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OpenMarket: Labor and Employment

  • CEI Podcast for January 2, 2014: Rethinking Unemployment Insurance

    January 2, 2014 4:26 PM

    With unemployment still painfully high more than five years after the financial crisis, Senior Fellow in Labor Policy Aloysius Hogan thinks that re-extending unemployment insurance would only make the problem worse.

  • The Great Italian Auto Bailout -- Courtesy of U.S. Taxpayers

    January 1, 2014 7:09 PM

    At the beginning of 2014, Detroit may be bankrupt, but they're cheering the five-year-old U.S. auto bailout in Italy. That's because after being the beneficiary of billions in U.S. taxpayer largesse, Fiat, the leading Italian auto company, is going to buy its final stake in Chrysler from that other big bailout recipient, the United Auto Workers (UAW).

    "Chrysler's Now Fully an Italian Auto Company," reads the Time magazine online headline. But wait a minute! Wasn't the bailout supposed to be about saving the American auto industry?

    As Mark Beatty and wrote in The Daily Caller in November 2012, after presidential candidate Mitt Romney made the controversial claim that Fiat would be expanding production of Chrysler's Jeep in China (a claim that turned out to be correct),

    The real outrage arising from the 2009 Chrysler bailout is not that its parent company, Fiat, is planning to build plants in China. It’s that the politicized bankruptcy process limited Chrysler’s growth potential by tying it to an Italian dinosaur in the midst of the European fiscal crisis. The Obama administration literally gave away ownership of one of the Big Three American auto manufacturers to an Italian car maker struggling with labor and productivity issues worse than those that drove Chrysler to near-liquidation.

    As we noted in the piece, much of Chrysler’s profits from its overhauled line are going to prop up Fiat’s failing, money-losing Italian business, rather than to expanding production and jobs in the U.S. Moody’s had downgraded Fiat’s credit rating to “junk” even before the Obama administration arranged for it to acquire a Chrysler stake, and in Autumn 2012, Moody’s gave Fiat another downgrade that the Financial Times described as even “further into ‘junk’ territory.”

    Around this time, Barron’s put it like this in a headline, “This time, Chrysler could bail out Fiat.” Actually, the Barron’s headline is slightly misleading in one respect — Fiat didn’t contribute much of anything to the Chrysler’s bailout.

  • Minimum Wage Increases Harm the Young, Unskilled, and Less Educated

    December 12, 2013 4:58 PM

    Minimum wage increases eliminate some jobs. Real world examples abound. As a business owner explains:

    The minimum wage kills jobs. End of story. I am a perfect example. I run a very successful financial advisory practice, and I would gladly hire two or three teens to work for me personally. But I will not do it at the minimum wage. They simply don’t bring enough economic benefit to warrant me paying them that much. So, what’s the end result? Two or three teens go without a job and instead do nothing. No job. No experience. No learning. Nothing.

    I personally know at least a dozen seniors in high school and freshmen in college who would jump at the opportunity to work with me for nothing, let alone $3 per hour or $5 per hour. All of the ancillary skills and benefits would far outweigh any wage they may earn. Yet, the minimum wage laws prevent this from happening. And instead they are just unemployed – economic casualties.

    Warren Meyer of Recreation Resource Management, Inc., has also been prevented from hiring people because of the minimum age, as he chronicles at this link.

    Studies show minimum wages disproportionately increase unemployment among the youngest and least-educated and least-skilled workers. Increasing the minimum wage increases unemployment rates among young people and minorities, noted economics professor Walter Williams in his 1982 book, The State Against Blacks. The economist Thomas Sowell makes the same point in his recent two columns “Minimum Wage Madness” Parts I & II. A 2013 study released by George Mason University's Mercatus Center concluded that due to a relatively-modest “minimum wage increase," “the unemployment rate for young workers without high school educations" would “rise by almost two percentage points," compared to “almost one percentage point” among older workers. Sowell notes that a "survey of American economists found that 90 percent of them regarded minimum wage laws as increasing the rate of unemployment among low-skilled workers. Inexperience is often the problem. Only about two percent of Americans over the age of 24 earned the minimum wage." A 2012 study by Sabia, Burkhauser & Hansen reached similar conclusions.

