistics-176

Women in Workforce : http://statusofwomendata.org/wp-content/uploads/2015/08/Michigan-Fact-Sheet.pdf

33 Most Coomon Jobs in Michigan: http://www.mlive.com/news/index.ssf/2016/01/33_most_common_jobs_in_michiga.html

Appendix A: 

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Total votes: 36

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