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Invisible Hands, Invisible Objectives

Stanford University Press

Contents

List of Tables.................................................................................................xiList of Figures................................................................................................xiiiPreface........................................................................................................xvAbbreviations..................................................................................................xvii1. The Goals and Assumptions of Workplace Law and Public Policy: The Need for Explicitness.....................32. The Evolution of U.S. Workplace Law and Public Policy: A Tapestry of Hidden Assumptions.....................223. Efficiency..................................................................................................474. Equity......................................................................................................665. Voice.......................................................................................................926. A Pluralist Manifesto for Workplace Law and Public Policy...................................................1177. Promoting Efficiency........................................................................................1328. Achieving Equity............................................................................................1499. Facilitating Voice..........................................................................................17310. Bringing Workplace Law and Public Policy into Focus and Balance............................................194Notes..........................................................................................................210Bibliography...................................................................................................261About the Authors..............................................................................................299Index..........................................................................................................301

Chapter One

THE HEADLINES ARE FAMILIAR: "Survey Finds 43.6 Million Uninsured in U.S." "Wal-Mart Looms over Two Bills to Improve Worker Health Care." "After Years of Growth, What about Workers' Share?" "Thousands Are Laid Off. What's New?" "Job Discrimination Complaints on the Rise." "Suits Allege Pay Violations at Restaurants." "As Demands on Workers Grow, Groups Push for Paid Family and Sick Leave."

It is therefore not surprising that calls to reform the U.S. legal regulations and public policies pertaining to work and the employment relationship are reaching a crescendo. And there are signs that the political landscape might finally be ripe for significant policy reform-the increase in the federal minimum wage in 2007, for example, was the first such increase in a decade. Missing from all of the arguments and proposals, however, is a conceptual basis for understanding alternative perspectives on government regulation of the employment relationship and for designing effective laws and public policies.

The principal objective of this book is to provide such a conceptual basis. We start with what we believe is a simple yet powerful and overlooked principle: the rationale for government regulation of any market-based activity is rooted in the intersection of the objectives of that activity and its operation. Introductory economics courses, for example, typically teach that government regulation is desirable only when regulation is able to fix a market failure. Underlying this result are assumptions about specific objectives (the efficient allocation of resources) and operational features (rational agents pursuing economic self-interest in markets that ideally are perfectly competitive). Assuming different objectives (such as a fair allocation of resources) or operating features (such as individuals seeking psychological fulfillment) can yield very different prescriptions for government regulation. Workplace law and public policy, therefore, must be understood, analyzed, studied, and reformed within a framework of (1) explicit objectives of the employment relationship, and (2) explicit models of how the employment relationship works.

Unfortunately, this is usually not how workplace law and public policy is approached. Although scholars and policymakers may seek various ends and objectives in workplace law and public policy (and many are possible), they often fail to articulate them explicitly. Too often, law students are trained in the letter of the law and human resources students are trained in its application, but neither group is educated about the fundamental purposes of workplace law and public policy. A deeper understanding of either field requires the recognition of foundational objectives. Otherwise, administration of a policy is reduced to a myopic satisfaction of rules at the expense of a deeper fulfillment of critical objectives. The failure to identify fundamental objectives similarly causes policy debates to focus narrowly on incomplete or misguided objectives. For example, the failure to recognize that the ultimate purpose of a strike replacement ban is to achieve goals that we term "equity" and "voice" has reduced the debates over such bans to technical squabbles over whether a replaced striker has been fired or not, and to narrow disputes over whether such bans cause longer strikes and reduce investment. Although such questions are important, they ignore the fundamental questions of whether a strike replacement ban would promote equity and voice.

Compounding the problem of obscured objectives is the problem of unstated models of how the employment relationship works. As we show later in this chapter, one can believe that the employment relationship works in very different ways: labor markets may or may not be perfectly competitive; employees can be seen as seeking only economic rewards or as also wanting psychological and democratic fulfillment; and employers' interests might align or sharply clash with their employees' interests. These different conceptualizations underlie dramatically different visions of workplace law and public policy, but these visions too often lack explicitness. As a result, students and the public fail to fully understand workplace law and public policy while scholars, policymakers, and advocates from different perspectives talk past each other in their academic analyses and policy debates.

By emphasizing the pursuit of efficiency through the invisible hand of free markets, the neoliberal market thinking that currently dominates public discourse further stifles explicit discussions of employment relationship objectives while also obscuring alternative perspectives on how the employment relationship works. In other words, the area of workplace law and public policy has been reduced to an arena of invisible hands, invisible objectives. Bringing workplace law and public policy into focus requires recognizing that workplace law and public policy is rooted in the intersection of the objectives and the operation of the employment relationship....