Category Archives: Publications

California’s #NeverNeeded AB5 Is Harming the Coronavirus Response

California’s AB5 law was already backfiring before the COVID-19 pandemic hit. The legislation intends to reclassify many California-based independent contractors as formal employees in an attempt to raise their wages and benefits. It has instead cost thousands of jobs—many of which are home-based and quarantine-friendly.

California legislators have reportedly been mulling an “oops” bill that would offer exemptions from AB5 requirements. Over in the Orange County Register, I argue that exemptions are not enough. AB5 should be repealed outright:

While offering exemptions has the virtue of requiring politicians to admit their policies are hurting people, it has three significant problems.

One, exemptions take time to process. We don’t have that right now. …

Two, the officials who grant exemptions would gain great power. There is a risk some would use this power to enrich themselves. California legislators would also be tempted to bully companies for campaign contributions by dangling AB5 exemptions.

Three, exemptions would give favored businesses a government-granted advantage over competitors.

Read the whole piece here. I weighed in earlier on AB5 here. Ryan Radia’s CEI study on AB5 is here.

Deregulation Is an Effective Pandemic Defense

Over at RealClearMarkets, Iain Murray and I outline the major points of CEI’s just-released #NeverNeeded paper, which identifies regulations harmful to the coronavirus response:

During a pandemic, regulations should not get between sick people and health care, or between hungry people and food. This also applies in normal times. …

As Congress gears up for a Phase 4 stimulus, it is crucial that regulatory reform be part of the package. The top two priorities now are keeping people safe and minimizing economic damage, in that order. Regulatory sludge, as legal scholar Cass Sunstein calls it, is harming both objectives.

Read the whole thing here. The #NeverNeeded paper is here. CEI’s #NeverNeeded wesbsite is here. And you can contribute your ideas to the #NeverNeeded hashtag on Twitter.

CEI Releases #NeverNeeded Paper

My CEI colleagues have quickly compiled a short paper full of #NeverNeeded regulations that should be repealed in the wake of the coronavirus. These rules not only prevent effective response right now, but they make the country less able to deal with future crises. Now is the time to do some serious regulatory housekeeping. I contributed a few bits here and there, but this paper is a joint effort by CEI’s entire staff, ranging from transportation to health care to internet access to the regulatory process itself.

Read the whole thing here.

The #NeverNeeded Regulatory Reduction Commission

Over at the Washington Examiner, I propose a Regulatory Reduction Commission to act as a permanent watchdog to prevent #NeverNeeded regulations from hindering the next pandemic response. It would work like this:

First, no amendments should be allowed to the committee’s package. The vote must be straight up-or-down. The commission’s purpose is to avoid vote-trading and back-scratching. …

Second, the committee would be relatively small to reduce bargaining costs and make consensus easier to reach. It would also be bipartisan, so neither party can stack the deck when it is in power.

Third, the committee’s design has to account for the sheer size of the problem. … So it would tackle, say, five of the Code of Federal Regulations’ 50 titles per year in a 10-year rotation.

Read the whole piece here.

More regulatory reform ideas that could strengthen future crisis responses are in CEI’s Ten Thousand Commandments annual report.

The Minimum Wage Tax Increase

By far the most common criticism of minimum wages is that they cost jobs. This is incomplete—the data often show smaller job losses than one would expect after minimum wages go up. This is because workers earn more than wages—they also get non-wage pay such as insurance, free food and parking, and more. When regulations cause wage pay to go up, employers cut non-wage pay to pay for it. Job cuts happen, but they tend to be a last resort. I recently wrote a paper on these underappreciated tradeoffs.

The most underappreciated minimum wage tradeoff is a tax increase on the poor, which for some people would exceed $2,000. When untaxed non-wage pay is converted to taxable wages, workers pay higher taxes, without necessarily making more money. If a $15 minimum wage passes, it could cost some workers more than $2,000 in taxes, in addition to all the other non-wage pay cuts that come with a minimum wage increase.

I try to shine some light on this in an op-ed for Inside Sources:

To afford higher wages, employers cut back on other benefits, like health insurance, workplace leave flexibility, free meals, free parking or tuition reimbursement. That’s a real loss to workers, considering that non-wage pay is mostly tax-free.

By incentivizing employers to convert nonwage benefits to wages,  minimum wage advocates are, probably unknowingly, proposing a massive tax increase on the poor.

For some workers, this would mean a tax increase of up to $2,370 per year at a $15 per hour minimum wage. Depending on which state a worker lives in and other factors, shifting untaxed non-wage pay over to taxable wages could also expose some minimum wage earners to income tax liability, sales taxes and other taxes.

Read the whole thing here. My paper “Minimum Wages Have Tradeoffs” is here.

Ex-Im Reauthorization Vote Today in the House

Over in the Washington Examiner, I have a piece about the Ex-Im reauthorization bill that the House of Representatives will vote on today. I argue that even if this year’s battle ends in defeat, it has already been a significant nearly five-year-long victory, with guaranteed chances for victory in the future:

The Nobel-winning economist Ronald Coase once wrote, “An economist who, by his efforts, is able to postpone by a week a government program which wastes $100 million a year (which I would call a modest success) has, by his action, earned his salary for the whole of his life.” Over the period from 2014 to 2018, Ex-Im’s reduced activity spared taxpayers from nearly $48 billion of risk exposure, or nearly $12 billion per year. Ex-Im’s total portfolio decreased by $52 billion, or an average of $13 billion per year. This is more than a modest success.

Due to Ex-Im’s reauthorization requirement, reformers will have another opportunity in a few years — a lesson in institutional design that should be applied to other agencies.

Read the whole thing here.

Conservatives Should Oppose Ex-Im, Too

Over at CNS News, I argue that conservatives should favor closing the Export-Import Bank, even though President Trump supports the agency:

Finally, an underappreciated point is how Ex-Im can make some U.S. businesses less competitive. When Ex-Im offers favorable financing for a foreign airline to buy a Boeing plane, that airline often directly competes with U.S. airlines such as American, United, or Southwest. Often, Ex-Im can only help one U.S. business by hurting others. Besides being zero-sum, this opens up a fierce lobbying game with predictable ethical consequences. The Trump administration supports Ex-Im as part of its larger trade agenda. In practice, Ex-Im turns out to undermine it.

Read the whole piece here. My recent paper on Ex-Im is here.