Tag Archive for: Labor Unions

Teachers Unions Politicized U.S. Schools, Not Parents

Union leaders claim that “extremists” politicized US schools. This is blatant revisionism.


When voters were asked by Pew Research, prior to the 2020 election, what issues were most important to them, education wasn’t even among the top dozen.

But things have changed dramatically since then. Outlets ranging from The Washington Post, to ABC News, have identified education as a potentially significant factor in the 2022 midterms. Additionally, after education emerged as a defining issue in Virginia’s gubernatorial election last year — ranking as a top two or three issue — school choice became a litmus test issue for Republicans.

This is quite the swing in just two years.

Theoretically, education should not really be a political issue; but, as we have seen, it clearly has become one. Therefore, we must ask why exactly this has happened.

There are many possible answers to this question. One of them came from Randi Weingarten, president of the American Federation of Teachers — the second largest teachers union in the country. In a recent tweet, she blamed “extremists” who are “attacking teachers” and focusing on a culture war that is “intended to undermine teaching and learning.”

“The culture wars are intended to undermine teaching and learning,” Weingarten wrote. “Extremists are politicizing schools and attacking teachers. Attacking teachers doesn’t help kids, it undermines everything.”

If that was not clear enough, she also linked to a news article where she gets a bit more specific about the kinds of people she is talking about: “the anti-public schools crowd, the anti-union crowd, the privatizers, the haters.” In other words, she is referring to the conservatives, libertarians, liberals who believe in school choice, and even parents themselves.

But are these groups really the ones politicizing education? Or, alternatively, are they simply responding to the overtly political forces that have controlled education for a long time?

The 2020-2021 school year should be seen as critical when considering the politicization of education. Two events occurred in the months preceding that school year that led to the extreme stances that eventually launched schools into the political limelight: the Covid-19 pandemic and the police murder of George Floyd. The former was taken advantage of by teachers’ unions with backward incentives, while the latter led to a nationwide racial reckoning that some took so far as to actually begin promoting regressive racial ideologies in the name of progress.

First, when the Covid-19 pandemic began, there was understandably a lot of uncertainty. But one of the first things that was known about the virus was that kids were the least vulnerable to severe infection. We also soon found out that schools were not a hotspot of Covid transmission. Yet, many K-12 schools started the 2020-2021 school year online — largely due to cynical activism by teachers’ unions. Prior to the school year, Weingarten threatened a strike, stating that “nothing is off the table” if school districts decided to reopen, and the Chicago Teachers Union tweeted later that the push to reopen school was “rooted in sexism, racism and misogyny.” It is reasonable to point out that this is just rhetoric — not necessarily representative of what actual power the unions have to shape policy — but studies demonstrated that the strength of a district’s union, not the prevalence of Covid-19 in the community, was the best predictor of prolonged school closures.

More recently, the effects of these closures — caused by the exploitation of a crisis by public sector unions — have become clear. A study released by McKinsey & Company found that “by the end of the 2020-21 school year, students were on average five months behind in math and four months behind in reading.” The learning loss was even more severe among low-income students, as well as black and Hispanic students. Numerous studies — including the CDC’s own research — also show that the closures damaged students’ mental health, with rates of anxiety and depression rising.

Second, following our nation’s racial reckoning beginning in the summer of 2020, some schools began to include radical — regressive, even — teachings on race in their curriculum. Activist Chris Rufo has done deep reporting on this issue for City Journal, exposing example after example of racial essentialist messages surrounding race making their way into K-12 classrooms. Moreover, looking to spread this kind of instruction further, the National Education Association, which is the largest teachers union in the country, passed a resolution that explicitly endorsed the teaching of critical race theory in the classroom as a tool to understand America. And the American Federation of Teachers, which is the second largest teachers union in the country, announced a campaign to bring the writings of Ibram X. Kendi — a scholar who has written that “The only remedy to past discrimination is present discrimination. The only remedy to present discrimination is future discrimination.” — into every single classroom.

In response to perpetual school closures driven by union power, as well as racially divisive curricula making its way into K-12 schools, a coalition of conservatives, libertarians, and liberals mobilized against such policies.

Parents showed up to school board meetings, politicians passed legislation, and heterodox news outlets reported on what was happening. So many people have left the traditional public school system recently that it is being referred to by some as an ”exodus” of sorts. This is the response that Weingarten is blaming for the politicization of schools. However, it should be noted that all of this came after both radical and unprecedented policies were implemented. So, while one may criticize aspects of the response — after all, I do not agree with every law passed or with every speech given by a parent at a school board meeting — it stretches credulity to claim that parents politicized schools when in fact it was the schools themselves, in tandem with the unions, who introduced these radical political elements.

Data show that more and more people are looking for alternatives to the traditional public school system. Earlier this year, PBS published a piece exploring the surge in homeschooling across the country.

“In 18 states that shared data through the current school year, the number of homeschooling students increased by 63% in the 2020-2021 school year, then fell by only 17% in the 2021-2022 school year,” wrote the Associated Press’ Carolyn Thompson.

The article tells the stories of multiple parents who started to homeschool their children over the past year, and they find that a common reason is that they were simply unimpressed by the quality of the instruction during school closures. Apart from homeschooling, the National Alliance for Public Charter Schools reported that enrollment went up by seven percent during the pandemic.

The reason is clear: the traditional public school system has been riddled with failures for a long time, but events over the past few years made people more aware of them. And these failures do not just exist in the heads of parents, conservative ideologues or school choice activists, as Weingarten suggests. They are very real. Parents want their kids to attend school in person, and they generally don’t want their kids to be indoctrinated into a particular ideological system by strangers who work for the government. According to the American Federation of Teachers’ own poll, 60 percent of likely voters in battleground states are dissatisfied with the way traditional public schools are teaching about race and 58 percent are dissatisfied with how they are teaching about issues related to gender identity.

People vote with their feet; so, as more and more people leave the traditional public school system, it will become more and more clear that something fundamental needs to change in the way the U.S. handles education policy.

The reason something fundamental must change is that the failures we are seeing do not just happen by chance; rather, they are the natural byproduct of a government monopoly on education coupled with power in the hands of a public sector union. Therefore, any real reform to the education system must address these two things.

First, it is generally understood that monopolies are bad for consumers. They lead to higher prices, along with lower quality and quantity. Figuring out why this happens isn’t difficult: firms have no incentive to innovate, nor provide a high-quality product, when consumers have no other options. The economist Thomas Sowell was correct when he observed that education is truly an outlier when it comes to how it is treated, as traditional public schools — as opposed to a grocery store or a summer camp — do not have to convince anyone that attending them is in their best interest. People are simply forced to attend. However, moving to a model that is characterized by choice will 1) empower families to choose a school that best fits the needs of their individual children and 2) incentivize every school, including traditional public schools, to prioritize the quality of the education they are providing and to continually improve. After all, if they do not, then people will simply decide to attend elsewhere.

Second, the job of a union is to protect, and accrue benefits for, its members. This can clearly be a worthwhile goal; but, when it comes to public sector teachers’ unions, the problems arise when advocating for the interests of teachers means advocating against the interests of students. The truth is that what is best for students is not always best for teachers, and vice versa.

For example, when Covid-19 school closures were being considered, it was clearly in the interest of students to learn in an in-person environment; however, teachers’ unions advocated against opening schools because their job is to look out for the comfort and safety of members. Another example is when a teacher’s job performance is egregiously sub-par. In such a scenario, it is clearly in the interest of students for that teacher to be removed, while it is in the interest of the teacher and the union to retain the teacher’s job. This is why in New York City it takes an average of 830 days and $313,000 to fire a single incompetent teacher.

A successful educational system cannot include cornerstones that, due to their very nature, work to the detriment of children. The good news is that by enacting policies that advance school choice, the power of teachers’ unions to advocate backward policy will weaken for two reasons. First, if that policy is detrimental enough, it may encourage students to leave for a school that puts students’ needs first; this could certainly cause the unions to begin to tread a bit lighter in their advocacy. Second, most charter schools and private schools are not unionized, which means that more students will be learning in schools that are not unionized after there is school choice if unionized schools fail to provide the education consumers want.

Steven Levitt, who co-authored the bestselling book, Freakonomics, explained the current problem with schools aptly. He wrote that “the problem (…) is not too many incentives but too few.” Right now, the schools and the teachers can really just “do whatever they want” in the classroom, regardless of what is best for students, because political forces are protecting the government’s education monopoly and the power of the unions to influence policy. In other words, because there is no competition, there can be no accountability.

This is clearly correct. And so the only solution is greater educational freedom. More people recognize this than ever before, but the work is only just getting started.

