Free markets to help workers succeed

Raleigh – I have two favorite Ronald Reagan quotes about the world of work. The former demonstrates his mastery of an indispensable political tool: self-deprecating humor. “It’s real hard work that didn’t kill anyone,” he quipped, “but I understand, why take a chance?”

My other favorite quote from Reagan makes a serious point: “I believe the best social program is a job.” He was right, as mountains of empirical evidence later showed. Government actors can boost real incomes for low-income people through a variety of means, including cash welfare and non-monetary benefits such as housing assistance and Medicaid. American governments have largely done this over the past five decades, helping to reduce the real poverty rate from 31% in 1960 to less than 2% in 2021.

However, many people who now live above the poverty line – when the government benefits they receive are counted as income – certainly feel poor, appear to others to be poor and are often deeply frustrated or very unhappy. That’s because one’s physical condition, while obviously important, is not as decisive in determining one’s sense of well-being as what Harvard researcher Arthur Brooks calls “earning success.”

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Although our unemployment rates are still relatively low—3.9% in North Carolina in November and a statistically indistinguishable 3.7% for the nation as a whole—many people lack the dignity and stability that come from having a job. Many are employed but lack the opportunity to advance in their chosen profession, enter a new and promising profession, or start their own business.

Elected officials often proclaim themselves the heroes of action. But the policies they propose, whether progressives advocating handouts or patriotic populists advocating trade restrictions, will do little to help ordinary workers. You’ll find a better set of policies in a new Cato Institute book, Empowering the New American Worker.

In a section on occupational licensing, for example, Kato analyst Chris Edwards points out that places with freer labor markets tend to have higher levels of employment, economic mobility, and entrepreneurship. Policymakers can make workers better off, while maintaining or even improving the quality of services for consumers, with commonsense reforms such as replacing compulsory licensing with voluntary certification and allowing workers licensed in other states to automatically license into a new one.

One of the most powerful chapters, co-written by book editor Scott Linkium, explains the potential of remote work to break down barriers to workers’ progress. While some jobs obviously can’t be done from home, many employers and employees have learned during the pandemic that switching to remote or hybrid models can be mutually beneficial. The broader implications, for example, of traffic congestion and affordable housing, are also significant. Unfortunately, public policy has not yet adapted to these new realities. Governments need to change how they tax individuals who earn income from multiple states, for example, and how they tax companies that employ large numbers of remote employees. They’ll also need to rethink how employee benefits are structured.

From educational services and child care to transportation, housing, and health care, Cato’s team offers sensible reforms that either remove barriers to opportunity or make it easier for individuals to spend public dollars in the way most likely to meet their specific needs.

As Lincicome notes in the book’s epilogue, our political debate is rife with supposedly “pro-labor” propositions based on faulty assumptions about the past, present, and future of the American workplace. Many politicians believe that workers are “powerless and need cradle-to-grave government protection, despite the long-term damage such policies do to these workers and the economy at large,” he writes. “By contrast, pro-market policies that respect the individual agency and ability of all workers will allow them to pursue their unique hopes and dreams in a more dynamic, diversified, high-paying economy — and adapt to what comes next.”



John Hood is a board member of the John Locke Foundation. His most recent books, “Mountain Folk” and “Forest Folk,” combine epic fantasy with early American history ( Follow Hood on Twitter @JohnHoodNC

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