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Some Conservatives Taking Leave of Their Economics

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Here’s a letter to Fox Business:

Editor:

What’s with supposedly free-market conservatives, such as Sen. Marco Rubio, endorsing schemes for the government to encourage more paid family leave? (“Rubio pushes paid family leave bill with option to borrow against Social Security [2],” March 27.)

There’s no reason to believe the allegation that the market fails to supply, in its mix of various forms of compensation for workers, too little paid leave. And evidence, as reported by Dan Mitchell [3], does not support any such allegation of market failure.

It’s true that the ‘conservative’ proposal to allow each worker to pay for paid leave today by drawing on his or her Social Security account is better than forcing employers to offer paid leave. But to see the central economic flaw of this ‘conservative’ proposal, conservatives should ask themselves if they believe that each worker should be allowed to draw on his or her Social Security account to get the funds necessary to add, say, an extra dollar to his or her hourly take-home pay.

I’m confident that no conservative would endorse such a scheme. Yet allowing workers to draw on Social Security to raise the dollar value of that portion of their compensation taken in the form of hourly take-home pay differs in no essential way from allowing workers to draw on Social Security to raise the dollar value of that portion of their compensation taken in the form of fringe benefits such as paid leave.

Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030

…..

And if for some mysterious reason the market consistently results in paid leave being too small a portion of workers’ total compensation, then it must be the case – in competitive labor markets – that the market also results in wages or fringe benefits other than paid leave being too large a portion of workers’ total compensation.

Please don’t say “But the problem is that labor markets aren’t competitive.” Even if – contrary to what I believe to be true for the great majority of workers – labor markets are shot through with monopsony power, then (1) there is still no reason to believe that paid leave is too small a portion of workers’ total compensation, and (2) arranging through government action for workers to get more paid leave would do nothing to make workers better off given that such action would not itself diminish the monopsony power.

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