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Labor Market Regulations and Outcomes for American Workers

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Challenges in Classical Liberalism

Part of the book series: Palgrave Studies in Classical Liberalism ((PASTCL))

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Abstract

This paper delves into the debate over whether flexible labor markets are good for the economy. It covers labor market history and regulations’ impact on workers and the economy, focusing on a few examples, including minimum wages, collective bargaining, and employee misclassification. It first details trends in the American labor market, including those of low wages and inequality, and how those trends have developed under a regime of poor and decreasing labor market regulations. The bulk of the chapter lays out the context and political economy of each area of labor market regulations, how that translates to outcomes in the labor market, and what policy solutions are possible in the current political context. The author argues that declining and insufficient regulations have severely eroded job quality and worker power, and increased inequality, and that specific labor market regulations can serve to bolster worker power and improve poor outcomes. When relevant, U.S. regulations and outcomes are compared on a global stage with similar countries where there are both stronger labor market regulations and better outcomes.

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Notes

  1. 1.

    See David Harvey, A Brief History of Neoliberalism. Oxford: Oxford University Press, 2005. Print.

  2. 2.

    Many academic studies attempt to define a direct relationship between a nation’s stock market and macroeconomic conditions, e.g., Adebayo et al. (2020), Boon (2005), Pilinkus (2010), and more.

  3. 3.

    For a review of the literature, see Betcherman (2012).

  4. 4.

    For an introduction to this debate, see Freeman (2013).

  5. 5.

    See Mankiw (2016). Mankiw himself shows how wage and productivity data do not align (Mankiw 2006).

  6. 6.

    The trend of increasing wages, benefits, bonuses, options, etc., for corporate bosses and executives, while shedding labor costs, has a lot to do with the rise in private equity and financialization of corporations in which private shareholder interests are primary to business decisions, rather than stakeholder interests. This is not a focus of this chapter, due to word count limitations, however it is an important piece of context in explaining the rise of low-wage work that is worthy of investigation. For more data, see Organisation for Economic Cooperation and Development (2018).

  7. 7.

    In the united States these programs include Medicare and Medicaid, food stamps, disability insurance, and Social Security, as well as tax credits like the Earned Income Tax Credit and the Child Tax Credit. Spending on programs for the poor, in particular, has declined in the past few decades. See Organisation for Economic Cooperation and Development (2020).

  8. 8.

    For a wealth of context and sources, see Peters (2008).

  9. 9.

    More than half of minimum wage workers are above age 25 despite the idea that most minimum wage jobs are “youth” jobs, according to Bureau of Labor Statistics (2021).

  10. 10.

    Author’s calculation based on 2019 Organisation for Economic Cooperation and Development (2021) data.

  11. 11.

    For discussion, see Leonard (2000).

  12. 12.

    For example, see Schlogl and Sumner (2018).

  13. 13.

    Big-name employers using union avoidance consultants have included FedEx, Bed Bath & Beyond, LabCorp, Caterpillar, Pier 1 Imports, Nestle, Hilton, and more. Gordon Lafer and Lola Loustaunau (2020).

  14. 14.

    An NPR/Marist poll found that that 1 in 5 jobs in America is held by a worker under contract (Noguchi 2018); an estimated 57 million Americans, or 36 percent of the workforce, are freelancing, according to a 2017 report by Upwork (2017); Weil and Goldman (2016) estimated there are 29 million workers in ten industries alone who are affected by the fissured workplace; and Katz and Krueger (2019) show that between 6.9 percent and 9.6 percent of all workers are independent contractors, or 10.5 to 15 million workers—an estimated 30 percent increase since the early 2000s, in large part due to misclassification of workers as independent contractors.

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Authors and Affiliations

  1. Economic Policy Researcher, Jersey City, NJ, USA

    Amanda Novello

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  1. Amanda Novello
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Correspondence to Amanda Novello .

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Editors and Affiliations

  1. Business & Economics Department, Roanoke College, Salem, VA, USA

    Alice L. Kassens

  2. Business and Economics, West Virginia University, Morgantown, WV, USA

    Joshua C. Hall

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Novello, A. (2023). Labor Market Regulations and Outcomes for American Workers. In: Kassens, A.L., Hall, J.C. (eds) Challenges in Classical Liberalism. Palgrave Studies in Classical Liberalism. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-031-32890-9_9

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  • DOI: https://doi.org/10.1007/978-3-031-32890-9_9

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