Here is a quick econ 101 lesson for our city’s elected officials who keep wrongly claiming that Earned Sick Leave is going to drive businesses out of town.
Yesterday, Councilman David Oh claimed “The issue is not that businesses will close over the sick-leave bill,” Oh said. “The issue is . . . that we are going to, over time, lose a certain number of businesses that are going to fail or move out.”
Councilman Oh is trying to trick us with his double reverse reasoning here. You get what he is trying to say right?
Councilman Green had this to say “We need to create a regulatory environment that is good for business.” Let me translate what that means, if you let businesses treat people badly then they will chose to do business in your city. I don’t know if that is true, but I think that it is a tough slogan to attract businesses. “Come to Philly, you can really treat our workers badly!” The thinking here is that if it is cheaper to do business in another town, then business will go there instead.
The City Paper described Mayor Nutter’s disposition like this- Mayor Michael Nutter, citing what he described as the adverse affect of such legislation on the city’s business competitiveness.
Sorry guys, you are all wrong. Here is a little Econ 101 for you.
First of all, the workers least likely to have and paid time off currently are service workers. These workers prepare food, watch kids and cut hair for an example. If you look at this group closer, you realize that a huge majority of them are restaurant workers.
Check out the math. 180,000 people in Philly lack paid sick leave. After the bill compromised on whether unions would be helped buy this (not any more), and how “small” is “small” (it grew from 6-10 employees to 6-20) and took out sub-contractors like security guards (the first group of organized workers in our city to focus exclusively on paid sick days and win), you are left with a pool of 125,000 workers effected by the new law.
Of that 125,000 workers, you have to figure that several thousand restaurant workers are “under the table.” let’s take them out of the law and subtract -5,000. Then let’s remove super small mom-and-pop-sweatshops, like Chinese take-outs and bodegas. minus 3,000. Then, take out restaurant managers, (12,000 restaurants x 2 = 24,000). You end up with 93,000 out of the 125,000 being restaurant workers. That is about 75% of the workers without paid sick leave who will now benefit from this bill are restaurant workers.
Does it make sense that a restaurant owner would close up their business and move it out of town as Green-Nut-Oh believe?
Let’s look at the data.
Right now, it is already cheaper to operate a restaurant outside of Philadelphia. Rents are cheaper and the taxes are lower. You would have to assume that their are way more restaurants outside of the city and this legislation will drive out the rest. Soon we will all have to go to Buck County to get a burger!
Business, especially service business is driven by local demand. There has to be a density of customers who want your product in a defined geographic area at the price that you are selling it in order to succeed.
If it is true as Green-Nut-Oh claim that business leaders will refuse to “create jobs” if they are not coddled and give the right conditions to grow, like mold on a loaf of bread, then that is the root of the problem. The business leaders should be asking, “where are the customers at, what do they want and how much will they be wiling to spend on it.” If they aren’t asking that, then they are not smart enough to be in business.
Case in point, since it is already cheaper to operate a food establishment outside of Philly you think that our city would be ringed with Starbucks and it would be a Starbucks desert in the City of Brotherly Love.
Check out this map of Starbucks in PA… http://goo.gl/maps/JdCce
Notice how Starbucks are clustered around urban areas, and especially in Philadelphia where we have at least 50 coffee shops, while Ben Salem has 3 or 4?
Green-Nut-O need to quit with their “sky-is-falling,” recycled, Chamber of Commerce talking points and start feeling accountable to the working people of Philadelphia.
If nothing else, please stop pretending to have any economic argument against Earned Sick Leave. You are embarrassing yourselves.