AUTHOR

Jack Elbaum

Jack Elbaum was a Hazlitt Writing Fellow at FEE and is a junior at George Washington University. His writing has been featured in The Wall Street Journal, Newsweek, The New York Post, and the Washington Examiner. You can contact him at jackelbaum16@gmail.com and follow him on Twitter @Jack_Elbaum.

RELATED ARTICLE: Parent Sues School Over Transgender Brainwashing

EDITORS NOTE: This FEE column is republished with permission. ©All rights reserved.

California’s Statewide $15 Minimum Wage Will Horribly Backfire for Poorer Cities by Mark J. Perry

I wrote earlier this month about one of the potentially fatal flaws of California’s recently enacted $15 an hour statewide minimum wage: a one-size-fits-all uniform $15 minimum wage for the entire state of California is really a “one-size-fits-none” minimum wage, given the huge variations in the cost of living around the country’s most populous state.

While a high-wage, high cost-of-living city like San Francisco might be able to absorb a $15 minimum wage without experiencing significant negative employment effects, that same $15 wage could inflict serious economic damages and result in job losses for many of the state’s 500 cities that are in low-wage, low cost-of-living areas.

To help understand how the “one-size-fits-all” approach of a $15 an hour state minimum wage will have a disproportionately adverse impact on low-cost communities in California, the table below displays the “living hourly wages” for California’s 26 metropolitan statistical areas (MSAs), based on data from MIT’s Living Wage Calculator for the year 2014 (most recent year available).

According to the MIT website, the cost-of-living adjusted living wages are the “hourly rates that individuals must earn [in a given MSA] to support their family [and cover basic family expenses], if they are the sole provider and are working full-time (2,080 hours per year).” Living wages for adult workers with 1 to 3 children are also displayed in the table.

The living wage data shown above reveal huge differences in the cost-of-living between low-cost California MSAs like Yuba City, El Centro, Chico, and Merced (living wages are below $10 an hour) and high-cost cities like San Francisco and San Jose, where the cost-of-living adjusted living wage is 38% higher.

If $15 an hour is an appropriate minimum wage for San Francisco, it should be less than $11 an hour in MSAs like Yuba City and El Centro, where the cost-of-living is significantly lower. It’s also important to note that all four of those low-cost MSAs had jobless rates above the state average in February, and three of them (all except Chico) had double-digit unemployment rates in February, with El Centro having the distinction of once again being the MSA with the highest jobless rate in the entire country at 18.6%.

Therefore, many MSAs in California (like Yuba City, El Centro, Chico and Merced) not only have costs-of-living way below the state average, but they also have jobless rates that are way above the state average, and it’s those MSAs that will be adversely impacted by the imposition of a uniform state minimum wage of $15 an hour.

Bottom Line: As I concluded before, even supporters of a $15 an hour minimum wage in California would have to concede that a one-size-fits-all, uniform $15 an hour state minimum wage, without any adjustments for the significant differences in the cost-of-living across the Golden State, will disproportionately affect unskilled and limited-experience workers in low-cost MSAs like Yuba City and El Centro, and also in hundreds of other low-cost, low-wage cities (that are not part of an MSA) throughout the state.

In other words, a one-size-fits-all minimum wage for all 500 cities in California is really a “one-size-fits-none” minimum wage, and will inflict very serious and long-lasting economic damage in most parts of the state outside of the large metro areas on the coast (LA, San Francisco, and San Diego).

The clumsy, top-down, ham-handed approach of government imposed wage controls like a $15 an hour statewide minimum wage in California, without allowing for any adjustments to accommodate the significant differences in cost-of-living and labor market conditions, is one of the main reasons the Golden State’s risky experiment with a $15 wage will likely backfire and be “not-so-golden” in practice.

In contrast, one of the significant advantages of market-determined wages is that they can naturally and automatically adjust to the market conditions of local areas. For example, we might expect that the starting wages for national chains like McDonald’s (1,165 stores in California) and Starbucks (2,000 locations) would vary around the state of California based on local labor market conditions and the local cost-of-living, and would be higher in San Francisco than in cities like El Centro.

But a government mandated price control like the $15 an hour uniform minimum wage in California that outlaws adjustments to fit the customized needs of the 500 individual city-level labor markets in the state is a public policy destined to fail — especially in the state’s low-wage, low cost-of-living cities with high jobless rates that are the most vulnerable to the “one-size-fits-none” awkwardness and clumsiness that is the $15 statewide minimum wage in California.

Related: See my article with AEI colleague Andrew Biggs titled “A National Minimum Wage Is a Bad Fit for Low-Cost Communities.

Bonus Question: I included the living wages above that MIT calculated would be necessary to support an adult-headed household with either one, two or three children so that I could feature the question posed below by Georgetown University professor Jason Brennan at the Bleeding Heart Libertarians blog in his post titled “Some Questions for Living Wage Advocates” (h/t Don Boudreaux):

If you believe employers owe employees a living wage, do you think that an employer has a moral duty to pay an employee more just because [he or] she has more children?

Reprinted with the permission of the American Enterprise Institute.

Mark J. PerryMark J. Perry

Mark J. Perry is a scholar at the American Enterprise Institute and a professor of economics and finance at the University of Michigan’s Flint campus.

We Pay Millions to ‘Ghost Teachers’ Who Don’t Teach by Jason Bedrick

The Philadelphia school district is in a near-constant state of financial crisis. There are many factors contributing to this sorry state — particularly its governance structure — but it is compounded by fiscal mismanagement. One particularly egregious example is paying six-figure salaries to the tune of $1.5 million a year to “ghost teachers” that do not teach. Pennsylvania Watchdog explains:

As part of the contract with the School District of Philadelphia, the local teachers union is permitted to take up to 63 teachers out of the classroom to work full-time for the Philadelphia Federation of Teachers. The practice, known as “release time” or “official time,” allows public school teachers to leave the classroom and continue to earn a public salary, benefits, pension and seniority.

These so-called ghost teachers perform a variety of jobs for the PFT, serving as either information officers for other teachers or carrying out the union’s political agenda.

“Teachers should be paid to teach,” attorney Kara Sweigart, who is arguing ghost teacher lawsuits for the Fairness Center, a free legal service for employees who feel they’ve been wronged by their unions, told Watchdog.

“At a time when school districts are hurting financially, districts should be devoting every tax dollar to support students,” she said, “not to pay the salaries of employees of a private political organization.”

According to public salary data available through Philadelphia city agencies, the school district is paying 16 ghost teachers $1.5 million this year. All of them are making at least $81,000.

PFT Vice President Arlene Kempin, who has been on release time since 1983, is among the highest paid at $108,062. Union head Jerry Jordan, who has also been on release time for more than 30 years, is earning $81,245, according to district payroll logs. The 16 ghost teachers on the books this year are making an average salary of almost $98,000.

The “ghost teacher” phenomenon is far from unique to Philly or even the education sector. Such “release time” subsidies for ghost teachers, policemen, firefighters, and bureaucrats of all stripes are common features of public-sector union contracts nationwide. Last month, a Yankee Institute report found that Connecticut provided unions with $4.1 million to subsidize 121,000 hours union-related activities, “the equivalent of more than a year’s worth of work for 50 full-time employees.” Meanwhile, the Goldwater Institute in Arizona is in the midst of a lawsuit against the city of Phoenix for unconstitutionally providing millions of dollars in release-time subsidies.

According to the most recent report from the federal Office of Personnel Management, the federal government paid more than $157 million in 2012 for federal employees to work for their unions for a total of 3,439,449 hours. And those are just the direct costs.

In his book, Understanding the Teacher Union Contract: A Citizen’s Handbook, former teacher union negotiator Myron Lieberman explained how difficult it is to account for the full amount of subsidies that taxpayers provide to the unions:

Most school board members are not aware of the magnitude of these subsidies. In school district budgets, the subsidies are never grouped together under the heading “Subsidies to the Union.” Instead, the subsidies are included in school district budgets under a variety of headings that may or may not refer to the union…

School districts pay for these subsidies from a variety of line items in the district budget: payments to substitute teachers, teacher salaries, and pension contributions, among others.

In most situations, the union subsidy is lumped together with other expenses paid for under the same line item; for example, the costs of hiring substitutes for teachers who are on released time for union business may be included in a budget line for substitutes that also covers substitutes for other reasons, such as replacing teachers on sick leave, personal leave, maternity/paternity leave, and so on.

Taxpayer dollars allocated for education should be spent on items and activities that assist student learning, not to promote the interests of private organizations (especially when their interests often collide with the interests of students). Union work should be paid out of funds the unions collect through dues and donations, not funds expropriated from unwilling and unwitting taxpayers.

Cross-posted from Cato.org.

Jason Bedrick

Jason Bedrick

Jason Bedrick is a policy analyst with the Cato Institute’s Center for Educational Freedom.

