The U.S. mid-term election cycle brought mixed results on state and local ballot measures determining wage and employment laws.
Nebraskan voters approved a minimum wage hike from $9 per hour to $15 per hour by 2026, as DC voters opted to mandate that tipped workers’ minimums rise from $5.35 per hour to $16.10 per hour by 2027.
Ballot measures in Laguna Beach, California and elsewhere looking to introduce special minimum wages for staff in particular industries (such as hotel staff) genuinely failed. Illinois voters opted to enshrine a state constitutional amendment for the right to collectively bargain, whereas Tennessee voters opted to enshrine a right-to-work law as an amendment to their constitution.
These changes remind us of the large role governments play already in our labor markets and how contentious this can be. Internationally, the U.S. has relatively lightly regulated jobs markets. However, over the past century, workers’ freedom to contract and U.S. businesses’ freedom to hire and fire at-will have still been substantially watered down here, even if other countries have gone much further in curbing these freedoms.
U.S. anti-discrimination laws affect firms’ recruitment and layoff decisions and there are restrictions for businesses in many states on what they can ask about would-be employees’ criminal histories. Minimum wage laws, overtime pay regulation, restrictions on independent contracting, and forced unionization can create legal obligations for firms to provide pay, conditions, or benefits which they and individual workers in free negotiation might otherwise spurn.
All such policies tend to be predicated on an adversarial model of worker and management interests, with policymakers swooping in to “protect” workers from their bosses by imposing mandates on business or threats of fines for actions deemed unfair. In public debates, most such laws and regulations are therefore assumed to benefit “American workers” as a cohort.
Yet in my chapter of the Empowering The New American Worker book, I explain how basic economic analysis (confirmed by empirical evidence) tells us that, at best, these policies tend to help some workers enjoy more security or higher pay or benefits at the expense of others, who often suffer heavily. At worst, they raise the overall costs and risks of mutually beneficial job agreements, reducing net opportunities, harming business productivity, or distorting remuneration packages in ways that harm employees.
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