CEI’s Battered Business Bureau: The Week in Regulation

New regulations from the past week cover everything from Namibian meat to California raisins.

On to the data:

  • Last week, 70 new final regulations were published in theFederal Register, after 50 the previous week.
  • That’s the equivalent of a new regulation every two hours and 24 minutes.
  • With 1,929 final regulations published so far in 2016, the federal government is on pace to issue 3,546 regulations in 2016. Last year’s total was 3,406 regulations.
  • Last week, 1,810 new pages were added to the Federal Register, after 1,293 pages the previous week.
  • Currently at 46,503 pages, the 2016 Federal Register is on pace for 85,484 pages. This would exceed the 2015 Federal Register’s all-time record adjusted page count of 81,611.
  • Rules are called “economically significant” if they have costs of $100 million or more in a given year. 19 such rules have been published so far in 2016, none in the last week.
  • The running compliance cost tally for 2016’s economically significant regulations ranges from $3.82 billion to $6.02 billion.
  • 144 final rules meeting the broader definition of “significant” have been published this year.
  • So far in 2016, 364 new rules affect small businesses; 54 of them are classified as significant.

Highlights from selected final rules published last week:

For more data, see Ten Thousand Commandments and follow @10KC and@RegoftheDay on Twitter.

Collective Bargaining Increases Inequality

I recently pointed out that minimum wage regulations increase inequality. That’s not what the “Fight-for-15” activists intend, but it is the result they would achieve. Collective bargaining is another unintentional inequality-increaser. The reasons why are pretty similar, as Iain Murray and I point out on pp. 10-14 of our recent paper, “The Rising Tide.” This week there were two opposing developments in Washington related to the issue: the National Labor Relations Board issued a decision that strengthens the hand of unions seeking to organize workers for representation via collective bargaining, but the House Appropriations Committee voted to defundrelated regulations from being implemented by both the Department of Labor and the National Labor Relations Board.

Just as minimum wages benefit some workers, so does collective bargaining. Union members tend to earn higher wages than their non-union peers working similar jobs. And just as with minimum wages, these benefits come with tradeoffs. Fewer jobs for non-members, higher consumer prices, and more are all part of the collective bargain. Some people make more, because other people make less and pay more.

According to a recent report from the Council of Economic Advisors about declining labor force participation, the U.S. is in the 90th percentile among OECD countries when it comes to union-friendly labor policies. But is only in the 62nd percentile for entrepreneurship-friendly policies (p. 30). Those percentiles are a useful priority guide for policymakers.

Another CEI study by Ohio University economist Lowell Gallaway and researcher Jonathan Robe finds that in union-heavy states such as Michigan, per capita income is as much as $11,000 lower than what it could be without powerful unions and their exclusionary policies. That’s nearly $28,000 per year for an average-size household—money that could be spent on better schools, housing, food, clothing, and much else. Instead, that money is never made at all.

There is also evidence that many union members don’t even want to be members. When Wisconsin gave many government employees a choice on whether or not to join a union, many of them decided against unions. In a painful bit of symbolism, the very first AFSCME local, founded in Madison in 1932, saw its membership decline more than 85 percent within just a few years after the law passed.

Many politicians and activists want to reduce economic inequality, and collective bargaining is one of the most popular policies for doing so. But not only does it actually increase inequality—union benefits come at consumers’ and other workers’ direct expense—the proper goal is to make the poor better off. Iain Murray and I aim at that goal in our recent papers, “People, Not Ratios” and “The Rising Tide.” We encourage others to join us.

CEI’s Battered Business Bureau: The Week in Regulation

It was a short work week due to the Fourth of July holiday, but agencies still managed to issue new rules covering everything from stormwater to seatbelts.

