Power & Market

Lockdowns: Psychology and Self-Interest

03/09/2021Lipton Matthews

Exploring the political economy of embracing lockdowns is an interesting topic for economists to research. Philip Baggus recently published a piece on the political economy of Covid-19 hysteria and it would be fascinating to read his findings if he were to study the proposed topic. Evidence indicates the futility of lockdowns, yet they are still widely embraced. That support for lockdowns remains pervasive suggests that something greater than a desire to conform is at work.

Humans are rational actors interested in minimizing costs and believing that lockdowns work is a reassuring and inexpensive alternative to taking responsibility for one’s health. Lockdowns shift the burden of responsibility to politicians by relieving citizens of their duty to act on their own accord. Hence, accepting the ineffectiveness of lockdowns may force them to adjust their lifestyles to the reality of Covid-19. But the truth is that most people lack the discipline to change their diet to suit the reality of Covid-19 and neither are they willing to be guided by research in the process. For example, some studies argue that the consumption of Vitamin D can reduce the impact of Covid-19. However, the average person will not engage in serious research to protect himself from Covid-19, this is simply time-consuming

So, affirming the value of lockdowns makes it easier for people to use their time efficiently without concern for Covid-19. Hence, one can increase leisure by outsourcing responsibility to government bureaucrats who promote lockdowns. The average person is rarely fond of research and doing it to preserve his health is not a major motivator. For matters of health, people rely on medical opinion, only few opt to conduct independent research. Lockdowns are therefore popular, due to self-interest. Rejecting this option forces people to be responsible for their well-being and this may prove to be costly for those of us who are uninterested in allotting time to understand the complexities of a novel disease.

Moreover, unlike ordinary people, experts advocate lockdowns, since they confer psychic benefits in the form of improved social status. Prior to Covid-19, many of these experts were unknown, but today they are prominent characters. Because of Covid-19, they are now able to write articles telling politicians how they can make lockdowns more effective. Yet medical practitioners are not the only people benefiting from the hysteria of Covid-19. There has been a great demand for psychologists to explain why people might oppose anti-Covid -19 measures. Covid-19 creates several opportunities for experts to boost their popularity, so they are encouraged to amplify the dangers of the disease.

Another factor responsible for the sacralization of lockdowns is the fear that skepticism will engender a moral hazard. Covid-19 is portrayed as a pandemic and experts believe that tolerating skepticism could result in the justification of inane theories that are in opposition to preventing the spread of the disease. Therefore, experts aim to manage chaos by maligning skeptical voices. In short, cooperation is vital for the success of society and becomes extremely important, during a pandemic. Entertaining skeptical positions can deter cooperation, so managing dissent could be a rational option for experts in a perceived pandemic. If people are critical of lockdowns, they can also be skeptical of policies able to reduce transmissions.

I have presented a theory, now I expect a brave economist to test the hypothesis. And I think that Philip Baggus is up to the task. I hope he accepts the offer.

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Lockdowns Destroyed the Democracy of the Marketplace

"We're closed."

These are terrible words to see in front of your favorite small shops and services when you are in the mood to purchase something you desire, or ready to pay for something you wish to avail of. This feeling is made even worse emotionally when you know the closures are forced and permanent, and that you sadly and ultimately could not do anything about it.

It may not be the case that these businesses were bad and died a natural death, and may in fact be quite the contrary. You are probably a dedicated customer, and one among many that happily voted to keep those enterprises running by paying for what they offered, because you and others genuinely liked them. These businesses could have thrived under normal circumstances.

However, when a business was one of the casualties of regulations that limited its ability to operate, and when you were forced to stay at home and became unable to spend on it as often as before, you were essentially denied the ability to vote for its continued existence.

A diverse and plentiful number of micro, small and medium enterprises makes up the bulk of any healthy economy. It is normal to see that such entities comprise the vast majority of business activities in countries around the world. The economy has to thrive at different levels to cater to the tastes and needs of people from all walks of life. This natural phenomenon has been demonstrated consistently over the course of human history.

These days, the depressing news that hits consumers around the world is that of the mass closure of smaller businesses. These would be last seen offering final services that could not even be given fully due to limitations imposed upon them. These are the stores that found themselves severely hampered by the policies governing the economy created in the wake of the pandemic, through no fault of their own. While some undoubtedly survived by adapting to circumstances, as competent entrepreneurial entities should, many did not.

