Best treatment for the Coronavirus? Paid sick leave

At this point, the crisis demands unorthodox solutions. The best way to protect people, and the economy, is to limit economic activity

By The Editorial Board

Published: Mar 4, 2020

Best treatment for the Coronavirus? Paid sick leave

Image: Shutterstock

The Federal Reserve did what it could Tuesday to offset the growing economic impact of the coronavirus by announcing a supersize reduction in its benchmark interest rate — the first time the Fed has acted between its regularly scheduled meetings since the financial crisis in 2008.

But the Fed is ill equipped to limit the effect of a global pandemic alone. Lower interest rates may eventually soothe financial markets and help to hold down borrowing costs, but the Fed can’t speed the reopening of Chinese factories or reverse Facebook’s decision to cancel an annual developers conference that last year brought 5,000 visitors to San Francisco.

“A rate cut will not reduce the rate of infection. It won’t fix a broken supply chain. We get that,” Jerome Powell, the Fed’s chairman, conceded at a news conference Tuesday.

The real work falls on the rest of the government. The first step should have been simple: ensuring that testing for the coronavirus was readily available and, better yet, free. But even after weeks of lead time for the virus’s inevitable arrival, access to testing remains woefully inadequate as the domestic death toll rose to nine on Tuesday.

At this point, the crisis also demands unorthodox solutions. To restrict the spread of the coronavirus, the government needs to put limits on commerce. The best way to protect people, and the economy, is to limit economic activity. That is an unfortunate but inescapable truth. Public health officials will need to impose quarantines, businesses will need to cancel meetings. And most of all, the problem now and going forward is making sure that sick workers stay home. That means not forcing employees to choose between penury and working while coughing.

Congress can help by mandating that workers receive paid time off if they fall ill, or if they need to care for an ailing family member. Such a policy is necessary both to impede the spread of the virus and its economic harm. Roughly one-quarter of workers in the private sector — about 32 million people — are not entitled to any paid sick days. Absent legislation, they face a choice between endangering the health of co-workers and customers and calling in sick and losing their wages and perhaps also their jobs.

The current system is practically devised to spread infectious disease. Among the people least likely to have paid sick days, and therefore most likely to work through illness, are low-wage service workers like restaurant employees and home health care aides. (Those workers also are less likely to have health insurance, which compounds the problem.)

Most developed nations require employers to provide some form of paid sick leave, and the United States should do so, too. Some states already mandate sick leave, and a recent study found that the adoption of such laws reduced cases of influenza by 11% in their first year. Whatever the course of the coronavirus, mandatory sick leave for American workers would improve the lives of families and insulate the economy against pandemics.

If Congress cannot bring itself to do the right thing, however, it still could help by mandating sick leave specifically for this coronavirus. A 2013 study of workers in Allegheny County, Pennsylvania, estimated that allowing them to take up to two paid “flu days” would have reduced workplace transmission of the flu by roughly 39%.

Employers sometimes argue that sick leave policies encourage malingering. But studies show that even accounting for workers who play hooky, society still benefits.

The government could defray the cost of emergency sick leave for employers, for example by allowing businesses to claim a one-time tax credit. There is also a good case for providing broader help, particularly to smaller companies that cannot easily weather a loss of revenue.

The Italian government, for example, announced Sunday that it would issue tax credits to businesses that reported declines in revenue of 25% or more — in effect shifting the losses from private balance sheets to the government’s balance sheet.

Also seeking to help smaller businesses, the Chinese government has announced that banks can defer the receipt of loan payments from smaller companies that were due during the first half of the year without being required to report such loan payments as overdue. In hard-hit Hubei province, the leniency applies to larger companies, too.

The Trump administration so far has shown little interest in tailored responses. President Donald Trump reacted to the Fed’s announcement by demanding further rate cuts. He has insisted that the United States should have the world’s lowest interest rates; the European Central Bank’s benchmark rate sits below zero, at -0.5%.

Trump also has said that Congress should pass a payroll tax cut.

If the federal government fails to contain the spread of the coronavirus, and the economic outlook darkens, such a broad-based stimulus may well become necessary. But targeted policies — like sick days — are likely to remain the most effective form of response.