Labour Market Regulation

​​There are two perspectives on whether law has any business banning the various transactions and interactions that go on in free markets. The first camp believes there should be more rules, as many rules as possible so that nothing is left un-banned. If the rules don't work, we just make more rules to fix that. The second camp believes there should be no rules at all, except maybe a select few rules needed to prop up the privileged class.
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The two camps don’t speak to each other, because they can't stand each other and also because they’re not allowed to on pain of excommunication from the camp. Rumour has it that very soon they won't even be able to live in the same country together, because it's hard to be compatriots when you don't speak to each other and each side regards the other as the spawn of Satan. The only place where the two sides sometimes encounter each other is on the internet, where you can observe them engaged in intelligent and fruitful debate: 'You're Nazis!' shouts one side and 'No, you're Nazis' the other side shouts back. It's all very edifying. It's almost like being back at school, squabbling on the playground. 

There's a scraggly band of beleaguered people who self-identify with neither camp thus breaking the Code of Honour for Civilized Society which states that you must choose a camp and prepare for a fight to the death. 

Forced to choose a side, all lawyers believe in having as many rules as possible in order to ban stuff and stifle creativity, so they fall naturally into the first camp. There might be one or two stragglers who have lost their way and ended up accidentally in the second camp with all the non-believers, but we don’t pay any attention to them because they are massively outnumbered and obviously they never admit to being in the other camp because lawyers are prudent folks. Never show your true colours.

​The first principle of being a good lawyer is always to know which side of your bread is buttered, and make sure always to fall buttered side up. This principle is also called 'taking the path of least resistance'. Never choose the path where people will be firing pot shots at you from all directions. So, exceptions aside, we can say that there’s a moral consensus on this issue amongst those of us who have dedicated our lives to the academic study of The Law – we need more rules to build a better society for our children and our children's children. We will never have enough rules, so we are always going to need more rules, and our main job is to write reams and reams about what those rules should look like.

Having established that consensus as a starting point, what does this mean for labour markets? The idea of a labour market is that you go out there, touting your skills from door to door, and eventually you make contact with an employer who likes your brand of jazz and bam, you’re hired. Remember that this is a market, so you will have to haggle over prices (your wages). Also, you are not a slave, which means that you can part ways with your employer at any time without being sent to prison or strung up. The problem with that type of market is obvious – it leaves workers exposed to many unacceptable risks. What if no employer wants to hire you because your brand of jazz is just too bizarre? What if someone hires you, but pays you pittance wages? And what if you get fired before you’re actually ready to quit the job? There are many other risks faced by workers but these are the most important ones. The employer faces risks too, but the employer is rich so we don’t care.
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In comes the law, riding swiftly to the rescue, with a set of rules known as ‘employment protection’. Long ago, in the Dark Ages, there was no employment protection. And now, behold:

What a difference a century makes! From then to now dozens of new employment laws and regulatory agencies governing all aspects of labor and employment have been added. The United States, for example, did not have so much as a federal child labor law until 1938; six decades later the Dunlop Commission spoke of ‘an explosion in the breadth and depth of legal regulation of the American workplace’, including twenty-six major statutes, one executive order, and thousands of detailed regulations (Commission on the Future of Worker-Management Relations, 1994).

Labor and Employment Law and Economics  (Edward Elgar, 2009) p. 3.
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There are indeed many good reasons to rejoice in this new age of regulation. There are three main quibbles with the whole regulation business: individual autonomy, property rights and private contract. But this does not answer concerns about exploitation. Take the example of child labour. Children barely older than 4 years old should not be sent up the chimneys of rich people to sweep out the soot, breathing in the choking dust and contracting lung diseases that will send them to an early grave. What autonomy does such a child have? Such examples are used to dispose of the ‘individual autonomy’ argument. As for property rights, whose property rights are we concerned about here – rich people’s property rights? This in turn is used to dispose of the property rights concerns. If the law were to respect property rights then the law would just be protecting rich people who don’t need protection because they’re rich already. The idea of private contract is also easy to criticise. The welfare of workers is not always seen as a ‘private’ matter to be decided between individuals – it is instead seen as a matter that affects all of us in Society (well, all the poor in society anyway).

This also explains the example of minimum wage legislation. This is the law that states that if you hire someone there’s a minimum hourly wage fixed by law that you must pay. If you don’t want to pay the stated rate, don’t hire anybody, simple as that. Do the work yourself, you lazy capitalist. Open a supermarket, stack your own shelves and man your own tills. Or get robots to do it for you. But if you want to hire people to help, you must pay them the minimum wage. This law is there to protect workers so if a worker wants to work for less than the fixed rate that is absolutely forbidden. It’s for their own protection because it’s obvious that nobody really wants to work for pittance wages. Any rational person would rather starve to death than work for less than the minimum wage fixed by the government.

The same justification can be rolled out for any labour regulation you can think of, leading to the conclusion that labour market regulation is always justified, and the more of it, the better.
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