Socialism Is Harder than You Think by Scott Sumner

Suppose you wanted to switch to socialism — what would be the ideal place to do so? You’d want a country with extremely high quality civil servants.

That would be France.

You’d want a country where socialism is not a dirty word, and capitalism is.

That would be France.

You’d want a country with the Socialist party in power, a party that was committed to enact the ideas of Thomas Piketty.

That would be France.

So how did things work out in France, when they tried to adopt a Bernie Sanders/Thomas Piketty approach to taxes?

IN THE eyes of many foreigners, two numbers encapsulate French economic policy over the past decade or so: 75 and 35. The first refers to the top income-tax rate of 75%, promised by François Hollande to seduce the left when he was the Socialist presidential candidate in 2012. The second is the 35-hour maximum working week, devised by a Socialist government in 2000 and later retained by the centre-right.

Each has been a totem of French social preferences. Yet, to the consternation of some of his voters, Mr Hollande applied the 75% tax rate for only two years, and then binned it. Now he has drawn up plans that could, in effect, demolish the 35-hour week, too.

Mr Hollande’s government is reviewing a draft labour law that would remove a series of constraints French firms face, both when trying to adapt working time to shifting business cycles and when deciding whether to hire staff. In particular, it devolves to firms the right to negotiate longer hours and overtime rates with their own trade unions, rather than having to follow rules dictated by national industry-wide deals.

The 35-hour cap would remain in force, but it would become more of a trigger for overtime pay than a rigid constraint on hours worked. These could reach 46 hours a week, for a maximum of 16 weeks. Firms would also have greater freedom to shorten working hours and reduce pay, which can currently be done only in times of “serious economic difficulty”. Emmanuel Macron, the economy minister, has called such measures the “de facto” end of the 35-hour week.

At the same time, the law would lower existing high barriers to laying off workers. These discourage firms from creating permanent jobs, and leave huge numbers of “outsiders”, particularly young people, temping.

For one thing, it would cap awards for unfair dismissal, which are made by labour tribunals. Laid-off French workers bring such cases frequently; they can take years and cost anything from €2,500 to €310,000 ($2,700 to $337,000) by one estimate.

Unfortunately, while France is moving away from these polices, the US is like to move some distance in their direction. Of course there are differences. Our minimum wage is still lower than in France, and our top income tax rate is closer to 50% in states like California and New York. But all the momentum is with the socialists, who are especially numerous among the younger voters.

Socialist ideas are superficially appealing. Paul Krugman (who favors very high income tax rates on the rich) often says that reality has a liberal bias. Actually, reality has a neoliberal bias, and if you don’t take incentive effects into account, you may end up disappointed.

Back in the US, Sander’s single payer approach also has problems:

A costing of Mr Sanders’s plans by Kenneth Thorpe of Emory University, using more conservative assumptions, found that the plan was underfunded by nearly $1.1 trillion (or 6% of GDP) per year. If Mr Thorpe is right, higher taxes will be required to make the sums add up. In 2014 Mr Sanders’ own state, Vermont, abandoned a plan for a single-payer system on the basis that the required tax rises would be too great.

Vermont is one of the most liberal states in the union. Now think about the fact that they gave up on the idea, despite it having been previously approved and signed into law. Then think about the concept of rolling out a multi-trillion dollar plan at the federal level, soon after the only experiment at the state level failed to get off the ground.

Is that evidence-based liberalism, or wishful thinking?

This post first appeared at Econlog.

Scott SumnerScott Sumner

Scott B. Sumner is the director of the Program on Monetary Policy at the Mercatus Center and a professor at Bentley University. He blogs at the Money Illusion and Econlog.

This Crazy 100-Year-Old Law Makes Almost Everything More Expensive by George C. Leef

The 2016 presidential campaign so far has featured almost no discussion of downsizing the federal government. Americans would benefit enormously if we could get rid of costly old laws that interfere with freedom and prosperity, and future generations would benefit even more.

I keep hoping that someone will manage to put this question squarely to the candidates in either party: “What laws would you seek to repeal if you were the president?”

There are so many laws that ought to be repealed, including countless special interest statutes that benefit a tiny group while imposing costs on a vastly greater number of Americans. But if candidates need an idea of where to start, one such law is the Merchant Marine Act of 1920, also called the “Jones Act.”

The Act requires that all shipments between American ports to be done exclusively on American ships. As Daniel Pearson explains,

Its stated purpose was to maintain a strong U.S. merchant marine industry. Drafters of the legislation hoped that the merchant fleet would remain healthy and robust if all shipments from one U.S. port to another were required to be carried on U.S.-built and U.S.-flagged vessels.

The theory behind the law is musty, antiquated mercantilism — the notion that the nation will be stronger if we protect “our” industries against foreign competition.

Imagine how strong we would be if there had been a Jones Act for automobile transportation. Would Americans be better off today if the Detroit automakers had remained an oligopoly by keeping out all of those Hondas, BMWs, and Hyundais? Obviously not — yet this logic has handicapped US shipping for 96 years.

A recent op-ed in the Honolulu Star-Advertiser nicely explain the absurd consequences of this law. The writer just wants to buy a cabinet, but “although the cabinet was made in Taiwan, it could not be off-loaded in Hawaii, but rather had to be shipped to the West Coast, then loaded onto an American ship for the costly backward journey to Hawaii.” Tons of time, fuel, and expense wasted, all thanks to the Jones Act.

We get a more comprehensive view of its costs from a report by the Government Accountability Office (GAO) last September. The report, titled “International Food Assistance: Cargo Preference Increases Food Aid Shipping Costs,” shows the heavy cost of the law. The GAO, known for its non-partisan, straight-shooting approach, found that the Jones Act increased the cost of shipping food aid by 23 percent.

What does that mean? Between 2011 and 2014, the taxpayers had to fork over an extra $45 million to ship food for USAID. With Washington’s prodigious spending, we’ve gotten used to the idea that amounts under a billion are too small to bother with, but that is the wrong way to look at things. Even if we didn’t have a constantly increasing national debt, we ought to root out every needless federal expenditure.

Treading very delicately, the GAO states that, because the Jones Act “serves statutory policy goals,” Congress should merely tweak it so that aid agencies can find less costly shipping. But the federal government has no constitutional authority to be in the business of international aid, and carving out a special exemption for this would simply help the government avoid the consequences that it is inflicting on everyone else. Congress should simply repeal the protectionist law entirely.

The Jones Act also distorts our energy market and leads to higher prices than otherwise. Writing at The Federalist, trade attorney Scott Lincicome points out that, due to the law’s restrictions, only thirteen ships can legally move crude oil between US ports, and those ships are “booked solid.” As a result, shipping American crude from Texas to Philadelphia costs more than three times as much as it would cost to send it all the way to Canada on a foreign vessel.

One of the Act’s few congressional opponents is Arizona Senator John McCain, who pointed out in this testimony that Hawaiian cattlemen who want to sell livestock on the mainland “have actually resorted to flying the cattle on 747 jumbo jets to work around the restrictions of the Jones Act. Their only alternative is to ship the cattle to Canada because all livestock carriers in the world are foreign-owned.”

Hawaii is especially hard hit by the Jones Act, but other states and territories that depend heavily on water-borne shipping also suffer. Consider Puerto Rico: a 2012 study by the New York Fed found that it cost about $3,063 to ship a 20-foot container from an east coast US port to Puerto Rico, but shipping the same container to a foreign destination, such as Jamaica, would cost only about $1,687. Because it is an American territory, the poor island pays almost twice as much to import American products.

For nearly a century, we’ve paid more at the pump, more for goods, more in taxes, and even more to do charitable aid, all because of this ancient special interest law.

All that the Jones Act accomplishes is to guarantee a market for costly, unionized American shipping. It is similar in purpose to the Davis-Bacon Act, which guarantees a market for high-cost unionized construction (as I explain here).

Such special interest laws are never good for the country as a whole, but they are passed and maintained because their lobbyists are crafty, knowledgeable, and highly motivated, while the voting public is mostly ignorant.

It takes a spotlight and presidential leadership to get rid of them. Will any of this year’s crop take up the challenge?

George C. LeefGeorge C. Leef

George Leef is the former book review editor of The Freeman. He is director of research at the John W. Pope Center for Higher Education Policy.

Obama Administration Declares War on Franchisors and Subcontractors by Walter Olson

In a series of unilateral moves, the Obama administration has been introducing an entirely new regime of labor law without benefit of legislation, upending decades’ worth of precedent so as to herd as many workers into unions as possible.

The newest, yesterday, from the National Labor Relations Board, is also probably the most drastic yet: in a case against waste hauler Browning-Ferris Industries, the Board declared that from now on, franchisors and companies that employ subcontractors and temporary staffing agencies will often be treated as if they were really direct employers of those other firms’ workforces: they will be held liable for alleged labor law violations at the other workplaces, and will be under legal compulsion to bargain with unions deemed to represent their staff.

