Thursday, July 5, 2012

Labor Is A Commodity - Get Over It!

Once when I was being interviewed on a very liberal radio talk show I said, what seemed very obvious to me, that labor was a commodity. Much to my surprise the host went absolutely berserk. How dare I talk about the labor of human beings as if it were an inanimate object like corn or steel. The liberal view seemed to be that there was something so special about labor that it defied the laws of economics. Our nation is faced with a severe problem of unemployment. There is good reason to believe that, no matter what is done in the short term, in the long term it is going to become increasingly worse. Some of this stems from the fact that we ignore some very basic economic laws. The more something costs the less people buy. Isn't this rather obvious? When the price of gas goes up we drive less or trade in the gas guzzler for a hybrid. When the price of beef goes up we switch from steak to hamburger or buy chicken. When the price of labor goes up we don't employ as many people or substitute other factors of production. Any government policy that increases the cost of hiring an employee increases unemployment. This was brought into sharp focus recently when the U.S. Supreme Court upheld the constitutionality of the Affordable Care Act, also known as Obamacare. A little noticed until now provision of the bill is that employers who don't provide health care insurance to full-time employees will be fined. There is no fine applied to part-time employees. This is not a small thing. The fine would be at least $2,000 a year per employee. If the employer provides access to insurance but the insurance is unaffordable the fine goes up to $3,500 a year. A recent survey found that the cost of health insurance averaged more than $11,000 a year and that the employee share of that cost was about $2,700. Let's consider the plight of a minimum wage worker. At $7.25 an hour, earnings for a full-time job are $14,500 a year. How many employers can afford to tack on another several thousand dollars to that amount? How many employers would find it much more economical to hire several part-time employees rather than one full-time employee? Not having health insurance sucks. Not having health insurance or a jobs sucks even more.