  • Busybodies in Congress Prepared to Re-Prohibit Voice Communications During Flight

    December 9, 2013 5:21 PM

    After two decades with a ban on the books, the Federal Communications Commission is set to consider allowing transmitting mobile devices on aircraft. On Thursday, the FCC will vote on whether or not it will begin allowing transmitting mobile devices in flight. The European Commission recently approved 3G and 4G transmissions aboard commercial flights with some limitations and leaving the decision to permit voice communications up to individual airlines. Recent research has found that there is little risk of aircraft instrument interference from passengers' portable electronic devices, which led the Federal Aviation Administration to recently end its prohibition on use of non-transmitting devices below 10,000 feet.

    Airlines can still decide individually if portable electronic devices are allowed during all flight phases, but most if not all will soon permit their customers to use their devices in airplane mode gate to gate. The airlines would have the same discretion to permit or prohibit transmitting mobile devices if the FCC decides to reform its current policy. Some airlines may wish to allow their customers to engage in voice communications during flight, others may not.

    But some in Congress wish to outlaw this choice. Bill Shuster, R-Pa., who chairs the House Transportation and Infrastructure Committee, is set to introduce a bill that would "prohibit an individual on an aircraft from engaging in voice communications using a mobile communications device during a flight of that aircraft in scheduled passenger interstate or intra-state air transportation."

    “For passengers, being able to use their phones and tablets to get online or send text messages is a useful in-flight option. But if passengers are going to be forced to listen to the gossip in the aisle seat, it’s going to make for a very long flight,” Shuster said in a statement. “For those few hours in the air with 150 other people, it’s just common sense that we all keep our personal lives to ourselves and stay off the phone.”

    Another Republican, Lamar Alexander, Tenn., is considering whether or not to introduce a similar bill in the Senate. "Stop and think about what we hear now in airport lobbies from those who wander around shouting personal details into a microphone: babbling about last night’s love life, bathroom plans, next week’s schedule, orders to an assistant, arguments with spouses," Alexander said in a November statement. "Imagine this noise while you travel, restrained by your seatbelt, unable to escape."

    According to the Red Team/Blue Team media narrative, the Republicans are supposedly skeptical of regulation while the Democrats enthusiastically embrace it. Yet here we have a proposed arbitrary political intervention coming from these supposed skeptics on Team Red -- who have charted out a more pro-regulatory course than European socialists.

  • President Pushes Welfare Rather than Opportunity and Social Mobility in Speech about Inequality

    December 5, 2013 4:11 PM

    "President Obama on Wednesday declared that addressing income inequality would be the focus of 'all' of the White House’s efforts 'for the rest of my presidency.'” But he came up with nothing new to advance this goal. Instead, he reiterated stale proposals that expand welfare rather than the opportunity to earn a living. For example, he "called for an extension of emergency unemployment benefits set to lapse by the end of the year," even though "House Republicans have signaled they likely will not support an extension," notes The Hill.

    There is something he could have done instead, that would have expanded economic opportunity, and reduced social inequality, while disproportionately helping minorities, the poor, and the spouses of our soldiers and sailors. That step would be campaigning against the spread of costly and unnecessary occupational licensing rules -- and reforming federal accreditation regulations that reinforce them.

    In 1950, 4 percent of all jobs required a government-conferred license. Now, well over 20 percent do, many of them jobs that anyone could quickly learn how to do on the job. These licensing requirements are in many cases designed not to protect the public, but rather to prevent aspiring young people from competing with established businesses. In Florida, you need a state license to be an interior designer – and it takes two years of college study, plus years of training, to get such a license.