If a business is limited, for example, to only be able to serve an arbitrarily small number of customers at any given time, how can it hope to get by as it normally would? Yet such limitations exist around the world, decreed in the name of stopping the spread of COVID-19. For example, shops that used to be able to tend to twenty customers at once could have had their maximum number of potential clients reduced to just five at a time.

What this does in practice for countries with large populations is that customers would sometimes have to line up outside shops or gather in large crowds for a long time anyway due to space limitations. In that case, was the objective of the policy, presumably to create social distancing, successfully met? That said, these cases are supposed to be the lucky ones. Some businesses could not even reopen at all due to other such restrictions that worked unfavorably against them.

Disasters and market fluctuations happen, sure, and these sometimes trigger the closure and death of certain businesses. Risk and uncertainty are always integral parts of lived experiences, and we make decisions and judgements based on our perception of them. But the very problem posed here is that closures enabled through harsh restrictions could have been avoided entirely. Some business deaths were preventable, and it would be a disservice to simply blame everything on the pandemic.

In these times, where consumers are stuck at home and unable to spend on the goods and services they would otherwise like to avail of, people are essentially barred from the democracy of markets. On the consumer side, it has become difficult to patronize favorite businesses as in pre-pandemic times. On the producer side, it has also become difficult to provide goods and services in a way that allows for continued and efficient operations in a “pandemic market”.

With many small businesses tragically and irreversibly gone —and more to follow suit as countries continue to scramble to get their acts together— we need to create a healthy and competitive global economy. We should start by remembering the importance of enabling market democracy.

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Libertarian Terrorists?

02/02/2021Ron Paul

The Department of Homeland Security issued on Wednesday a nationwide terror alert lasting until April 30. The alert warns of potential terrorist attacks from Americans who are “ideologically motivated” and have “objections to the exercise of government authority and the presidential transition, as well as other perceived grievances fueled by false narratives.”

The language used in this alert suggests that millions of Americans are potential terrorists. Second Amendment–supporting, antiwar, antitax, antipolitics, antimilitarization, pro-life, and anti–Federal Reserve activists certainly have “objections to the exercise of government authority.” They are certainly viewed by the political class and its handmaidens in Big Tech and the mainstream media as ideological extremists. Anyone who gets his news from sources other than mainstream media or Big Tech, or who uses certain “unapproved” social media platforms, is considered to have had his grievances “fueled by false narratives.” For something to be considered a false narrative, it need only contradict the “official” narrative.

The "domestic terrorist” alert is the latest sign that the activities on January 6 on Capitol Hill, like the attacks of September 11, 2001, are being used to advance a long-standing antiliberty agenda. Legislation expanding the federal government’s authority to use its surveillance and other unconstitutional powers against “domestic terrorists” is likely to soon be considered by Congress. Just as the PATRIOT Act was written years before 2001, this legislation was written long before January 6. The bill’s proponents are simply taking advantage of the hysteria following the so-called insurrection to push the bill onto the congressional agenda.

Former CIA director John Brennan recently singled out libertarians as among the people the government should go after. This is not the first time libertarians have been smeared. In 2009, a federally funded fusion center identified people who supported my presidential campaign, my Campaign for Liberty, or certain Libertarian and Constitution Parties’ candidates as potentially violent extremists.

The idea that libertarianism creates terrorists is absurd. Libertarians support the nonaggression principle, so they reject using force to advance their political goals. They rely instead on peaceful persuasion.

Libertarianism is being attacked because it does not support just reforming a few government policies. Instead, it presents a formidable intellectual challenge to the entire welfare-warfare state.

The ultimate goal of those pushing for a crackdown on “domestic terrorism” is to make people unwilling to even consider “radical” ideas—to make people so afraid of certain ideas that they refuse to even give those ideas a fair hearing.

Progressives who are tempted to support what is being promoted as a crackdown on right-wing violence should consider the history of government harassment of progressive movements and leaders such as Martin Luther King Jr. What do they think a future right-wing authoritarian would do if given power to go after “ideological extremists”?

All Americans who cherish the Bill of Rights should come together to stop this latest crackdown on liberty. My Campaign for Liberty will be mobilizing Americans to stop passage of any domestic terrorism legislation, while my Institute for Peace and Prosperity and my Liberty Report will provide Americans with the most up-to-date information about the continuing attempts to smear those who speak the truth about government lies.

