A STRONG ECONOMY
Create Opportunity in the Workplace
American workers often don’t seem to have a voice in Washington, as labor policy tends to serve the interests of unions more than workers. Congress crafted America’s labor laws for the industrial economy of the Great Depression—and has barely changed them since then. These increasingly out-of-touch 20th century laws often hold back workers who are trying to get ahead in a 21st century economy. Many of the left’s solutions would only make the challenges facing struggling workers worse. Congress and state governments should reduce legal barriers that prevent workers from starting careers and climbing the ladder and that prevent employers from offering compensation in ways that respond to the needs of today’s workers.
Congress passed America’s major labor laws generations ago. Men held most jobs then, and manufacturing and heavy industry dominated the economy. Most children grew up in one-income families in which one parent worked and the other stayed home to raise the kids.
That economy no longer exists. Women have entered the workforce en masse; most mothers now work outside the home. Computers have automated many of the routine manufacturing tasks that humans once performed. Technology also enables previously unthinkable workplace flexibility. Yet the law often punishes employers and employees who try to adapt to these changing opportunities and dynamics.
For example, the Fair Labor Standards Act requires most workers to collect overtime pay if they work more than 40 hours a week. It does not allow them to receive compensatory time off instead. Many workers—especially working parents—want more flexibility in their hours. They would like to bank extra hours in some weeks to spend with their families in later weeks. This 1930s law says employers cannot permit such flextime.
Similarly, companies must track the hours of salaried employees who are eligible for overtime—even if they work no overtime. Employers cannot track hours reliably when employees telecommute. As a result, many human resource managers forbid overtime-eligible salaried employees from working remotely. This flexibility would benefit workers and their families, yet a law written decades before personal computers were invented prevents it.
The National Labor Relations Board is rewriting union election rules to tilt the scales toward union organizers. Some workers may want a union, but the choice should be made fairly. Only 10 percent of today’s union workers have even had a chance to vote on whether they wanted a union in their workplace at all. Workers should get a chance to vote on their future every few years, deciding whether they want their same—or any—union. These reforms should be complemented with laws preventing union bosses from withholding performance pay from workers and with the promotion of other 21st century labor relations models like work councils and employee involvement programs.
At the state level, special-interest groups have walled off a third of the jobs in the economy from outside competition. One of every three jobs in the United States requires a license to perform. In some cases, these licenses protect public safety. We would not want just anyone performing brain surgery or filling a prescription. Unfortunately, in many cases, these licenses have little to do with protecting consumers. Every state in America requires barbers to get state permission to cut hair. Thirteen states license bartenders. Louisiana licenses florists. Maryland even licenses fortune-tellers.
The public does not need protection from bad haircuts or inaccurate fortunes. So why do these jobs require licenses? Trade associations lobby heavily for them. Licensing requirements make it more expensive for unemployed workers to enter a field. A prospective security guard in Michigan, for example, must study for three years. Reduced competition means higher wages for those in that field at the cost of fewer job opportunities and higher prices for those on the outside.
Licensing functions as another type of labor cartel that benefits insiders at the expense of competitors on the outside. States should exhaustively review their licensing requirements and eliminate all those not necessary to protect public safety. If Americans don’t like their haircut, they can go to a different barber. The government should remove barriers to job creation instead of erecting them.