President Obama just urged Congress to cut workers’ wages. Of course, the news headlines did not report it as such. However, make no mistake: The president’s call for mandatory paid sick leave would simultaneously cut workers’ pay.
The president proposes requiring businesses to offer seven days paid sick leave to their workers. That sounds great. But the president never explained where businesses will get the money for it. In fact, the cost almost certainly will come out of workers’ paychecks.
Businesses care about the total compensation they pay workers. They care much less about how that compensation splits between wages and benefits. Economists have repeatedly found that when the government requires businesses to offer a benefit, they do so – and take the cost out of workers’ pay.
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