Grow Economy, don’t Mandate Sick Leave

The aftermath of the 2016 Legislative session is still being discussed and parsed, but the liberal New Mexico Voices for Children think tank is already clamoring for the next expansion of New Mexico government. The issue this time is paid sick leave. Naturally Voices, which views every societal “nail” in need of a government “hammer,” has a government-driven solution.

New Mexico private sector workers are, according to a new report, offered sick leave at a lower rate than similar workers in any other state. To be honest, we at the Rio Grande Foundation share the concerns expressed by Voices on this. We’d like to see more workers paid better and offered employee benefits.

The difference lies in our proposed solutions to the problem.

We view the issue through the lens of recent news reports that an astonishing 10,000 people applied for 290 job openings at the new Cheesecake Factory in Albuquerque. Obviously, there is an over-supply of relatively low-skilled labor in both Albuquerque and New Mexico as a whole. This is a market reality driven by New Mexico’s historical over-reliance on federal dollars and extractive industries.

Voices wants to simply impose a new regulation demanding that businesses offer workers no less than one week of paid sick leave (their report does not differentiate between full and part-time workers). Their own data claim that this will cost New Mexico businesses $240 million annually.

What they don’t seem to understand is that businesses — especially mom-and-pop restaurants and other small businesses — aren’t just going to take this $240 million out of their bottom-lines. Often, they don’t have profits to speak of. So they will lay off the very workers that this proposal is supposed to help. And if part-time workers are included in the proposal, that means part-time workers just starting out in the work force will be the hardest hit.

The real problem with Voices’ proposal is not its unintended consequences, but rather its the lack of vision inherent in it and so many other similar proposals — like the misnamed “Fair Workweek Act” — which was proposed in the Albuquerque City Council in 2015.

Voices sees the economy as a fixed pie. If you take away from labor, you give more to capital, and vice-versa. We at the Rio Grande Foundation see innovation and productivity as beneficial to everyone.

What Albuquerque and the state of New Mexico desperately need is not more government regulation: it’s more and better jobs of all kinds. It is no surprise that New Hampshire, the most economically-free state in the nation (lacking both a sales and an income tax) has the most generous sick leave policies according to the Voices report.

Unfortunately, when businesses or entrepreneurs look at our state they see onerous and often arbitrary regulations, they see a gross receipts tax that makes doing business here more costly than other states. They see a workforce and school system that are not up to preparing workers for the modern economy and they see high crime rates. Lastly, they see a population — especially in the Rio Grande corridor — that tends to be both suspicious of outsiders and highly sensitive to land use and economic development proposals.

These problems are not unique to New Mexico, but New Mexico is unique in possessing all of them in spades. Addressing some or all of these issues in ways that make New Mexico more attractive to business would grow our economy and make it more likely that workers receive competitive wages and benefits.

For many years, New Mexico has enacted policies that make our state less attractive than many of our neighbors for private sector development. Another new regulation isn’t going to change that. Instead, it is time to move in the opposite direction towards economic freedom and competitiveness. This will make jobs more plentiful leading to higher pay and more competitive benefits for New Mexico workers.

The Rio Grande Foundation is an independent, non-partisan, tax-exempt research and educational organization dedicated to “promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility.”