Michigan’s Republican House majority and Democratic Senate majority face an early test of whether they can agree with each other. That’s because there will be a paid sick leave mandate coming in late February, along with increases in the minimum wage. Some lawmakers want to change the laws before they go into effect. They want to reduce the likelihood that these laws result in unintended consequences, such as job losses for low wage workers and complications for overregulated small business.

What lawmakers are discussing is not whether the state will have a minimum wage or mandate paid sick leave benefits. The question is how to do it, whom it applies to, and how much the state will require.

Yet in the fight around the margins of the laws, it is a battle between two ideas. One is that employment is good for both employers and employees. The other is that employment is exploitative.

People hold different views on the question and are informed by their experience, their sense of fairness, their peers, their tastes and their ideology. I hope that for many, especially the elected officials making the decisions, the question is informed by an objective study of the effects of the laws.

The people who believe employment is exploitative see that employers want to pay workers as little as they can and will replace them at the slightest inconvenience. That business owners make more money when they lower their costs. Thus, they see that minimum wage laws and paid sick leave rules counter the business owners’ incentive to exploit workers. The laws ensure employers can’t pay too little and keep them from firing people who get ill.

On the opposite side, some people believe that employees have options about where to work. Workers can earn an honest wage at another employer if one treats them poorly or doesn’t offer them what they’re worth. Many employers pay well because they recognize workers’ worth, but even miserly employers must compete for workers. Part of that competition is over how well employees are treated.

These are two conflicting ideas. They both recognize that employers strive to make money, that they make more money with lower costs, and that employment is a cost. One side thinks that this results in exploitation. The other side says that competition ensures that workers are treated better.

Data on wages and benefits can tell us which side is more correct.

If we lived in an exploitative world, 79% of private sector workers in America probably wouldn’t have paid sick leave benefits. (This is above 90% in some industries and professions.) Back in 2011, 60% of workers had paid sick leave benefits, with vacation and holiday pay offered even more readily. And that was before a wave of states began to mandate the benefits.

Likewise, employers were paying more for people at the low end of earnings ladder even before states increased their minimum wage requirements. Average wages and salaries in the lowest quintile in America increased 16% above inflation from 2019 to 2023, according to the Bureau of Labor Statistics. This increase stems more from competition than increases in wage mandates.

It’s a sign that free markets deliver better outcomes to workers than government employment mandates. Economists who use sophisticated methods to assess the effects of the laws agree.

Do minimum wage laws cost low wage workers more in lost jobs and employment opportunities than they gain in higher pay? “There is a preponderance of negative estimates in the literature,” according to an extensive review.

There is less research on paid sick leave mandates, however, because they don’t have the hundred-year history of minimum wage laws. Economists have so far found mixed effects, some good for workers and some bad for workers. But it’s clear that there is no free lunch from the mandate. And some proponents’ view that workers won’t have access to benefits until employers are forced to offer them is clearly false.

The literature and economic trends may question the effectiveness of minimum wage and paid sick leave mandates. But the question lawmakers are asking is not whether to have these laws at all. It’s whether they should mitigate their expected negative consequences.

The biggest change lawmakers are discussing is whether employees can use sick leave without notifying the employer first. Another proposed change is to apply the mandates for both minimum wage and sick leave to workplaces with 50 or more employees or to every employer.

Other important changes would apply to servers and other tipped employees. Employers are currently required by law to ensure that tips cover an employee’s earnings up to the minimum wage. Hourly wages that do not include wages can be less than the minimum wage. This arrangement would be eliminated without the proposed changes under a bill passed by the House.

The Democratic Senate majority may abstain from adopting the changes passed by the House. It may prefer the rules set to be implemented in late February. Abstaining would be an indicator that there are potent political forces that believe employment is inherently exploitative. Those who hold this view should look deeper at the evidence. It will challenge their ideology.

Permission to reprint this blog post in whole or in part is hereby granted, provided that the author (or authors) and the Mackinac Center for Public Policy are properly cited.