The new test, one of “industrial realities,” will ask whether the remote company has the power, even the potential power, to significantly influence working conditions or wages at the subcontractor or franchisee; a previous test sought to determine whether the remote company exercised “ ‘direct and immediate impact’ on the worker’s terms and conditions — say, if that second company is involved in hiring and determining pay levels.”

This is a really big deal; as our friend Iain Murray puts it at CEI, it has the potential to “set back the clock 40 years, to an era of corporate giants when few people had the option of being their own bosses while pursuing innovative employment arrangements.”

  • A tech start-up currently contracts out for janitorial, cafeteria, and landscaping services. It will now be at legal risk should its hired contractors be later found to have violated labor law in some way, as by improperly resisting unionization. If it wants to avoid this danger of vicarious liability, it may have to fire the outside firms and directly hire workers of its own.
  • A national fast-food chain currently employs only headquarters staff, with franchisees employing all the staff at local restaurants. Union organizers can now insist that it bargain centrally with local organizers, at risk for alleged infractions by the franchisees. To escape, it can either try to replace its franchise model with company-owned outlets — so that it can directly control compliance — or at least try to exert more control over franchisees, twisting their arms to recognize unions or requiring that an agent of the franchiser be on site at all times to monitor labor law compliance.

Writes management-side labor lawyer Jon Hyman:

If staffing agencies and franchisors are now equal under the National Labor Relations Act with their customers and franchisees, then we will see the end of staffing agencies and franchises as viable business models.

Moreover, do not think for a second that this expansion of joint-employer liability will stop at the NLRB. The Department of Labor recently announced that it is exploring a similar expansion of liability for OSHA violations. And the EEOC is similarly exploring the issue for discrimination liability.

And Beth Milito, senior legal counsel at the National Federation of Independent Business, quoted at The Hill: “It will make it much harder for self-employed subcontractors to get jobs.”

What will happen to the thriving white-van culture of small skilled contractors that now provides upward mobility to so many tradespeople? Trade it in for a company van, start punching someone’s clock, and just forget about building a business of your own.

What do advocates of these changes intend to accomplish by destroying the economics of business relationships under which millions of Americans are presently employed? For many, the aim is to force much more of the economy into the mold of large-payroll, unionized employers, a system for which the 1950s are often (wrongly) idealized.

One wonders whether many of the smart New Economy people who bought into the Obama administration’s promises really knew what they were buying.

This post first appeared at Cato.org.

Walter Olson
Walter Olson

Walter Olson is a senior fellow at the Cato Institute’s Center for Constitutional Studies.

Will Robots Put Everyone Out of Work? by Sandy Ikeda

Will workplace automation make the rich richer and doom the poor?

That could happen soon, warns Paul Solman, economics correspondent for PBS NewsHour. He’s talking to Jerry Kaplan, author of a new book that seems to combine Luddism with fears about inequality.

PAUL SOLMAN: And the age-old fear of displaced workers, says Kaplan, is finally, irrevocably upon us.

JERRY KAPLAN: What happens to people who simply can’t acquire or don’t have the skills that are going to be needed in the new economy?

PAUL SOLMAN: Well, what is going to happen to them?

JERRY KAPLAN: We’re going to see much worse income inequality. And unless we take some humanitarian actions, the truth is, they’re going to starve and live in poverty and then die.

PAUL SOLMAN: Kaplan offers that grim prognosis in a new book, Humans Need Not Apply. He knows, of course, that automation has been replacing labor for 200 years or more, for decades, eliminating relatively high-paying factory jobs in America, and that new jobs have more than kept pace, but not anymore, he says.

I haven’t read Kaplan’s book, but you can get a sense of the issue from this video.

The  fear is that, unlike the past when displaced workers could learn new skills for a different industry, advanced “thinking machines” will soon fill even highly skilled positions, making it that much harder to find a job that pays a decent wage. And while the Luddite argument assumes that the number of jobs in an economy is fixed, the fear now is that whatever jobs may be created will simply be filled by even smarter machines.

This new spin sounds different, but it’s essentially the same old Luddite fallacy on two levels. First, while it’s true that machinery frequently substitutes for labor in the short term, automation tends to complement labor in the long term; and, second, the primary purpose of markets is not to create jobs per se, it is to create successful ventures by satisfying human wants and needs.

While I understand that Kaplan offers some market-oriented solutions, the mainstream media has emphasized the more alarmist aspects of his thesis. The Solmans of the world would like the government to respond with regulations to slow or prevent the introduction of artificial intelligence — or to at least subsidize the kind of major labor-force adjustments that such changes appear to demand.

Short-Term Substitutes, Long-Term Complements

Fortunately, Henry Hazlitt long ago worked out in a clear, careful, and sympathetic way the consequences of innovations on employment in his classic book, Economics in One Lesson. Here’s a brief outline of the chapter relevant to our discussion, “The Curse of Machinery”:

(As Hazlitt notes, not all innovations are “labor-saving.” Many simply improve the quality of output, but let’s put that to one side. Let’s also put aside the very real problem that raising the minimum wage will artificially accelerate the trend toward automation.)

Suppose a person who owns a coat-making business invests in a new machine that makes the same number of coats with half the workers. (Assume for now that all employees work eight-hour days and earn the going wage.) What’s easy to see is that, say, 50 people are laid off; what’s harder to see is that other people will be hired to build that new machine. If the new machine does reduce the business’s cost, however, then presumably it takes fewer than 50 people to build it. If it takes, say, 30 people, there still appears to be a net loss of 20 jobs overall.

But the story doesn’t end there. Assuming the owner doesn’t lower her price for the coats she sells, Hazlitt notes that there are three things she can do with the resulting profit. She can use it to invest in her own business, to invest in some other business, or to spend on consumption goods for herself and others. Whichever she does means more production and thus more employment elsewhere.

Moreover, competition in the coat industry will likely lead her rivals to adopt the labor-saving machinery and to produce more coats. Buying more machines means more employment in the machine-making industry, and producing more coats will, other things equal, lower the price of coats.

Now, buying more machines will probably mean she has to hire more workers to operate or maintain them, and lower coat prices mean that consumers will have more disposable income to spend on goods in general, including coats.

The overall effect is to increase the demand for labor and the number of jobs, which conforms to our historical experience in many industries. So, if all you see are the 50 people initially laid off, well, you’ve missed most of the story.

Despite claims to the contrary, it’s really no different in the case of artificial intelligence.

Machines might substitute for labor in the short term, but in the long term they complement labor and increase its productivity. Yes, new machines used in production will be more sophisticated and do more things than the old ones, but that shouldn’t be surprising; that’s what new machines have done throughout history.

And as I’ve written before in “The Breezes of Creative Destruction,” it usually takes several years for an innovation — even something as currently ubiquitous as smartphones — to permeate an economy. (I would guess that we each could name several people who don’t own one.) This gives people time to adjust by moving, learning new skills, and making new connections. Hazlitt recognizes that not everyone will adjust fully to the new situation, perhaps because of age or disability. He responds,

It is altogether proper — it is, in fact, essential to a full understanding of the problem — that the plight of these groups be recognized, that they be dealt with sympathetically, and that we try to see whether some of the gains from this specialized progress cannot be used to help the victims find a productive role elsewhere.

I’m pretty sure Hazlitt means that voluntary, noncoercive actions and organizations should take the lead in filling this compassionate role.

In any case, what works at the level of a single industry also works across all industries. The same processes that Hazlitt describes will operate as long as markets are left free to adjust. Using government intervention to deliberately stifle change may save the jobs we see, but it will destroy the many more jobs that we don’t see — and worse.

More Jobs, Less Work, Greater Well-Being

Being able to contribute to making one’s own living is probably essential to human happiness. And economic development has indeed meant that we’ve been spending less time working.

Although it’s hard to calculate accurately how many hours per week our ancestors worked — and some claim that people in preindustrial society had more leisure time than industrial workers — the best estimate is that the work week in the United States fell from about 70 hours in 1850 to about 40 hours today. Has this been a bad thing? Has working less led to human misery? Given the track record of relatively free markets, that’s a strange question to ask.

Take, for example, this video by Swedish doctor Hans Rosling about his mother’s washing machine. It’s a wonderful explanation of how this particular machine, sophisticated for its day, enabled his mother to read to him, which helped him to then become a successful scientist.

I had lunch with someone who was recently laid off and whose husband has a fulfilling but low-paying job. Despite this relatively low family income, she was able to fly to New York for a weekend to attend a U2 concert, take a class at an upscale yoga studio in Manhattan, and share a vegan lunch with an old friend. Our grandparents would have been dumbfounded!

