Consumers More Likely to Buy from Companies that Offer Paid Sick Leave

During this global health and economic crisis, American consumers have changed their spending habits. They’re spending more on everyday essentials and adopting new brands and behaviors. These habits are likely to continue throughout the COVID-19 pandemic.

Whether consumers are aware of it or not, the emotional dimension of consumption has intensified during the crisis. And this heightened state of insecurity provides companies with a real opportunity to build deeper and trustworthy relationships with customers as noted in a recent interview by CO—an editorial website by the U.S. Chamber of Commerce— with consumer psychologist Yit Karow.

A core element of this opportunity includes how companies treat their own employees. While “conscious or sustainable capitalism” has gained mainstream traction for some time, the crisis seems to have accelerated consumer interest in companies that invest in their employees or address income and gender inequity for example.

A recent survey conducted by Morning Consult, found that 67 percent of Americans say they want companies that they purchase goods and services from to take care of their employees and treat them well.

Companies who can afford to, should consider providing paid sick leave to increase consumer spending, which is vital to the economy. But it also helps workers stay home; reduces the economic burden associated with staying home for women and minorities; and helps control the spread of virus. In a 2017 study, paid sick leave was found to significantly lower overall worker absenteeism, potentially saving employers $630 million to $1.88 billion per year. Paid sick leave is also associated with higher likelihoods of seeking preventative care.

Prior to the pandemic, nearly a quarter of all American workers lacked access to paid sick leave. Congress tried narrowing this gap with the passage of the Families First Coronavirus Response Act, which reimburses small and midsize companies with dollar-for-dollar tax credits for the cost of providing 10 days (80 hours) of paid sick leave wages to their employees during COVID-19. This was a significant step to slow the spread of the virus and support small business owners reeling from the rapid fall of consumer demand, but it excluded employers with 500 or more workers. And while 91 percent of workers at companies with more than 500 workers had access to paid sick leave prior to the current crisis, the average length was only eight days, which is six days short of the recommended 14-day quarantine for coronavirus.

As Congress considers a fourth stimulus package, policymakers should continue to work with the administration in a bipartisan fashion to require companies of all sizes to extend paid sick leave. In doing so, Congress should also pick up the tab.

Otherwise, we risk hurting businesses already operating at razor thin margins. And if the pandemic has taught us anything, it’s that consumer behavior has changed and companies will attract more customers and benefit from good policies like paid leave. Not to mention that paid sick leave is also an evidence-based way of containing the virus and protecting our country.

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