The San Antonio City Council faces another tough and divisive issue: what to do about paid sick leave. There are a lot of misconceptions about compensation and what that word means in a business. For businesses, it’s about attracting and retaining good employees to provide whatever product or service a business is trying to sell. For employees, it’s about earning a level of compensation that will allow them to take care of themselves and their families.
The true definition of compensation
There are the things everyone automatically thinks when you hear the term compensation, like salary and time off. However, a compensation system for any entity is far more complicated than that — it includes other things like health care, retirement, bonuses, car allowances, etc. Compensation systems can be amazingly complicated. However, they all serve the same purpose: ensuring a business can attract and retain good employees so they can support themselves and their families at the same time as ensuring the business is profitable. Two very important decisions are made at hiring 1) the business gets to decide if they want to make someone an offer and 2) the applicant gets to decide if they want to accept.
Now, those decisions can — and often do — change over time from both perspectives. Employees can decide a job they have is not meeting their needs. A business can decide that their compensation system is not attracting and retaining employees as they thought it would. Regardless, that same important decision power still rests with the individual employee and the individual business. Sometimes they’ll agree and sometimes they won’t. I’ve made those decisions numerous times throughout my career, both as an individual employee and as someone responsible for running a business.
Employee vs business rights
But enough Human Resources rambling. What does this have to do with the current debate about paid sick leave?
One group believes that it is an employee’s right to have designated paid sick leave. The other group believes it is an individual business’ right as to whether or not to provide it. There are two fallacies in those sentences.
The first is the idea that sick leave unto itself is the only answer to a compensation system, when it is merely a potential part of a compensation system. It is not a compensation system by itself. Let’s assume that the ordinance is enforceable. What is the reaction of those businesses it affects? If they can afford it and view it as a good way to modify their current compensation system in order to help attract and retain employees, they welcome the ordinance with open arms. If they can’t afford it or don’t think it will help them in attracting and retaining employees, they will be forced to change their compensation system in order to follow the ordinance. This essentially means they’ll be forced to cut something else out of their compensation system to offset the cost. This could include anything from decreasing salary, charging more for other benefits they might already offer, or increasing the price of whatever product or service the business provides.
This is not a threat to those who believe strongly in paid time off. These are just facts — and why it’s a major fallacy to believe you can address only one aspect of a compensation system to achieve a goal.
An unnecessary fight
Beforehand I did mention there were two fallacies in those earlier sentences. The second is that we shouldn’t be having this fight to begin with. The Council erred in choosing to preempt a duly generated petition asking for a vote on this issue. Instead, they decided to pass an ordinance pandering to a special interest for the sake of political expediency — an ordinance that may or may not be enforceable.
Here’s a suggestion to clean up the mess: scrap the ordinance and put the issue on the ballot as originally requested by the original petition. If it passes, then Council at least has the majority support they can use to justify the ordinance. If it doesn’t pass, then the Council will need to move on to actually running the city and stop trying to tell others how to run their business or make the decision for folks as to where they do or do not work.