As British journalist Matt Ridley puts it in his book The Rational Optimist,

Innovation changes the world but only because it aids the elaboration of the division of labor and encourages the division of time. Forget wars, religions, famines and poems for the moment. This is history’s greatest theme: the metastasis of exchange, specialization and the invention it has called forth, the “creation” of time.

The great accomplishment of the free market is not that it creates jobs (which it does) but that it gives us the time to promote our well-being and to accomplish things no one thought possible.

If using robots raises the productivity of labor, increases output, and expands the amount, quality, and variety of goods each of us can consume — and also lowers the hours we have to work — what’s wrong with that? What’s wrong with working less and having the time to promote the well-being of ourselves and of others?

In a system where people are free to innovate and to adjust to innovation, there will always be enough jobs for whoever wants one; we just won’t need to work as hard in them.

Sandy Ikeda
Sandy Ikeda

Sandy Ikeda is a professor of economics at Purchase College, SUNY, and the author of The Dynamics of the Mixed Economy: Toward a Theory of Interventionism.

New York Orders Fast-Food Workers Replaced With Robots, Kiosks, Mobile Apps by Daniel Bier

Well, they didn’t quite put it that way — the New York Times‘ headline read “New York panel recommends $15 minimum wage for fast-food workers” — but it amounts to the same thing.

A panel appointed by Gov. Andrew M. Cuomo recommended on Wednesday that the minimum wage be raised for employees of fast ­food chain restaurants throughout the state to $15 an hour over the next few years. Wages would be raised faster in New York City than in the rest of the state to account for the higher cost of living there.

The panel’s recommendations, which are expected to be put into effect by an order of the state’s acting commissioner of labor, represent a major triumph for the advocates who have rallied burger­ flippers and fry cooks to demand pay that covers their basic needs.

They argued that taxpayers were subsidizing the workforces of some multinational corporations, like McDonald’s, that were not paying enough to keep their workers from relying on food stamps and other welfare benefits.

The $15 wage would represent a raise of more than 70 percent for workers earning the state’s current minimum wage of $8.75 an hour. Advocates for low­ wage workers said they believed the mandate would quickly spur raises for employees in other industries across the state, and a jubilant Mr. Cuomo predicted that other states would follow his lead.

In other news, I ordered my lunch yesterday on my computer and picked it up from Panera Bread without ever talking to a person. Last night, I picked up a couple groceries and paid through the self-checkout lane. This morning, I ordered a latte on my Starbucks app, and it was waiting for me when I walked into the store. I’m thinking of going to a burger joint later, where I’ll tap out my order on a kiosk.

Of course, it’s not fair to blame the minimum wage exclusively for the increasingly widespread automation of service jobs. Ordering kiosks and mobile apps are becoming more popular as the technology becomes better, cheaper, and more popular. That will probably happen no matter what the price of labor is.

But the fact that the cost of not using technology — that is, an employee — is about to cost 70% more will give the entire New York fast-food industry a great big shove away from labor and towards machines. And since chain restaurants don’t just operate in New York, the investment in automation will spill into stores everywhere.

Who wins from this?

Unions and more experienced workers, at least in the short-run. Labor unions’ entire purpose is to push up wages for their members, which makes them more expensive and less attractive compared to non-union workers.

But if unions — like, say, the Service Employees International Union — can make all workers more expensive, it makes union labor look relatively better by comparison. They won’t have to compete against cheaper labor anymore (which is to say, less-skilled workers won’t be allowed to compete by underbidding them).

Why arbitrarily single out “fast food” for the hike?

First, it makes the fight politically easier because the unions only have to defeat one industry lobby, instead of every business that uses unskilled labor. Second, the SEIU, in particular, represents a lot of food workers and has for years been pushing to unionize the big fast-food chains.

Who loses?

First, businesses, especially those operating on thin margins. They’ll be staring at a 70% increase in labor costs, already typically one of the biggest expenses for restaurants.

Less experienced workers — especially unskilled immigrants and young people starting out in the job market — will also lose. Businesses will try to offset some of higher cost of labor by cutting hours or jobs, delaying or cancelling expansions, replacing labor with capital where they can, and replacing less skilled with more skilled workers where they can’t.

They’ll also try to raise prices to cover costs, so consumers lose, too — especially those who eat fast-food more often, have tighter budgets, and have food as a bigger share of their budgets: i.e., low and lower-middle income families.

The net effect this will be less employment, less production, and less consumption. The economy and especially less-advantaged people will be worse off for it.

Miscellaneous arguments:

  • CEO pay: The Times awkwardly shoehorns in the fact that McDonald’s chief executive made $7.5 million last year, presumably trying to suggest that he’s the reason its other 420,000 employees are paid so little. In case you’re wondering, redistributing his salary comes out to 5 cents per employee per day. And then McDonald’s has no CEO. Hurray?
  • Corporate Subsidy: The Times also uncritically repeats the incoherent claim that taxpayers are somehow “subsidizing” these “multinational corporations” because they don’t pay “enough to keep their workers from relying on food stamps and other welfare benefits.” This makes no sense at all.
  • No Big Deal: The economists who claim that raising the minimum wage won’t hurt employment that much always couch it with the caveat that the increase be “small” or “moderate.” By no stretch of the imagination is hiking the wage floor to $15 “moderate.” In New York, it’s a 70% increase; in states with the federal minimum of $7.25, it’s 107% increase.

Antony Davies has charted the relationship between the minimum wage as a share of the average wage and the unemployment rates for different workers over time.

There’s no connection between the minimum wage and unemployment for the college-educated, but for those with high school or less, there’s a strong positive correlation:

Notice that the chart axis stops at 45% of the average hourly wage: in more than three decades, the minimum wage has never gone higher. Today, according to BLS data, a $15 minimum wage would be 60% of the average hourly wage — the highest relative minimum wage ever. We are literally going into uncharted territory.

Daniel Bier

Daniel Bier is the editor of Anything Peaceful. He writes on issues relating to science, civil liberties, and economic freedom.

Europe Needs Regime Change in Greece: They Won’t Get It by Stephen Davies

It seems the saga of negotiations between the Greek Government and its creditors has arrived at a denouement but almost certainly not a final conclusion, and we may expect this show to return to the stage at some point, probably in the near future. The reason for this is the real nature of the ultimate problem facing both parties, something of which the creditors are still unaware.

The negotiations over the last few months have been marked by a remarkable degree of acrimony. Most of the other eurozone governments have become increasingly (and publicly) exasperated with the Greeks, and the expressions of hostility towards the Greek government from members of national parliaments have grown ever more outspoken.

Some of the reasons for this are well known — above all, the lack of a true European demos: there simply is not the kind of solidarity or shared interest in Europe that one finds in, for example, the United States.

However, there is another reason for the acrimony that has not received much attention. The creditors misunderstand what it is they are asking the Greek government and society to do. This lack of understanding is why any deal made now is likely to prove a disappointment.

The impression given by media reports is that this is all about debt, specifically the debts run up by the Greek state before 2009. Certainly there is a problem, but it is one that is soluble and does not require the kind of fraught negotiations we have seen.

The difficulty is that the fiscal state of Greece before the first bailout in 2010, and the underlying state of the Greek economy, are symptoms of a much more serious underlying problem. This is one not of debt but of competitiveness.

Quite simply the Greek economy is not productive enough to support the levels of income and public spending that it now has, without significant capital inflows from outside Greece. Before 2008 these came in the form of private loans, since then by government bailouts (even if much of this has been recycled back to private creditors).

Greek firms and labour are simply not competitive with their counterparts elsewhere in Europe, above all in Germany. Being in the euro means that they cannot adopt the traditional way of regaining at least some competitiveness by devaluing their currency. Instead, they have to deflate internally, and the attempt to do this has devastated economic life in Greece.

This is all well known. It is the reason why the creditors are demanding that, in return for a third bailout, the Greek government introduce a series of reforms to public spending, the tax system, and the machinery of the Greek state, particularly it’s tax collecting apparatus. Successive Greek government have either refused to do this or promised to do it and then failed. This is why the rest of the eurozone is becoming ever more exasperated. It here however that the misunderstanding comes in to play.

What the creditors think they are asking for is a major shift in public policy. They recognise that the shift they are asking for is radical, and many also realise that what would be involved would be a shift in the general ideological basis of Greek politics, towards a more market liberal direction. However, they are actually, without realising it, asking for something much more fundamental and drastic.

One question that should be asked is why Greece got into a position that was so much worse than that of other “peripheral” economies. Also, why has the performance of the Greek economy been so much worse than that of other countries that have had bailouts and austerity, such as Spain, Portugal, and Ireland? The answer lies in the fundamental nature of the Greek state and the political economy of Greece.

Greek political culture is dominated by practices and institutions that certainly exist elsewhere in Europe but are not as dominant. The state has a narrow tax base, with powerful interests such as the Orthodox Church effectively exempt. The revenue collection apparatus is completely ineffective so that tax evasion is endemic at every level of income.