    Poor kids can’t afford this kind of wasteful and unnecessary “training” as the prerequisite for entering a well-paying trade. But rich kids can. The net effect of these occupational licensing requirements is to reinforce and magnify social inequality and reduce social mobility. Aspiring working-class young people deserve better than being excluded from well-paying fields just because they and their families can’t afford pointless licensing requirements.

  • Dumbest Reason to Be Skeptical of Autonomous Vehicles: They Might Cost Auto Mechanics Their Jobs

    November 19, 2013 1:51 PM

    Today, the House Subcommittee on Highways and Transit of the Transportation and Infrastructure Committee held a hearing on "How Autonomous Vehicles Will Shape the Future of Surface Transportation." This hearing is the first time Congress has seriously addressed autonomous vehicles, and many observers were rightly worried that political interest from Congress might lead to unnecessary economic intervention.

    Fortunately, the majority of the questions from members of Congress were reasonable, and the witnesses were largely able to explain away concerns and emphasize the need for regulatory caution.

    There were some notable exceptions to this rule. In his questioning, Rep. Albio Sires, D-N.J., expressed concern that highly automated or autonomous vehicles would be so technologically advanced that any repair would need to be conducted by highly trained engineers employed by manufacturers, thereby putting mom-and-pop auto shops out of business -- something like that, anyway.

    "I think that's just going to put people out of work," Sires told the panel. "You're going to have to send these cars back to the shop. I can't see anybody doing work on these things. I mean, you have to be so sophisticated. And I guess that's where we're headed. So can anybody tell me if we're going to put people out of work?"

    After receiving answers from the panelists -- who somehow managed to stop themselves from bursting out laughing -- Sires wrapped up his questioning with, "This is very exciting, the more I read about it. But it's just scary to me."

  • Memo to Road Socialists: There Is Nothing Unlibertarian about Road Pricing

    November 5, 2013 11:10 PM

    Virginia just elected Democrat Terry McAuliffe as governor, as had been predicted by every poll conducted during the past few months -- although at much smaller margins than had been projected. During the twilight hours of the campaign, some of Republican Ken Cuccinelli's supporters began attacking Libertarian Robert Sarvis for various alleged ideological sins. One in particular involved Sarvis's expressed support for adopting a user-based funding model for Virginia's roads, specifically his mention of a mileage-based user fee as a possible replacement to fuel and non-user tax revenue.

    The claim is that this is necessarily a government surveillance scheme and that such a proposal is inherently unlibertarian. This is false and is based upon ignorance of how such systems actually operate. Furthermore, labeling a mileage-based user fee system as unlibertarian runs contrary to the opinions of virtually every libertarian transportation scholar. What follows is my attempt to articulate why libertarians ought to support mileage-based user fees over fuel taxes and general tax revenue funding for transportation.

    Virginia's New Transportation Law

    To put this in context, outgoing Republican Virginia Governor Bob McDonnell enacted this past spring a tax-and-spend transportation law that raised taxes, failed to do serious program reform, and increased the share of non-user funding for Virginia's roads. CEI harshly criticized the plan for these reasons. In the lead up to the vote, Cuccinelli supported a watered-down proposal that didn't rely on the general sales and use tax increases backed by McDonnell. However, the Cuccinelli-supported plan, just like the McDonnell plan, relied on increased sales tax funding of transportation, and assumed Congress would legalize state Internet sales taxes so Virginia could use the "Amazon tax" to fund transportation projects.

    In October, the Cuccinelli campaign released a seemingly reasonable transportation plan that stressed the devolution of funding and management responsibility from the state to local authorities (the Sarvis campaign also repeatedly stressed decentralization of transportation funding and management). While decentralization, ideally to the facility level, is a goal shared by many fans of free markets and limited government, the Cuccinelli plan failed to articulate how locally controlled roads should be funded -- specifically, the revenue collection mechanisms. Out of the three candidates, only Sarvis offered user-based road pricing alternatives such as tolling and a mileage-based user fee (MBUF).