On to the data:

  • Last week, 50 new final regulations were published in theFederal Register, after 137 the previous week.
  • That’s the equivalent of a new regulation every one hour and 14 minutes.
  • With 1,859 final regulations published so far in 2016, the federal government is on pace to issue 3,548 regulations in 2016. Last year’s total was 3,406 regulations.
  • Last week, 1,293 new pages were added to the Federal Register, after 2,051 pages the previous week.
  • Currently at 44,693 pages, the 2016 Federal Register is on pace for 85,292 pages. This would exceed the 2015 Federal Register’s all-time record adjusted page count of 81,611.
  • Rules are called “economically significant” if they have costs of $100 million or more in a given year. 19 such rules have been published so far in 2016, none in the last week.
  • The running compliance cost tally for 2016’s economically significant regulations ranges from $3.82 billion to $6.02 billion.
  • 141 final rules meeting the broader definition of “significant” have been published this year.
  • So far in 2016, 354 new rules affect small businesses; 53 of them are classified as significant.

Highlights from selected final rules published last week:

For more data, see Ten Thousand Commandments and follow @10KC and@RegoftheDay on Twitter.

Minimum Wage Increases Inequality, Decreases Labor Force Participation

The minimum wage actually increases inequality. It helps some workers, but only at others’ expense. The reasoning is simple: people can’t make money if you put them out of work. When the minimum wage goes up, some people get a raise, but only because other people get their hours cut, are fired, or never hired in the first place. Some people get more, just as many other people get less. The minimum wage’s results are exactly the opposite of its intentions.

That’s why a recent Council of Economic Advisors report, “The Long-Term Decline in Prime-Age Male Labor Force Participation,” misses the mark. On page 42, the report says: “To fight the long-run trend of increasing inequality, the President has proposed raising the minimum wage, giving greater support to collective bargaining, and helping ensure that workers have a strong voice in the labor market.”

There are two problems with this approach. The big one is the implicit assumption that inequality is automatically a bad thing. This is precisely the approach Iain Murray and I warn against in our recent paper, “People, Not Ratios.” The mathematical difference between rich and poor is ethically irrelevant, as Princeton University philosopher Harry G. Frankfurt also argues.

What is ethically relevant is how people at the economic bottom are doing. Do they have enough to live with comfort, dignity, and security? Are they becoming better off over time? What policies will help the poor become better off over time? These are the questions anti-poverty activists should be asking.

That’s a pretty big problem. The second problem is with a study quoted on the same page by David H. Autor, Alan Manning, and Christopher L. Smith, “The Contribution of the Minimum Wage to US Wage Inequality over Three Decades: A Reassessment.”

Economists are famously divided on many issues, leading to President Harry Truman’s wish for a one-armed economist, who would be unable to say “on one hand… on the other hand…” The minimum wage is not a two-handed issue. A survey of professional economists finds overwhelming support for the statement “A minimum wage increases unemployment among young and unskilled workers.”

So not only did the CEA report have to cherry-pick a study that supported its ideological priors, that study’s support is tepid at best. This may be why the CEA report does not bother to quote it directly, which I do here:

We find that the minimum wage reduces inequality in the lower tail of the wage distribution, though by substantially less than previous estimates… These wage effects extend to percentiles where the minimum is nominally nonbinding, implying spillovers.

For more on how the minimum wage affects inequality, see Iain Murray’s and my recent paper, “The Rising Tide.” A future post will make similar arguments about the CEA report’s arguments on collective bargaining.

CEI’s Battered Business Bureau: The Week in Regulation

Maybe the recently-passed Congressional Review Act deadline I wrote about previously hasn’t had much effect on midnight regulators. The Federal Registeronce again topped 2,000 pages last week, and included a year-high 137 final regulations, ranging from eggs to groupers.