(You can watch the Ron Paul Liberty Report live on YouTube Monday-Friday at noon, eastern time.)

Reprinted with permission.

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Lockdowns in Europe Are Back. Turns Out Early Lockdowns Didn't "Beat the Virus" after All.

10/20/2020Ryan McMaken

Back in August, European politicians were threatening lockdowns and calling for "vigilance." But given the economic devastation wrought by full, nationwide lockdowns, politicians have become fearful of going down that road again. For example, in the Czech Republic, where the seven-day average for reported covid deaths has surged from 7 to 66,  the central government has stated it won't make a decision about lockdowns for two more weeks. Meanwhile, Czech citizens are protesting against what restrictions are in place. 

But elsewhere in Europe, restrictions are quickly escalating.

Belgium: all bars, cafes, restaurants must close.

Ireland: people are required to limit movement, stay out of each other's homes.

France: new nighttime curfews.

Spain: people can't leave or enter Madrid for nonessential reasons.

Netherlands: a maximum of three people in your home per day.

It should be noted that Spain, Ireland, and Belgium have had some of the strictest lockdowns in Europe. Belgium never really ended strict measures and has always had very draconian measures on gatherings, even during the summer, as other countries were raising restrictions. Belgium now has the worst national covid death rate in Europe.

In Spain, of course, the lockdowns were notoriously strict during spring 2020, with families not even permitted to leave their apartments to gather with family outside.

It was claimed this would all "beat the virus." Of course, lockdowns do no such thing.

As Dr. Gilbert Berdine has noted here at mises.org:

The data suggest that lockdowns have not prevented any deaths from covid-19. At best, lockdowns have deferred death for a short time, but they cannot possibly be continued for the long term. It seems likely that one will not have to even compare economic deprivation with loss of life, as the final death toll following authoritarian lockdowns will most likely exceed the deaths from letting people choose how to manage their own risk.

In Sweden, there is still no sign of any resurgence of covid deaths. There is no lockdown, and no general mask mandate. Death rates in Spain, Belgium, Italy, and eastern Europe continue to get worse while Sweden's rate remains stable.

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Lew Rockwell and I Discuss Commie Cowboys

09/11/2020Ryan McMaken

A reader recently reminded me of this great old podcast from 2013. Lew Rockwell and I talk for half an hour about my little book Commie Cowboys, the politics of the Western genre, and why the anti-Westerns were better than those old John Wayne ones.

We cover lots of stuff about the frontier, war, pop culture, and more. Lew cracks some great jokes in here.

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Long Live the Almighty Dollar

08/08/2020Robert Aro

The saying goes: “The grass is always greener on the other side.” But is it really?

US dollar supremacy is something to which we have become accustomed. It’s easy to take for granted that the dollar is still the world’s reserve currency despite relentless efforts made by central bankers and governments to destroy it.

Few born in America have ever experienced what would be formally called “hyperinflation.” To most, hyperinflation is only something we hear about in other countries like Venezuela or Zimbabwe, those unfortunate countries whose currency was legally counterfeited into oblivion by those in charge of the printing press. The list of nations with an undesirable currency is long, but Lebanon has now joined the group of nations experiencing fiat destruction, as reported by Reuters, using the definition of hyperinflation as a period of time where a country's inflation rate exceeds 50 percent per month. Per the press release:

Now, Lebanon has been gripped by the phenomenon, becoming the first country in the Middle East and North Africa to suffer from rapid, runaway price rises for goods and services.

For some inexplicable reason, all over the planet and throughout history we find instances of perpetual inflation and hyperinflation appearing as the rule, not the exception. Central planners claim inflation in America has remained stubbornly low for a very long time. If anything, they’ve found a risk of “deflation” to be the concern; the cost of living and affordability of life for the average person would decline in such dramatic fashion that it would be a terrible thing for the economy.

Fortunately the “problem” of inflation may finally be solved within in a few short months, as CNBC explains in an eye-catching breaking news headline:

The Fed is expected to make a major commitment to ramping up inflation soon.

It starts slowly:

In the next few months, the Federal Reserve will be solidifying a policy outline that would commit it to low rates for years as it pursues an agenda of higher inflation…

The ideas get progressively worse from there, as neither the mainstream media nor mainstream economists understand inflation:

The Fed and other global central banks have been trying to gin up inflation for years under the reasoning that a low level of price appreciation is healthy for a growing economy.

