Government Restrictions in the Workplace
As I have mentioned previously in the column (and will continue to do so in the future), I believe the free market is the most efficient means of ensuring that the largest number of people possible will be better off than they would under a different system. When the government interferes, as they do from time to time in the US economy, it is often regulated in the most inefficient ways. I will review three of the more prominent means of regulating the market: Age Restrictions, Minimum Wage, and restrictions placed on market entry.
Age Restrictions
A manager at Kaybee Toys complained that they are having a difficult time finding extra employees for the holidays. Ironically, several 14-year old youths have come into the store looking for temporary employment. They cannot hire them however, because they aren't old enough according to federal/state regulations. I would imagine there are a number of 14 and 15 year olds who are willing and would be quite capable of handling certain jobs such as customer service, stocking shelves, cleaning, etc. Instead of placing a blanket regulation on age levels, federal regulations could control these types of jobs in a much more efficient manner. Restrictions could be placed on the number of hours worked, the actual job performed, the times at which a young person could work on a school day, etc. By regulating it in this manner young people could earn spending money, save for a car or tuition, and perhaps learn some responsibility at the same time. (As P.J O'Rourke once said, referring to Gen-Xers, "Pull your pants up, turn your hat around, and get a job!") Businesses would also benefit. This could open up an entirely different labor pool, and in these prosperous times, that is important.
Minimum Wage
Proponents of minimum wage often argue that not only should the minimum wage be higher than it is currently, it is an essential part of public policy. The drawback to raising, or even enforcing a minimum wage is that it results in lost jobs. This follows from the logic that when the price of a good (employees) increases, consumers (employers) will buy less. In 1995, David Card and Alan Krueger published the results of their study on minimum wage, which maintained that raising the minimum wage lead not to an increase in unemployment, as was previously believed, but an increase in the number of employees hired. However, many prominent economists went back and looked at Card and Krueger's data gathering methods. The two called managers of fast food restaurants and asked whether they hired more or less people when the minimum wage was increased. The managers told them they had hired more employees. However, when others questioned the results of the study, they looked at the actual employment records and their results contradicted the Card and Krueger study and showed that an increase in the minimum wage actually led to a decrease in jobs.
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