Labor Day

In a previous post I wrote that the labor market is one of the most regulated markets in our economy:

Minimum wage laws effectively tell teenagers they cannot work unless they can produce $7.25 an hour. When the ObamaCare mandate kicks in next year, that hurdle will climb to more than $15 an hour for many potential employees. OSHA regulations dictate what risks workers may and may not take while on the job. Wage and hour laws dictate what wage rate a worker can accept in order to be able to work at nights and on weekends. Those same laws tell many parents they can’t take off to see their kid’s soccer game and make up the time in the next pay period…

Occupational licensing laws keep potential entrants out of 92 different trades, in the average state, covering almost one-third of all workers. These regulations, for example, prevent you from putting a bowl over someone’s head, cutting around the edges and collecting 50 cents for the effort unless you have undergone many hours of training in barbering.

You would think that those opinion writers who complain the most about stagnating wages and persistent unemployment would be first in line in the attempt to liberate workers from all this. After all, you can’t earn an income if you don’t have a job and you can’t earn a higher income if you are not working and learning new and better skills.

But no. The reverse is true. Those who complain the most about the plight of workers seem to have an insatiable desire to tax and regulate them out of the job market. After the usual arguments ad hominem against Republicans, Paul Krugman’s Labor Daycolumn celebrates the welfare state (which Casey Mulligan estimates is responsible for half the current excess unemployment) and lauds ObamaCare (which may be responsible for the other half).

You wouldn’t know this from reading Krugman columns (but you can be sure he knows) that economic studies consistently show that employee benefits ultimately substitute dollar for dollar for employee wages. ObamaCare is not helping workers. It is costing them their jobs and lowering their take-home pay.

Go figure.

Comments (15)

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  1. JD says:

    I’m glad that you touched on occupational licensing, it is something that even freedom lovers overlook. Why do you have to have a license to cut hair?

    • Dewaine says:

      Even more serious industries like medical care need to abandon government licensing. We could more accurately assign medical personnel to the appropriate situation if we didn’t force people to have certain level of qualification. Doctors could focus on the serious problems, while other health care professionals could more cheaply provide day-to-day care.

  2. Lucas says:

    Occupational Licensing is keeping the economy from remaining competitive and is increasing the amount of money paid into school systems. Its only a matter of time before the student loans bubble bursts from students pursuing superfluous degrees and licenses.

  3. Devon Herrick says:

    Workers appreciate employee benefits because they are paid for with pre-tax dollars. A dollars spent on health insurance through an employer ultimately costs a worker less than buying similar with after-tax income. This is especially true of high-income employees. The problem as I see it is that not all employees value the same employee benefits equally. A few years ago I talked to an employer who began providing health coverage to his moderate-income workers. A year later he was concerned about the premiums rising and discovered that many of his workers had actually dropped their coverage or had never participated in the company health plan. The only employees who continued to participate where those with pre-existing conditions. In fact, the skyrocketing cost of the company health plan was actually more than double the cost per participating employee he initially thought it was.

    Basically, some workers like the benefit because it was worth more to them than the cash it replace. Other works simply preferred the cash.

  4. Perry says:

    Methinks the labor unions will regret backing Obama in the last election.