  • Senate Poised to Pass Employment Non-Discrimination Act

    November 5, 2013 2:53 PM

    Yesterday, the Senate voted 61-to-30 to invoke cloture on the Employment Non-Discrimination Act, which would ban workplace bias based on sexual orientation or transgender status, making it almost certain that the Senate will pass the bill this week. It is uncertain whether it will pass the House, since House Speaker John Boehner has expressed opposition to the bill, which may not come to a vote before the full House.

    Previously, I have argued that ENDA's costs outweigh its potential benefits in the private sector, in commentaries you can find herehere, and here. The Heritage Foundation raises a series of objections to ENDA, some of which have more merit than others, at this link.

  • Happy Halloween! FAA to Allow Portable Electronic Devices During All Flight Phases

    October 31, 2013 12:03 PM

    A month ago, a Federal Aviation Administration (FAA) Aviation Rulemaking Committee (ARC) recommended that the agency drop its ban on portable electronic device (PED) use during takeoffs and landings. Today, the FAA announced it was largely adopting the ARC's proposals, which will soon permit passengers of commercial airlines to use non-transmitting PEDs (although WiFi on WiFi-enabled airliners and short-range Bluetooth devices will be allowed) gate to gate.

    This move was supported by both the airlines and the unions representing flight attendants. After years of evidence supporting such a policy -- electromagnetic interference with instruments from PEDs was never adequately demonstrated in the first place -- the ritual of powering down cell phones (in airplane mode) and other devices twice during flights will soon be a thing of the past.

    Note that the prohibitions will remain in place until operations procedures are implemented and individual airlines receive FAA approval for the PED policy change, so those traveling today and in the very near future will still need to switch off their phones and tablets. Pilots landing in low-viability conditions may still ask that passengers power down their PEDs, although this largely unenforceable and unnecessary provision was most likely included as a liability shield.

  • Jane Brody's Uninformed Attack on Cars and Suburbia

    October 30, 2013 1:16 PM

    While at a conference where participants discussed the wannabe social engineers cum urbanists' war on automobility and housing affordability, Jane Brody's broadside against Americans' "dependence on automobiles" and suburban living was published by the New York Times. Brody, unlike her Times colleague Michael Pollan, isn't a complete and total kook when it comes to agricultural biotechnology, and she is one of the more thoughtful nutrition writers in America. Unfortunately, Brody has fallen for one of the popular but incorrect urban elitist tropes about cars and the suburbs.

    Long commutes are killing us! Urban cores are healthier than the suburbs! Low-density living is just fattening us up for self-slaughter!

    Scary stuff, just in time for Halloween! But the "evidence" supporting such fear mongering ranges from flimsy to nonexistent.

    In her introduction, she unintentionally sets the stage for an interesting contradiction that drives suburb-hating urbanists crazy. "My son used to work in New Jersey, which entailed a hated commute by car that took 50 to 90 minutes each way," writes Brody. "He quit that job when his sons were born and, working part-time from home, cared for the boys. He now commutes to work in the city by foot and by subway, giving him time to read for pleasure."

    Despite the fact that many two-income American households don't have the realistic option to simply leave their jobs for childbirth, Brody fails to mention that the New York City metropolitan area has the longest commutes in the nation. Oh, but that's just for suburban New York metro commuters. City dwellers avoid those lengthy commutes, right? Wrong. New York City residents who can't afford to live in Manhattan can have extremely long commutes just like their suburban neighbors -- and some of the longest commutes in the metro area are those of Brooklyn and Queens residents. See this handy map that WNYC put together with Census data.

    This is to be expected. New York City has the lowest auto ownership in the nation and the highest public transit usage (about 40 percent of all transit trips taken in the U.S. are within the New York City metropolitan area). Those who get to work by transit rather than car generally have longer commutes: you need to walk to the transit stop, transfer, etc. That's why New York City drivers tend to have lower commute times than transit users. If you're looking for the shortest commutes, you'll need to move to auto-oriented, low-density places like Manhattan, Kansas, rather than Manhattan, New York, New York.


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