Even the Chicago Fed president, Chris Evans, weighed in and said he would like to:

keep rates where they are until inflation gets up around 2.5%, which it has not been for most of the past decade.

So stay tuned! We may soon find, come September’s Fed meeting, that our monetary planners are set to embark on a formal policy of more inflation. Despite the fact that economists have struggled with “low inflation” for the past decade while neglecting the majority of Americans, who are struggling with a high cost of living, low savings rate, and high debt levels, those in charge of monetary policy will soon find reasons to further weaken the purchasing power of your dollar.

In countries like Zimbabwe, Venezuela, and now Lebanon, there are those who look at their bankrupt nation and wonder how those in charge could lead them astray, while in America we think the government will forever wield the Almighty Dollar, printing as many dollars as needed at essentially no cost. In other news, gold has reached its all-time high…

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Las Vegas's New Football Stadium Is on Its Way to Becoming the "Bailout Bowl"

04/14/2020Doug French

The stadium naming curse is well known. Enron Field, Adelphia Coliseum, and MCI Center are just a few examples of bankruptcy following a company's name adorning its home team’s stadium or arena. Financial trouble typically comes after the name is attached and the team plays some games.

In the newest case, the company is struggling before a game has been played. Last August, Allegiant Airlines inked a deal with the NFL’s used-to-be Oakland, used-to-be Los Angeles, used-to-be Oakland (again), and now Las Vegas Raiders for the naming rights to the new 65,000-seat and partially taxpayer-funded stadium, which sits along I-15 in Clark County, Nevada.

Terms of the deal were not disclosed, but the Las Vegas Review-Journal (LVRJreported, “experts with experience on similar deals say Allegiant is likely paying between $20 million and $25 million in cash and in-kind services a year to put its name on the building.”

Raiders owner Mark Davis let this slip at the time, “I look forward to learning a lot more about the Allegiant brand. We’ve got 30 years ahead of us, so let’s make the best of it.”

Allegiant may be wishing it hadn’t made a thirty-year deal. Eli Segall writes in today’s LVRJ that “Allegiant Air’s parent is burning through at least $2 million in cash per day and hundreds of workers are taking two-month leave at half pay as the carrier grapples with the fallout from the coronavirus pandemic.”

March revenues were down 40–45 percent from a year ago and its prospects are likely to get much worse. The company is applying for funding from the federal government’s Paycheck Protection Program to keep its doors open. Meanwhile, “management expects flying capacity for April and May to drop 80 percent to 90 percent from the same period last year and is ‘continuously’ re-evaluating its flight schedule ‘in light of low demand for future bookings,’” Segall reports.

Allegiant (ALGT) stock has fallen from $183 plus per share in December to a close below $80 today. The company sported over $457 million in cash at year end: a couple hundred days' worth at the current burn rate, excluding a payment to the Raiders, of course.

Allegiant Stadium may work out like New York’s Citi Field, known in the years after the 2008 financial crisis as Bailout Ballpark. CNBC reported,

On the heels of announcing a naming deal that cost Citigroup $20 million a year over 20 years, the company was forced to take $45 billion in government bailouts and saw its stock price drop nearly 94 percent from its November 2006 levels. Because of the heavy taxpayer support given to Citigroup, lawmakers began urging the company to scrap the names rights deal. But the company stuck with its plans, and has managed to avoid bankruptcy.

Allegiant Stadium will likely be the Bailout Bowl, with construction requiring $750 million of taxpayer largesse and now more government bailout money required for the Bowl’s name holder to pay its Raiders bill.

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Local Scolds Are Using This Crisis to Grow the Police State

My posts on social media lately have focused on national and international issues related to COVID-19. I occasionally cruise through posts from my neighborhood's Facebook page and Nextdoor.com and just throw up my hands. The local "Karens" are condemning people for traveling, looking for offending groups of more than three people to narc on to the local hotline, and calling for increased police patrols of the neighborhood, etc. The most fundamental of civil rights mean nothing to these people.

We are being careful in my household. We don't go out much. Fortunately, we have jobs that allow us to work from home. When we go out, we take precautions as recommended.

But the mostly upper middle-class residents of my neighborhood and others—at least the ones who have time for social media—are worked up into such a lather about this that they've forgotten that there are important things about our society other than avoiding getting sick.

