Closing Special Interest Government; D. Bandow

The Bureau of Labor was established in 1884, from which sprung the Department of Commerce and Labor in 1903, only to split into two separate departments in 1913.Today the Department of Labor runs a national unemployment insurance system, regulates employment hours and wages, offers a hand to unions under the guise of monitoring employee-employer negotiation, conducts training programs, and generally oversees the workplace. It should come as no surprise that orga nized labor has sought a formal beachhead in government. After all, business enjoys mani fold subsidies from the Department of Com merce, whose primary function is to enhance corporate profits. But even many private firms today see the federal government as a kind of negotiator-in-chief when it comes to other companies' labor disputes. During the United Parcel Service strike, the Chamber of Com merce called on President Clinton to order the workers back to work and the company back to the negotiating table. Although the PresiMr. Bandow, a nationally syndicated columnist, is a senior fellow at the Cato Institute and the author and editor of several books, including Tripwire: Korea and U.S. Foreign Policy in a Changed World.

dent declined to do so, he did pressure the parties to reach an agreement. Moreover, he, like his predecessors, had no principled ob jection to using his power, having ended the earlier strike against American Airlines as it began. Here, as elsewhere, government has me tastasized beyond any conceivably appropri ate role. Labor relations are a private matter. Government should act only as impartial arbiter, preventing either side from using violence to achieve its ends and providing the framework for adjudicating disputes-are both sides living up to their contract? But questions as to whether workers join or are represented by a union, and what terms employees and employers agree on, should not be answered by government. Of course, the Labor Department was not created out of a principled desire to solve problems. Rather, it was essentially a payoffto labor unions. The bias was most evident during the New Deal, though many of those laws live on. Losers are not just companies faced with government-backed unions, but workers who don't want to support a union.

Individual choice has never been seen as a virtue by government. The Labor Department has not limited itself to regulating employment relations. It grabbed a growing piece of the welfare state when Washington's crusades like the War on Poverty created new government programs hither and yon. Although the old Health, Education, and Welfare picked up the ma jority of welfare programs, Labor got ahold of 669 670 THE FREEMAN • NOVEMBER 1997 a host of employment-related initiatives, ranging from job training to voluntarism. It is perhaps here that Congress should start. The agency's training programs have, in the main, proved to be abject failures. Scores of government efforts have had only minimal success in providing workers with more re munerative and permanent work. And that should come as no surprise, since government has no incentive to narrowly tailor public initiatives to individual needs. Congress should leave training to workers and employ ers.

Unemployment insurance discourages not only work, but also private savings to cushion a period of joblessness. Congress should abol ish the program or, as second best, leave it with the states. One of the virtues of feder alism is allowing different communities to handle problems like unemployment differ ently. Congress should also roll back federal regulation of the labor market. The minimum wage destroys jobs, since it prices out of work anyone who lacks sufficient education, expe rience, and skills to earn the minimum. Were this not the case, the government could make everyone rich by imposing a minimum of $100 or $1,000 an hour. Similar in effect is the Davis-Bacon Act, which requires the payment of union-scale wages for federally funded construction projects. Restrictions on overtime and other work conditions are equally misguided. Employees and employers should be free to bargain over the terms of their employment. Different workers are likely to prefer different packages of benefits; there is no reason for Washington to decide, say, the overtime pay rate, or under what circumstances companies can instead offer comp time.

Similarly, the government should not be in the business of promoting labor unions or aiding corporations. Early in its history Wash ington favored the latter; more recently it has leaned towards the former. But, again, federal regulation, though justified as helping work ing people, actually interferes with the right of employees to choose the employment condi tions they prefer. At the same time, restrictive regulations bar workplace flexibility-which benefits employees and employers alike-and penalizes blameless companies for transgress ing rules designed to give organized labor an unfair boost in representation elections. Con gress should, among many other things, end exclusiverepresentation by one union, restric tions on labor-management cooperation, and the requirement that firms hire union orga nizers as employees. Especially important is statutory enforce ment of the 1988 U.S. Supreme Court deci sion, Communications Workers ofAmerica v.

Beck, which grants workers the right to a refund of any union dues used for political purposes. One of the first acts of the Clinton administration was to repeal federal rules requiring that unions give an accounting to their members. As a result, most labor unions today flout the law, collecting dues with the implicit aid of the federal government for use in partisan political campaigns. Congress should also dismantle the Occu pational Safety and Health Administration (OSHA). Despite imposing annual costs es timated to run between $11 billion and $34 billion on the economy (the agency's nitpick ing regulation is legendary), there is no evi dence that OSHA has improved U.S. work place safety. The rate of employee fatalities has been falling for sixdecades, and is affected more by insurance requirements and tort litigation than by OSHA. (After all, it is not good business for companies to end up with dead workers.) At the same time, there has been little drop in workplace injuries since the creation of OSHA. The most realistic assess ment of the maximum benefit of OSHA regulation is about $4 billion, which falls somewhere between one-third and one-ninth of the cost imposed by the agency on the U.S.

economy. Repeal, not reform, is warranted, leaving workplace safety constrained by a variety of more cost-effective mechanisms, including private lawsuits and market pres sure. Such tasks as collecting statistics and fig uring the rate of inflation (Bureau of Labor Statistics), could be transferred to the Census Bureau. Oversight of private pensions (Pen sion Benefit Guarantee Corporation) could be shifted to the Treasury Department, with the agency stripped of its role as guarantor which poses multibillion dollar liabilities for taxpayers-and focused instead on ensuring that private companies fulfill their contracts to former employees. The federal government has grown dramat ically and inexorably because politicians de siring to expand their power have joined with lVTaxes by Raymond J. Keating C hristmas arrived early for TV broadcast ers this year. Way back in March the federal government played Santa Claus.