Preserving Freedom of Contract in Labor Markets Strengthens Florida’s Economy

Feb 20 • 81 Views • View Comments

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Contact:
Valerie Wickboldt
vwickboldt@jamesmadison.org
(850) 386-3131

Preserving Freedom of Contract in Labor Markets Strengthens Florida’s Economy
~ JMI’s latest Backgrounder highlights issues with Florida’s minimum wage law, wage theft and paid sick
leave ordinances that stand to negatively effect Florida’s employers and employees. ~

TALLAHASSEE, Fla. – Florida policymakers continue to place priority on job creation and strengthening Florida’s economy, but as The James Madison Institute’s (JMI) latest Backgrounder highlights, preserving freedom of contract in Florida’s labor markets is key to doing both. “Preserve Freedom of Contracts in Florida’s Labor Market” delves into three interconnected labor issues – minimum wage law, wage theft and paid sick leave ordinances – all standing to have a costly effect of Florida’s employers and employees.

“One of the lessons of economics is that economies that enjoy more economic freedom, and less government control over the economy, have higher incomes and more rapid economic growth,” said Dr. Randall Holcombe, JMI research fellow, DeVoe Moore Professor of Economics at Florida State University and author of the JMI Backgrounder. “Support for labor market freedom is neither pro-business nor pro-labor. It benefits both business and labor, increasing incomes and economic growth, because it allows employees and employers to make the employment arrangements that are the most mutually advantageous.”

JMI’s Backgrounder emphasizes that employers consider the total cost of employment when they hire, including both wages and the cost of non-wage benefits. Considering this, when employers are mandated to comply with certain labor mandates it could result in workers losing their jobs or having hours cut as employers try to manage newly added employment costs. Additionally, some workers will be forced to possibly trade higher wages in exchange for other non-wage benefits they might value less instead.

“As the Backgrounder states, it is vitally important for Florida to protect freedom of contract in labor markets because economic activity can so easily migrate away from states that limit economic freedom and gravitate toward states that protect it,” said Robert Sanchez, JMI public policy director. “After all the money the taxpayers have invested to promote Florida as a great place to do business, it would be counter-productive to let the actions of a few local jurisdictions, although often well-meaning, hurt those efforts.”

Highlights from the study of the three labor issues include:

· Wage Theft:
o Both employees and employers would be better off if Florida dealt with wage theft at the state level, preventing local ordinances and creating a uniform and state-enforced mechanism for dealing with the issue.
o If local governments were left to determine wage theft ordinances in the confines of each county for instance this would create a patchwork of differing procedures that sow confusion. Employers would then be held accountable in different ways depending on where their employees are working.
o Wage theft complaints also deserve to be settled in a court of law with a competent jurist presiding over proceedings governed by the same legal doctrines that apply to other disputes over money.

· Paid Sick Leave:
o Higher mandated benefits will raise the cost of hiring a worker, so mandating more benefits could result in a lower wages paid to workers or job cuts.
o As with wage theft ordinances, the patchwork of paid leave rules would be burdensome administratively for employers and put some areas of Florida at a disadvantage depending on the rules established at a local level.
o It is estimated that forcing private employers statewide to provide paid sick leave would cost the Florida economy about $3 billion a year.

· Minimum Wage Requirement:
o Florida’s minimum wage requirement prices low-skilled workers out of jobs and prevents them from getting work experience that can lead to higher-paying jobs. Rough estimates are that Florida’s minimum wage law lowers state employment by about 1.4 percent.

“It is difficult to come up with a precise estimate of the cost of infringing on labor market freedom in general, but one state that clearly has done so over the past half century is Michigan,” said Dr. Holcombe. “In 1980 Michigan’s per capita income was 6 percent higher than Florida’s. By 2010 Florida’s per capita income was 10.3 percent higher than Michigan’s. A large part of Michigan’s decline was its labor market policies, which pushed jobs, mainly in the auto industry, out of Michigan and into other states. We do not want to become like Michigan.”

JMI’s CapitolVanguard.org has covered the wage theft and paid sick leave issues earlier in their development in:
Labor Activist Group Targets Orlando-Based Darden Restaurants – http://bit.ly/CapVanLaborOrlando
Organized Labor Quietly Targets Strategic Areas of Fla. – http://bit.ly/CapVanLaborFlorida

“Florida’s officials know full well that in today’s global economy, both capital and labor are highly mobile. Therefore, for Florida to succeed, its business climate must remain highly competitive — both in reality and in reputation,” said Sanchez.

Visit www.jamesmadison.org to learn more about JMI and to read the full Backgrounder “Preserve Freedom of Contracts in Florida’s Labor Market.”

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Trusted Solutions for a Better Florida: Founded in 1987, The James Madison Institute (JMI) is Florida’s oldest and largest nonpartisan, nonprofit research and public policy education organization. JMI is dedicated to advancing such ideals as economic freedom, limited government, federalism, traditional values, the rule of law, and individual liberty coupled with individual responsibility. All JMI publications are available online at www.jamesmadison.org. For additional information please contact Valerie Wickboldt at 850.386.3131 or vwickboldt@jamesmadison.org. Twitter: @JmsMadisonInst – Facebook: facebook.com/JamesMadisonInstitute – Reporting: CapitolVanguard.org

 

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