We will all have to live in this society after the pandemic has passed. On a national scale, we will have to live with the powers government obtains during this crisis. Whatever powers they take won't all be given back (see Robert Higgs's "ratchet effect" and his book Crisis and Leviathan). And whatever powers government obtains won't all be used to effectively fight a pandemic—they will end up being used for political purposes, as the "stimulus" act should have amply indicated. People in government are no less selfish, no more ethical in their conduct, than the rest of us. And they don't always know what is best. Local information, often at the granular level of the household or individual, is vital but usually unavailable or ignored by officials in Washington, DC, or a state capital. Even if totalitarianism is an effective way to fight a pandemic—and I'm certainly not persuaded that it is—can anyone reasonably suggest that people granted such power will nobly and promptly relinquish all that power when the crisis has passed? Despotisms have arisen out of a fearful population in a crisis calling for government to rescue them.

On a more local scale, we're all going to be neighbors when this is over. In this crisis, a neighborhood should be growing closer, chatting (from a six-foot distance of course) with the people who live on our streets, picking up items from the grocery store for those whose risk of an outing is greater, or sharing a couple of extra rolls of TP. Instead, I'm seeing posts on Facebook calling for the arrest of kids in the neighborhood who dare to assemble in groups of more than three. Unqualified shaming of people who don't "stay home," when we really have no idea what the personal situation is that might result in venturing out. Calls for draconian policies from government that would have warmed Stalin's heart and that could severely impact neighbors. I'm not doing anything that would contravene current policy where I live. But I'm appalled at the instincts of some of my neighbors. The thought has already crossed my mind as I walk or run around my neighborhood—who among these people would inform on me if I appeared to be doing something that doesn't comply with a government order? Will they knock on my door and share their concern (from a six-foot distance) or just call the cops? (Is it paranoia if they have already publicly stated a desire to have people arrested?) Or worse—a few days ago an eighty-six-year-old woman died in a New York City hospital after being shoved by another patient who didn't like how close the elderly woman was standing. Will violence increase?

We may have a long way to go before the restrictions on our activities begin to be loosened rather than tightened. Stress is building. Most of us are worried about getting sick, or having a family member get sick. Many households are struggling financially. Family members who don't get along well at the best of times are living together in a pressure cooker environment. Parents are trying to shepherd children through online schooling. Some employees are trying to adjust to working from home and are worried about the future of their employers. People are already reaching a breaking point.

In the face of all this stress and anxiety, a commitment to civil and peaceful relationships with neighbors is even more important. Let's think before we condemn neighbors for not "social distancing" enough, and have polite conversations to persuade those who disagree. And let's refrain from calling on the social institution whose primary distinctive is the use of force to induce compliance. After calling the cops on our neighbor or our neighbor's kid—or advocating policies that render our neighbors jobless—we will still have to live around each other.

We have an opportunity to build relationships with those around us who have perhaps been ignored for years. Let's not squander that opportunity by looking for chances to narc on each other. That means you, Karen.

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Lebanon's Debt Crisis Has Destroyed the Nation's Economy

04/02/2020Mario Keyrouz

On October 17, 2019, civil protest erupted in Lebanon. The reason for the eruption was a proposed tax on the popular WhatsApp app.1 The tax served as only a spark to ignite the uprising. Over the years the economy of Lebanon has been steadily worsening. Of course, the usual suspect is the state, and the preferred method is interventionism.

Economic Conditions

Although there is no reliable data to track the unemployment rate in Lebanon, at a certain point in 2018 the president himself stated that the unemployment rate was about 46 percent. He attributed this high number to the grave economic situation and to Syrian refugees.2 According to the IMF, the debt-to-GDP ratio is projected to grow to about 185 percent in 2024.3 The official conversion rate of the US dollar to the Lebanese pound is about USD 1 dollar for LBP 1512.5, but in reality as of March the rate at which people are exchanging is USD 1 for LBP 2700.

During the first days of the civil protests, banks shut down and blocked depositors' access to their funds. They then moved to set some severe withdrawal limits on dollar accounts. Some banks have set a limit of USD 600 a month. Although there have been no severe limitations on accounts in Lebanese pounds, as of March 1 I am no longer allowed to spend more than fifteen dollars per month for international transactions using my debit card. Yes, you read that correctly! Fifteen dollars per month. And to top it all, the first sovereign default in Lebanon’s history took place on March 9. Much can be said regarding the current Lebanese economic conditions. But It is self-evident that Lebanon is currently undergoing the worst financial crisis since its independence. Not even during the civil war (1975–90) did people witness such a financial crisis. It could be that during the civil war the state was much more powerless than now and wasn’t able to intervene in the economy as much as it is now.

