A Far-Right Alternative to Raising the Minimum Wage

Reason provides a very Libertarian slant on current issues. The articles consistently reflect a Far-Right ideology, but there is little of the very obvious pandering to parochialism and paranoia that taints many other major Far-Right publications, from World Net Daily to the American Spectator to even the National Review. True to the periodical’s title, most of the writing has a consistently reasonable tone. That approach makes the authors’ perspectives on current issues refreshing and, at the same time, even more dangerous than most of the more provocative rhetoric coming from the Far Right.

Take, for instance, a recent article by Sheldon Richman. Titled “Let’s Make 2014 the Year of the Low-Wage Worker,” the article makes the case that the elimination of licensing will do more for low-wage workers than raising the minimum wage. The premise is that the licensing required to provide many services does not really work primarily to protect consumers from malpractice and malfeasance but, instead, it works to protect licensed practitioners from competition and to produce revenue for ever-voracious government at all levels.

Richman challenges the credibility of licensing by asking how many consumers in search of a service-provider first check licensing and how many look for either word-of-mouth or online recommendations. It is a dubious argument in a number of ways, starting with the fact that most of us will assume that most service-providers who are required to be licensed will in fact be licensed, especially if they are openly operating their businesses.

Moreover, in presenting this argument, Richman provides the following list of service providers: “physician, dentist, lawyer, hairdresser, plumber, mechanic, or electrician.” Very tellingly, he makes no distinction in the value of licensing for these occupations and professions, though I, like most people, would be much less concerned about whether the person cutting my hair were licensed than about whether the person repairing the brakes on my car, rewiring my home, or performing surgery on me were licensed.

For that reason, the list is also something of exercise in misdirection because low-wage workers are not going to enter any of the professions in the list just because licensing has been eliminated. Instead, they are going to enter more blue-collar occupations and become, according to Richman, “independent contractors” who can presumably reap the rewards of their own diligence and exert greater control over their own destinies.

What Richman fails to acknowledge is that the category of the “independent contractor” has become one of the major mechanisms for lowering the wages and eliminating the benefits of working-class Americans. An independent contractor is supposed to bid to complete a job within a certain time frame and while meeting certain standards. The employer is not supposed to dictate the specifics of how the contractor goes about fulfilling the contract. But many employers are abusing the classification. To cite just one example, several major parcel-delivery companies classify their drivers as “independent contractors” but dictate standard wages, work schedules, required dress, and the protocols by which drivers deal with both the shippers and the recipients of parcels. Classifying those workers as independent contractors allows companies to treat them much more arbitrarily than they could treat regular “employees.” Most notably, the companies do not have to provide these nominally self-employed workers with benefits, and the fact that they are nominally self-employed poses a major impediment to any efforts to organize.

Within the next decade, thirty percent of American workers will be contingent workers, either “independent contractors” or workers employed through “temp” agencies. This trend has been gaining momentum over the last ten to fifteen years, and I have seen no evidence whatsoever that it has any positive implications for low-wage workers. Indeed, academia has been at the front edge of this trend with the exploitation of adjunct faculty, who to our shame are among the most highly educated exploited workers in the world.

Companies will applaud the elimination of licensing because most service providers of all kinds are now part of franchises. The elimination of licensing will, in effect, provide an even broader pool of low-wage workers competing for those service jobs, further depressing wages.

Lastly, it must be noted that, with the elimination of licensing, many low-wage workers would enter many of the skilled and semi-skilled occupations that are still heavily unionized in many parts of the country—even in “right to work” states. So, as I indicated earlier, this argument is intentionally or coincidentally an attack on unions, which indisputably have been the major force in increasing working-class wages in this country and elsewhere.

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