A Twitter exchange this morning with Hot Air's Jazz Shaw about Hobby Lobby partially resulted in this post on something we both agree on: the pending Hobby Lobby SCOTUS case will have far-ranging effects on American businesses and employees,
and that the religious freedoms of the company are not the real issue (bold emphasis mine:)
But this leads us to what I think should be the real debate at the heart of this case. The question I would like to hear the SCOTUS justices ask the participants in this case is as follows: “Do you believe that the government has the power to tell employers how many days of paid vacation they have to offer their employees?”
Employers offer a collection of things to prospective applicants for job openings which the HR department collectively refers to as a compensation package. This goes far beyond the wages offered, covering items such as vacation, sick time, casual Fridays, employer contributions to 401K plans and, yes, health care options. Different companies offer different packages, and as you would expect, those who offer the best collection of benefits will attract the most and the best applicants. The employer must balance the costs of all this against their bottom line.
Conversely, an employer who offers virtually nothing but the bare minimum wage will attract only those who can’t find a position anywhere else. They may show up for work most of the time, but they will hardly be motivated to excel and further the company’s goals, generally keeping an eye on the clock and the door, hoping for a chance to bolt to a better situation. Such a company is unlikely to do well. It’s the invisible hand of the market at work yet again. So the real question I’m asking is not if the employer has the religious freedom to single out certain items of health care which they will or will not offer, but rather if they have the freedom to decide which – if any – benefits they offer the employee of any kind and to live with the consequences of those decisions. If the Hobby Lobby case actually settles anything, I’d hope it would be that question rather than the religious liberty debate which dominates the headlines.
And this is a point where I freely admit Jazz and I are on different sides. Jazz argues that businesses should be able to determine in a free market system what compensation and benefits they can offer, and that the government should step aside and let the market determine the winners. My argument is that if a local, state, or federal government elects people who create laws to mandate minimums that apply to all businesses and those laws are passed by elected officials in a representative democracy, then businesses are obligated to follow those laws.
It's classic libertarian versus liberal stuff here.
US v. Darby Lumber Company, decided in 1941, clearly held that under the
Commerce Clause of the Constitution that since Congress passed the Fair Labor Standards Act in 1938, and that Congress has the power to regulate commerce, then a federal minimum wage was within the purview of the Congress. That's the same legal logic behind the Affordable Care Act's minimum coverage laws for health insurance, including birth control.
The issue of the scope of what constitutes "commerce" has long been a bone of contention in American jurisprudence, as the Tenth Amendment declares intrastate commerce the dominion of states themselves. Either way, states all have minimum wage laws that cover this as well, even if it just says "The minimum wage is whatever the federal minimum wage is right now." Some states have higher minimum wages than the federal one. Those too are constitutional.
So that again brings us back to Jazz's question: do businesses have any real freedom to decide what they can offer employees at all? Would allowing them to do so help the American economy?
My answer is yes, they do, and yes, at the expense of workers. Look, let's not split hairs here on this: a business is in business to turn a profit, and in nearly every business I can think of, from lemonade stands to professional sports teams, the number one cost of a business is paying employees. If we got rid of the minimum wage tomorrow, you can bet that the invisible hand of the free market would pull everyone's wages down. If your employer can pay you less for the same work, they're going to do it.
If I'm Wal-Mart, and I have shareholders, my job is to provide maximum profit to the shareholders. So if I can get away with paying my cashiers $2 an hour, and I can find cashiers who will work for that much, then I win. Are they going to be the best cashiers? Probably not, but you know what? If I'm the nation's largest private employer and I drastically lower wages, and I've driven local competition out of business, and I can lower my prices even further in order to keep customers, I win again.
The real issue is not whether or not we need a minimum wage or regulation of benefits, it's whether or not we want to be a country where working 40 hours a week is enough to support a household. Increasingly, the answer is no, and that has long term repercussions. After all,
workers that don't get paid don't have money to spend.