Public Debt

Between 1993 and 2018, Lebanon’s public debt increased from $4.2 billion to $85 billion4—a debt that has been forced on the Lebanese people, and the burden of which Lebanese citizens have been dealing with for years. To put things into perspective—and this is from the IMF report:

Because of the large public debt, interest payments exceeded 9 percent of GDP. Tax revenues in 2018 were lower than forecast, with all tax revenue categories disappointing in the slow economy except taxes on income and profits.5

Consequences of the State’s Actions

I could go on discussing the awful policies and actions of the Lebanese state. I could give a very accurate description of its anatomy, which is an abomination. But what I would like to shed light on is the forgotten youth of Lebanon. How long is it going to be before the economy recovers? Is it still possible for a young Lebanese to build a better future for himself? Can all the young Lebanese who emigrated ever hope to come back? Existential crises, as bad as they already are for young individuals, have been made worse by the Lebanese government. Future Lebanese generations will inherit a debt that cannot be repaid. The state has robbed us of our prosperity.

Hope Remains

Despite everything that has happened, there’s still some hope for the youth of Lebanon. Lebanese have learned a lot from the past few months. It has become self-evident that the government of Lebanon holds too much power and is too centralized. Traditional political parties in charge of the government have had their popularity diminish dramatically. And the best thing is that some Lebanese have been resorting to cryptocurrency as a way to bypass the bank and transfer money. Above all, I truly hope that in the future Lebanese people will aim to reduce the concentration of power that the state holds.

  • 1. "Lebanon: WhatsApp tax sparks mass protests," Deutsche Welle, Oct. 10, 2019, https://www.dw.com/en/lebanon-whatsapp-tax-sparks-mass-protests/a-50880357.
  • 2. "Lebanon's president says unemployment is at 46 percent. Is it true?," StepFeed, Apr. 4, 2018, https://stepfeed.com/lebanon-s-president-says-unemployment-is-at-46-percent-is-it-true-7375.
  • 3. H. Plecher, "Lebanon: National debt in relation to gross domestic product (GDP) from 2014 to 2024," Statista, Nov. 13, 2019, https://www.statista.com/statistics/455257/national-debt-of-lebanon-in-relation-to-gross-domestic-product-gdp/.
  • 4. Rouba Chbeir and Marwan Mikhael, "A Historical Analysis of Lebanon’s Public Debt" (Blominvest Bank, 2019), p. 2.
  • 5. 2019 ARTICLE IV CONSULTATION—PRESS RELEASE, p. 5
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Legislation Should Help Rather Than Hinder the Gig Economy

02/19/2020Mark Thornton

Former Mises Fellow Peter St. Onge, senior economist at the Montreal Economic Institute cowrote an op-ed in the Globe and Mail (Toronto) that highlights the increasing importance of part-time workers and the benefits they provide customers over traditional lines of work. 

Casual or “gig” work has been around a very long time, but the sharing economy has put freelancers in the spotlight. It’s especially important for workers who can only work part-time: single parents, college students, the elderly, and seasonal workers. These groups have long counted on the ability to work flexible hours when they really need to, be they waiters, nannies, deliverymen, or translators.

So far, labour laws have helped by sheltering casual workers from the hassle of paperwork, and employers from the risks inherent in hiring permanent employees. Unfortunately, regulators are becoming hostile to this new job creation. California Assembly Bill 5 (AB 5), which took effect on Jan. 1, effectively turns freelancers into employees. The goal was to improve conditions for gig workers, but, in practice, it has meant the disappearance of their jobs. Mass layoffs of part-time and full-time freelance workers have occurred in the media and the film industry, with fears of more to come.

The experience of California illustrates why governments should avoid interfering in the sharing economy. Despite good intentions, forcing employers to provide benefits to contract workers risks pricing low-wage workers out of employment altogether. Studies have also shown that even when the company is paying for the benefits, the costs get directly passed along to the employees. So even workers who don’t lose their jobs end up paying for the mandated benefits through reduced wages.

Empirically, job losses from mandatory benefits disproportionately target low-income workers. A similar phenomenon occurred in Ontario where an Montreal Economic Institute study estimated that 50,000 young workers lost their job[s] in the wake of a hike in the minimum wage from $11.49 to $14 on Jan. 1, 2018.

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