How Labor Regulation Harms Unskilled Workers
How Labor Regulation Harms Unskilled Workers
"""
under the Davis–Bacon Act a laborer who places and picks up orange cones
around a federal highway project in California has a minimum wage of $43.97 an hour
[...]
“Obamacare,” [...] Firms that provide insufficient health insurance (or no insurance at all) face penalties of $2,000–$3,000 per employee per year.
[...]
Taken together, these regulations substantially increase the minimum cost of employing even the least-skilled workers. In a location with a $15 minimum wage, the actual all-in cost per hour with taxes and minimum benefits might be as high as $21 an hour. [...] 40% price increase
[...]
Liability for bad employee behavior [...] One potential way employers can manage this risk is to shift their hiring from unskilled employees to college graduates. [...] Similarly, because good information on prospective employees—credit checks, background checks, reference checks, discussions of past employment and salary—all have new legal limitations, employers who hire college graduates benefit from the substantial due diligence universities perform in their admissions process.
[...]
Most of these regulations impose fixed costs [...] tend to increase the
minimum size a business must be to remain viable. [...] even worse for many small businesses, the only person who can usually manage this compliance work is the owner [...] employment will shift from smaller to larger companies. This is indeed what the United States has experienced for over two decades [...] since 1992 most of the new small businesses formed have had no employees at all. These zero-employee companies are a predictable result of the increasing regulatory costs of hiring because these sorts of business owners are generally exempt from much of labor regulation. A company in which only the owners provide labor is substantially less expensive to operate than a company with even one employee.
[...]
The decline in the relative share of employment at small businesses and the decreased job creation from new small businesses have a disproportionate effect on unskilled labor because small businesses have always been a particular source of opportunity for less educated workers. In 1998, before most of these declines in small business employment share, 52.2% of small business employees had high school diplomas or less, while just 44.5% of larger company employers had this level of education.
"""
https://object.cato.org/sites/cato.org/files/serials/files/regulation/2018/6/regulation-v41n2-1.pdf

http://www.coyoteblog.com/coyote_blog/2018/07/i-have-the-cover-story-in-regulation-magazine-how-labor-regulation-harms-unskilled-workers.html
http://www.coyoteblog.com/coyote_blog/2018/07/i-have-the-cover-story-in-regulation-magazine-how-labor-regulation-harms-unskilled-workers.html

Labels: Oleg Zabluda

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