This means that simply raising or extending VAT for instance is not enough because so many transactions are off the books. At the same time, the Greek state provides generous pensions and other benefits, which it cannot fund.

The political system appears to be a modern democracy but is in fact a much older model. The key institution is clientelism, in which political actors give out rewards to their clients in the shape of handouts and sinecures in the very large public sector. This is done much more directly than with the kind of interest group politics that we find in most democratic countries, and it is central to the whole way that politics works.

The extent of patronage means that the Greek government (whoever they are) does not have a modern, Weberian, bureaucracy to call on. Instead, most of the people in the public service owe their positions to networks of patronage and these command their loyalty.

The economy is highly regulated in ways that entrench settled interests and inhibit innovation. In particular, a very wide range of occupations are subject to rules that make it very difficult for new entrants into those sectors. Because of the inefficiency and the existence of a plethora of rules that are irksome but ultimately unenforceable, corruption is endemic and widespread throughout Greek society.

This system cannot maintain anything like the standard of living to which most Greeks aspire and as such it means that, via membership of the euro, we have seen the development of an economy that depends upon inward transfers — to a much greater degree than is the case in countries such as Spain and Ireland.

Given all this, it becomes clear that what the creditors are asking for is much more than a shift in policy, no matter how sharp and dramatic. Policy shifts of that kind are part of the normal or regular political process that take place infrequently, but still regularly, in most polities. The shift brought about by Margaret Thatcher’s election in 1979 is an example.

What is needed in Greece, and what the creditors are asking for without realising it, is something more fundamental, a change in the very nature of the political system and in the entire nature of politics and government, rather than a change of policy within a system. This is a regime change in the original and correct use of that term.

The point of course is that changes of this kind are extremely difficult and only happen extremely rarely. Sometimes it requires a revolution, as in France; on other occasions, it takes place in the context of a fundamental crisis such as defeat in a major war. Very rarely it can happen when there is a near consensus in a society over what to do, as in Japan in the 1870s.

The current Greek government is almost certainly aware of this, but, apart from ideological objections to part of the list of reforms, they are quite simply unable, rather than unwilling, to do what is asked because a change in the political order is simply very, very hard.

So the creditors are likely to be disappointed and will then become even more enraged. Moreover, being in the euro makes any attempt at systemic change in Greece even more difficult than it would be already, because if removes a range of policy options that could alleviate some of the transition costs.

As most economists of all persuasions now think, the best option is a managed Greek exit from the euro. If this does not happen (as seems likely) then this farce is a production that will run for some time.


Stephen Davies

Stephen Davies is a program officer at the Institute for Humane Studies and the education director at the Institute for Economics Affairs in London.

Texas Will Stop Putting Kids in Prison for Skipping School by Jason Bedrick

The AP reports some good news out of Texas over the weekend:

A long-standing Texas law that has sent about 100,000 students a year to criminal court – and some to jail – for missing school is off the books, though a Justice Department investigation into one county’s truancy courts continues.

Gov. Greg Abbott has signed into law a measure to decriminalize unexcused absences and require school districts to implement preventive measures. It will take effect Sept. 1.

Reform advocates say the threat of a heavy fine – up to $500 plus court costs – and a criminal record wasn’t keeping children in school and was sending those who couldn’t pay into a criminal justice system spiral.

Under the old law, students as young as 12 could be ordered to court for three unexcused absences in four weeks. Schools were required to file a misdemeanor failure to attend school charge against students with more than 10 unexcused absences in six months. And unpaid fines landed some students behind bars when they turned 17.

Unsurprisingly, the truancy law had negatively impacted low-income and minority students the most.

In the wake of the arrest of a Georgia mother whose honor role student accumulated three unexcused absences more than the law allowed, Walter Olson noted that several states still have compulsory school attendance laws that carry criminal penalties:

Texas not only criminalized truancy but has provided for young offenders to be tried in adult courts, leading to extraordinarily harsh results especially for poorer families.

But truancy-law horror stories now come in regularly from all over the country, from Virginia to California. In Pennsylvania a woman died in jail after failing to pay truancy fines; “More than 1,600 people have been jailed in Berks County alone — where Reading is the county seat — over truancy fines since 2000.”)

The criminal penalties, combined with the serious consequences that can follow non-payment of civil penalties, are now an important component of what has been called carceral liberalism: we’re finding ever more ways to menace you with imprisonment, but don’t worry, it’s for your own good.

Yet jailing parents hardly seems a promising way to stabilize the lives of wavering students.

And as Colorado state Sen. Chris Holbert, sponsor of a decriminalization bill, has said, “Sending kids to jail — juvenile detention — for nothing more than truancy just didn’t make sense. When a student is referred to juvenile detention, he or she is co-mingling with criminals — juveniles who’ve committed theft or assault or drug dealing.”

It’s encouraging to see movement away from criminalized truancy, but it’s not enough. As Neal McCluskey has noted, compulsory government schooling is as American as Bavarian cream pie.

We shouldn’t be surprised when the one-size-fits-some district schools don’t work out for some of the students assigned to them. Instead, states should empower parents to choose the education that meets their child’s individual needs.


Jason Bedrick

Jason Bedrick is a policy analyst with the Cato Institute’s Center for Educational Freedom.

EDITORS NOTE: This post first appeared at Cato.org.

California Government Puts Uber on Blocks by Jeffrey A. Tucker

The California Labor Commission, with its expansive power to categorize and codify what it is that workers do, has dealt a terrible blow to Uber, the disruptive ride-sharing service. In one administrative edict, it has managed to do what hundreds of local governments haven’t.

Every rapacious municipal taxi monopoly in the state has to be celebrating today. It also provides a model for how these companies will be treated at the federal level. This could be a crushing blow. It’s not only the fate of Uber that is at stake. The entire peer-to-peer economy could be damaged by these administrative edicts.

The change in how the income of Uber drivers is treated by the law seems innocuous. Instead of being regarded as “independent contractors,” they are now to be regarded as “employees.”

Why does it matter? You find out only way down in the New York Times story on the issue. This “could change Uber’s cost structure, requiring it to offer health insurance and other benefits, as well as paying salaries.”

That’s just the start of it. Suddenly, Uber drivers will be subject to a huge range of federal tax laws that involve withholding, maximum working hours, and the entire labor code at all levels as it affects the market for employees. Oh, and Obamacare.

This is a devastating turn for the company and those who drive for it.

Just ask the drivers:

Indeed, there seems to be no justification for calling Uber drivers employees. I can recall being picked up at airport once. Uber was not allowed to serve that airport. I asked the man if he worked for Uber. He said he used to but not anymore.

“When did you quit?”

“Just now,” he said. Wink, wink. He was driving for himself on my trip.

“When do you think you will work for Uber again?”

“After I drop you off.”

That’s exactly the kind of independence that Uber drivers value. They don’t have to answer any particular call that comes in. They set their own hours. They drive their own cars. When an airport bans Uber, they simply redefine themselves.

They can do this because they are their own boss; Uber only cuts them off if they don’t answer a call on their mobile apps for 180 days. But it is precisely that rule that led the commission to call them “employees.”

That’s a pretty thin basis on which to call someone an employee. And it’s also solid proof that the point of this decision is not to clarify some labor designation but rather to shore up the old monopolies that want to continue to rip off consumers with high prices and poor service. No surprise, government here is using its power to serve the ruling class and established interests.

This is exactly the problem with government regulations that purport to define and codify every job. Such regulations tend to restrict the types and speed of innovation that can occur in enterprises.

The app economy and peer-to-peer network are huge growth areas precisely because they have so far manage to evade being codified and controlled and shoe-horned into the old stultifying rules.

If everyone earning a piecemeal stream of income is called an employee — and regulated by relevant tax, workplace, and labor laws — many of these companies immediately become unviable.

There will be no more on-demand hair stylists, plumbers, tennis coaches, and piano teachers. The fate of a vast number of companies is at stake. The future is at stake.

For now, Uber is saying that this decision pertains to this one employee only. I hope that this claim is sustainable. If it is not, the regulators will use this decision to inflict a terrible blow on the brightest and fastest growing sector of American economic life.


Jeffrey A. Tucker

Jeffrey Tucker is Director of Digital Development at FEE, CLO of the startup Liberty.me, and editor at Laissez Faire Books. Author of five books, he speaks at FEE summer seminars and other events. His latest book is Bit by Bit: How P2P Is Freeing the World.

There Is No “Nationwide Crime Wave” — But Baltimore Is in Trouble by Daniel Bier

Heather McDonald’s Wall Street Journal op-ed “The New Nationwide Crime Wave” has exploded into the debate over police misconduct and criminal justice reform like a flash-bang grenade. It’s been discussed on numerous talk radio and cable news shows, and it’s been shared nearly 40,000 times on social media.