On to the data:

  • Last week, 137 new final regulations were published in the Federal Register, after 77 the previous week.
  • That’s the equivalent of a new regulation every one hour and 14 minutes.
  • With 1,809 final regulations published so far in 2016, the federal government is on pace to issue 3,561 regulations in 2016. Last year’s total was 3,406 regulations.
  • Last week, 2,051 new pages were added to the Federal Register, after 1,343 pages the previous week.
  • Currently at 43,200 pages, the 2016 Federal Register is on pace for 85,001 pages. This would exceed the 2015 Federal Register’s all-time record adjusted page count of 81,611.
  • Rules are called “economically significant” if they have costs of $100 million or more in a given year. 19 such rules have been published so far in 2016, two in the last week.
  • The running compliance cost tally for 2016’s economically significant regulations ranges from $3.82 billion to $6.02 billion.
  • 140 final rules meeting the broader definition of “significant” have been published this year.
  • So far in 2016, 340 new rules affect small businesses; 53 of them are classified as significant.

Highlights from selected final rules published last week:

For more data, see Ten Thousand Commandments and follow @10KC and@RegoftheDay on Twitter.

Toward a Regulatory Budget

How much should the U.S. government spend on defense? How much on health care? Or energy, or technology? Every year, the U.S. federal government is supposed to publish a spending budget to answer these sorts of questions. But there is no equivalent budget for regulations. Why not? My colleague Wayne Crews’ newest study asks exactly that question.

Why is this a problem? Suppose the Labor Department doesn’t have the money in its budget for some job-training program it has in mind. It can get around the problem by simply issuing a regulation requiring private companies to run the same program, at their expense. People have to pay for it either way. But the regulatory way doesn’t show up on the federal spending ledger.

A regulatory budget, on the other hand, would prevent regulatory agencies from doing darn near anything they want. People like you and me have to prioritize our spending. If I buy a new television, that’s money I can’t put into my child’s college fund. Money you spend on a new car is money you can’t put into your retirement account.

Regulatory agencies, with their multi-billion dollar budgets, do not face the same tradeoffs that people like you and I do. A regulatory budget would help agencies behave more like people.

As it is now, if the Environmental Protection Agency issues a new power plant regulation adding $9.6 billion to people’s electricity bills every year, so what? It can, and will, pass additional regulations affecting everything from air conditioners to refrigerators, further adding to the damage. Federal regulations make it harder for people to pay their mortgages, student loans, and other bills.

The EPA hurts people, to the tune of at least $353 billion per year, on just an $8 billion budget. A regulatory budget would force the agency to publicly recognize that nearly 40-fold difference. Not to pick on the EPA specifically, but they do have a transparency problem. So do most of the 60-plus other rulemaking agencies that issue more than 3,400 new regulations every year. Their combined efforts cost consumers and entrepreneurs about $1.88 trillion every year.

A regulatory budget, similar to the spending requests agencies make every year, would go a long way toward making the public more aware of how much agencies like the EPA, FCC, SEC, and others actually cost. A regulatory budget is not be a panacea, but it would be better than what we have now.

For more see Wayne’s regulatory budget paper here.

CEI’s Battered Business Bureau: The Week in Regulation

The 2016 Federal Register surpassed 40,000 pages last week, with new rules ranging from lights on farm equipment to grading raisins.

On to the data:

  • Last week, 77 new final regulations were published in the Federal Register, after 93 the previous week.
  • That’s the equivalent of a new regulation every two hours and 11 minutes.
  • With 1,672 final regulations published so far in 2016, the federal government is on pace to issue 3,426 regulations in 2016. Last year’s total was 3,406 regulations.
  • Last week, 1,343 new pages were added to the Federal Register, after 1,802 pages the previous week.
  • Currently at 41,149 pages, the 2016 Federal Register is on pace for 84,322 pages. This would exceed the 2015 Federal Register’s all-time record adjusted page count of 81,611.
  • Rules are called “economically significant” if they have costs of $100 million or more in a given year. 16 such rules have been published so far in 2016, one in the last week.
  • The running compliance cost tally for 2016’s economically significant regulations ranges from $3.70 billion to $5.62 billion.
  • 132 final rules meeting the broader definition of “significant” have been published this year.
  • So far in 2016, 331 new rules affect small businesses; 49 of them are classified as significant.

Highlights from selected final rules published last week:

For more data, see Ten Thousand Commandments and follow @10KC and@RegoftheDay on Twitter.