It’s a story engineered to go viral: It has a terrifying premise (crime everywhere is spiraling out of control!), a topical news hook (it’s all because of protesters!), a partisan bad guy (it’s all liberals’ fault!), and a weapons-grade dose of confirmation bias.

But there is no nationwide crime wave. It is completely manufactured by cherry picking data and misleading stats.

McDonald selects a handful of cities and quotes statistics to show that crime is exploding in “cities across America” this year:

In Baltimore… Gun violence is up more than 60% compared with this time last year, according to Baltimore police, with 32 shootings over Memorial Day weekend. May has been the most violent month the city has seen in 15 years.

In Milwaukee, homicides were up 180% by May 17 over the same period the previous year. Through April, shootings in St. Louis were up 39%, robberies 43%, and homicides 25%. …

Murders in Atlanta were up 32% as of mid-May. Shootings in Chicago had increased 24% and homicides 17%. Shootings and other violent felonies in Los Angeles had spiked by 25%; in New York, murder was up nearly 13%, and gun violence 7%.

Does this blizzard of numbers show a “nationwide crime wave”? No.

As John Lott points out at FoxNews.com,

Overall, the 15 largest cities have actually experienced a slight decrease in murders. There has been a 2 percent drop from the first five months of 2014 to the first five months of this year. Murder rates rose in eight cities and fell in seven. There is no nationwide murder wave.

Murder rates fell dramatically in some of these cities. Comparing this year’s January-to-May murder data with last year’s, we find that San Jose’s murder rate fell by a whopping 59 percent; Jacksonville’s fell by 31 percent; Indianapolis’ by 28 percent; San Antonio’s by 25 percent; and Los Angeles’ by 15 percent.

Even in the cities where murder is up compared to 2014, other categories of crime are down. New York, for instance, has had more murders but fewer burglaries and robberies. LA’s other violent crimes may be up, but murder is down.

She also implies that police are being attacked and killed more than ever: “Murders of officers jumped 89% in 2014, to 51 from 27.”

This 89% statistic is a deeply misleading view of the facts. Yes, 51 officers were murdered in 2014, compared to 27 in 2013. But 2013 was the safest year for police since World War II. It had the fewest shooting deaths for police since1887.

If you compare 2014’s 51 murders to other recent years, it’s not exceptional. In 2012, there were 48 officers killed. In 2011, it was 72. Over the last couple decades, the rate of police murders (and indeed work-related deaths from all causes) have fallen by nearly half, as have assault and injuries of police.

There’s another reason why McDonald quoted last year’s statistics for officer deaths when all of her other figures come from this year: officer shootings are down 27% so far this year.

Just like her other statistics, if she had given any context at all to the 89% figure, it wouldn’t have fit with her narrative of rising violence.

But never mind — as the author of this story, McDonald knows the cause of this fictitious trend: the “Ferguson Effect.”

The most plausible explanation of the current surge in lawlessness is the intense agitation against American police departments over the past nine months.

By her account, an “incessant drumbeat against the police” is behind the nonexistent “wave” of crime and violence against cops.

But this is also a myth. Public support for police has not waned. Gallup’s polling shows that confidence in law enforcement has been steady since the early 1990s.

That hasn’t changed, even after the protests against police abuse around the country. A Huffington Post/YouGov survey from April 2015 showed that 61% of Americans have a “great deal” or a “fair amount” of trust in their local department; 21% said “not very much,” and only 14% had “none.”

There is no national crime wave. Big cities are not facing a “surge of lawlessness.” There is no “war on cops.” The public hasn’t turned against the police.

So what’s going on in Baltimore? McDonald isn’t wrong about the spike in crime there. Baltimore City really is facing a breakdown in law and order.

Alex Tabarrok notes that police have made 40% fewer arrests since the start of the protests and the filing of criminal charges against six cops involved in Freddie Gray’s death.

As arrests have declined, crime has soared.

Tabarrok writes,

Not all arrests are good arrests, of course, but the strain is cutting policing across the board and the criminals are responding to incentives.

Fewer police mean more crime. As arrests have fallen, homicides, shootings, robberies and auto thefts have all spiked upwards.

Homicides, for example, have more than doubled from .53 a day on average before the unrest to 1.35 a day after (up to June 6, most recent data) – this is an unprecedented increase – and the highest homicide rate Baltimore has ever seen.

It’s not just murder. Shootings are up over 250%. Robberies are up 64%. Car thefts are up 42%.

It’s reasonable to assume that the increase in crime is at least partially related to the decline in police activity — criminals respond to incentives just like everyone else — but why aren’t police making arrests?

The answer might be found in the “De Blasio Effect.”

New York saw a similar “work stoppage” — that is, an unofficial strike — by the NYPD during its feud with Mayor De Blasio over his critical comments about the death of Eric Garner.

The NYPD retaliated: Arrests fell by 56% and criminal summonses fell by 92%, until the mayor made up with the department and police work resumed.

Kevin Drum speculates that BPD’s precipitous decline in arrests is a similar reprisal against the indictment of the officers involved in Freddie Gray’s death.

It’s certainly possible that has something to do with it, but officers appear to be genuinely spooked. About 130 cops were injured in the riots — that’s about 4.5% of the city’s officers down over the course of a week. That’s almost twice the rate of injury the average department sustains in a whole year.

Cops are understandably worried. Peter Moskos, a former BPD officer, says, “In Baltimore today, several police officers need to respond to situations where formerly one could do the job. This stretches resources and prevents proactive policing.”

There’s another issue: when crime spikes, police can be overwhelmed. Cases build up, and as new reports pour in, less and less time can be devoted to the old ones.

Most murders in Baltimore this year have gone unsolved. BPD’s clearance rate for homicides has fallen to just 40%, and the surge in killings can only make things worse.

Police Commissioner Anthony W. Batts said the rise in killings is “backlogging” investigators, just as the community has become less engaged with police, providing fewer tips.

Tabarrok is worried that a new equilibrium for crime could emerge in Baltimore. If crime continues to rise, clearance rates will fall further, detectives will get more backlogged, and it gets even harder to solve the next case. And if the probability of being caught and punished goes down, criminals will commit more crimes.

With luck the crime wave will subside quickly but the longer-term fear is that the increase in crime could push arrest and clearance rates down so far that the increase in crime becomes self-fulfilling. The higher crime rate itself generates the lower punishment that supports the higher crime rate

It’s possible that a temporary shift could push Baltimore into a permanently higher high-crime equilibrium. Once the high-crime equilibrium is entered it may be very difficult to exit without a lot of resources that Baltimore doesn’t have.

Some people see criminal justice reform as being anti-cop or “soft on crime,” but it’s not. Reform enables police to do a better job, which reduces crime — and that makes them and their citizens safer.

The best thing that Baltimore can hope for is that cops get back to work and start solving crimes. The best way to do that is for the community to engage with law enforcement.

Communities’ trust in police is key to fighting crime, and right now the BPD doesn’t have it. The Baltimore Sun has documented in excruciating detail the department’s history of corruption and excessive force, writing: “The perception that officers are violent can poison the relationship between residents and police.” And that leads to tips not given, 911 calls not dialed, and witnesses failing to come forward.

Real, credible reform, combined with accountability for misconduct and a strong commitment to community safety, is the best and probably only way to rebuild the relationship between citizen and cop and to turn crime around in Baltimore. The city and the police must embrace the task; they won’t accomplish it without each other.


Daniel Bier

Daniel Bier is the editor of Anything Peaceful. He writes on issues relating to science, civil liberties, and economic freedom.

A Shrine to a Socialist Demagogue by Lawrence W. Reed

MANAGUA, Nicaragua — It’s May 27, 2015. Driving south on First Avenue toward Masaya on a hot, late-spring day in the Nicaraguan capital, my eye caught an image in the distance. “That looks like Curly from The Three Stooges!” I thought. Nah, what would he be doing here? Nyuk. Nyuk.

As we approached, I suddenly realized it only resembled Curly. It was actually somebody considerably less funny. The statue was a garish, tasteless manifestation of the late Venezuelan socialist strongman Hugo Chavez, surrounded by ugly, orange curlicues. I repressed the urge to gag as I stopped to take this photo:

Hugo Chavez shrine

This tribute to a man whose ceaseless demagoguery ruined his nation’s economy is the doing, of course, of Nicaraguan president Daniel Ortega and his party. Ortega, like Chavez, engineered constitutional changes that may make him effectively president for life. He has worshiped state power since the 1970s. He was a Cuban-trained Marxist and cofounder of the Frente Sandinista de Liberación Nacional, the Sandinistas. I visited the country five times in the 1980s to interview key political figures, and whenever I was there, Ortega was pushing government literacy programs; meanwhile, his government was harassing and shutting down the opposition press.

Back in the 1980s, Ortega relied heavily on subsidies from his Soviet and Cuban sponsors. But now that the Soviets are ancient history and the Cuban economy is on life support, he’s had to moderate. Nicaragua is a very poor country. Its per capita GDP is about a third of the world average, better than Yemen’s but not as deluxe as Uzbekistan’s. According to the 2015 Index of Economic Freedom, however, it’s ranked better than you might expect at 108th in the world. Seventy countries are actually less free.

Who do you think is ranked at the very bottom, at 176, 177, and 178?

None other than the workers’ paradises of Venezuela, Cuba, and North Korea.

If you want a glimpse of the current state of the Chavez/Maduro experiment in Venezuelan socialism, look no further than the relative scarcities of toilet paper (you’d better bring your own if you visit) and paper money (more abundant than ever at 510 percent inflation).

I asked my old friend Deroy Murdock, senior fellow with the Atlas Network, Fox News contributor, and keen observer of affairs in the Americas: How would you assess the legacy of the Venezuelan caudillo memorialized by Ortega’s regime in Nicaragua?

“Hugo Chavez arrived in Venezuela, determined to make his country a gleaming showcase of socialism, and renovate Cuba in the process,” Murdock said. “Now, Chavez is dead, Castro still lives, and both countries remain in dire straits. Chavez’s legacy is the enduring lesson that big government is bad, and huge government is even worse.”

Indeed. Seems pretty self-evident whether you look at the numbers from afar or walk the streets in person. Venezuela’s economy has been in free-fall for almost all of the past 15 years.

But there I was, gazing at a giant Hugo in Managua, a monument intended to say, “Way to go, man!” One wonders where an impoverished country gets the money or even the idea to construct such a hideous gargoyle.

Then I realized the answer: Ortega’s Nicaragua is run by socialists. And by typical socialist reasoning, you can be an architect of disaster but reckoned to be a “man of the people” just by claiming to be one.

If you produced the same results while advocating capitalism, you’d be reckoned a monster.


Lawrence W. Reed

Lawrence W. (“Larry”) Reed became president of FEE in 2008 after serving as chairman of its board of trustees in the 1990s and both writing and speaking for FEE since the late 1970s.

Labor Unions Create Unemployment: It’s a Feature, Not a Bug by Sarah Skwire

Did the labor unions goof, or did they get exactly what they want?

Los Angeles has approved a minimum wage hike to $15 an hour. Some of the biggest supporters of that increase were the labor unions. But now that the increase has been approved, the unions are fighting to exempt union labor from that wage hike.

Over at Anything Peaceful, Dan Bier has nicely explained why the unions would do something that seems, at first glance, so nonsensical. But what I want to point out is that this kind of hijinks is not a new invention of 21st century organized labor. Instead, it’s pretty much what labor was organized to do. It’s a feature, not a bug.

Part of the early reasoning for the minimum wage — which originated as a “family wage” or “living wage” — was its intent to allow a worker to “keep his wife and children out of competition with himself” and presumably to keep all other women out of the workforce as well.

Similarly, the labor movement, from the very beginning, meant to protect organized white male labor from competition against black labor, immigrant labor, female labor, and nonunion labor. There are subtleties to this generalization, of course, and labor historian Ruth Milkman identifies four historical waves of the labor movement that have differing commitments (and a lack thereof) to a more diverse vision of labor rights. But unions — like so many other institutions — work on the “get up and bar the door” principle. Get up as high as you can, and then bar the door behind you against any further entrants who might cut into the goodies you have grabbed for yourself.

Labor union expert Charles Baird notes,

Unions depend on capture. They try to capture employers by cutting them off from alternative sources of labor; they try to capture workers by eliminating union-free employment alternatives; and they try to capture customers by eliminating union-free producers. Successful capture generates monopoly gains for unions.

Protection is the name of the game.

Unsurprisingly, the unions made sure to be involved when, about 50 years before the 1970s push for an equal rights amendment, there was another push for an ERA in the United States. Written by suffragist leader Alice Paul, the amendment was an attempt to leverage the newly recognized voting power of women into a policy that guaranteed men and women shall have equal rights throughout the United States and every place under its jurisdiction.” This amendment would have prevented various gender-based inequities that the courts supported at the time — like hugely different hourly wages for male and female workers, limits on the number of hours women could work, limits on when women could work (night shifts were seen as particularly dangerous for women’s health and welfare), and limits on the kinds of work women could do.

Reporting on the debates over the ERA in 1924, Doris Stevens noted three main objections to the amendment:

First, there was the familiar plea for gradual, rather than sweeping change.

Second, there were concerns over lost pensions for widows and mothers.

And in Stevens’s words,

The final objection says: Grant political, social, and civil equality to women, but do not give equality to women in industry.… Here lies the heart of the whole controversy. It is not astonishing, but very intelligent indeed, that the battle should center on the point of woman’s right to sell her labor on the same terms as man. For unless she is able equally to compete, to earn, to control, and to invest her money, unless in short woman’s economic position is made more secure, certainly she cannot establish equality in fact. She will have won merely the shadow of power without essential and authentic substance.

Suffragist Rheta Childe Dorr (in Good Housekeeping, of all places. How the mighty have fallen!) pointed out again the logic behind labor’s opposition to the equal rights amendment:

The labor unions are most opposed to this law, for few unions want women to advance in skilled trades. The Women’s Trade Union League, controlled and to a large extent supported by the men’s unions, opposes it. Of course, the welfare organizations oppose it, for it frees women wage earners from the police power of the old laws. But I pray that public opinion, especially that of the club women, will support it. It’s the first law yet proposed that gives working women a man’s chance industrially. “No men’s labor unions, no leisure class women, no uniformed legislators have a right to govern our lives without our consent,” the women declare, and I think they are dead right about it.

Organized labor — founded to ensure the collective right to contract — refused to stand up for the right of individual women to contract. From their point of view, it was only sensible. And, perhaps most importantly, women in organized labor refused to stand up for the women outside the unions.

Organized male and female labor’s fight against the ERA was at least as much about protectionism as it was about sexism. Maybe more. Women’s rights and union activist Ethel M. Smith attended the debates on the ERA to report on it for the Life and Labor Bulletin, and found that union workers did not even attempt to gloss over their protectionist agenda:

Miss Mary Goff of the International Ladies’ Garment Workers Union, emphasized the seriousness of the effect upon organized establishments were legal restrictions upon hours of labor removed from the unorganized. “The organized women workers,” she said, “need the labor laws to protect them from the competition of the unorganized. Where my union, for instance, may have secured for me a 44-hour week, how long could they maintain it if there were unlimited hours for other workers? Unfortunately, there are hundreds of thousands of unorganized working women in New York who would undoubtedly be working 10 hours a day but for the 9-hour law of New York.”

So labor unions excluded women as long as they could, then let in a privileged few and barred the doors behind them. And they continue to use the same tactics today in LA and elsewhere.

How long can they keep it up?


Sarah Skwire

Sarah Skwire is a senior fellow at Liberty Fund, Inc. She is a poet and author of the writing textbook Writing with a Thesis.

LA Unions Demand Exemption from $15 Minimum Wage They Created by Daniel Bier

If there was ever any doubt that LA’s minimum wage hike was meant to help the labor unions at the expense of everyone else, I hope we can now put that idea to bed.

The LA Times reports,

Labor leaders, who were among the strongest supporters of the citywide minimum wage increase approved last week by the Los Angeles City Council, are advocating last-minute changes to the law that could create an exemption for companies with unionized workforces. . . .

Rusty Hicks, who heads the county Federation of Labor and helps lead the Raise the Wage coalition, said Tuesday night that companies with workers represented by unions should have leeway to negotiate a wage below that mandated by the law.

“With a collective bargaining agreement, a business owner and the employees negotiate an agreement that works for them both. The agreement allows each party to prioritize what is important to them,” Hicks said in a statement. “This provision gives the parties the option, the freedom, to negotiate that agreement. And that is a good thing.”

Unions want to give workers and business the option — the freedom! — to prioritize what’s important to them and negotiate their own pay! Isn’t that nice. But only if those workers are paying union dues, and only if those businesses are using union labor.

The minimum wage hike was always meant to make independent workers more expensive and make unions look better by comparison. But it’s a bold move for the unions to simply say, in one breath, “Everyone deserves a living wage! It’ll be good for everyone! Except us, thank you. We’ll set our own pay — and also, give a break to any businesses who agree to go back to union labor.”

More on this transparently corrupt policy of the minimum wage by FEE’s Jeffrey Tucker.


Daniel Bier

Daniel Bier is the editor of Anything Peaceful. He writes on issues relating to science, civil liberties, and economic freedom.