Labor laws' unintended consequences
When federal government and state governments passed laws governing wages, working hours and other workplace conditions prior to World War II, agricultural labor was exempted.
Many years later, after the 40-hour work week became standard, California's Industrial Welfare Commission decreed that farmworkers could work up to 10 hours a day or six days a week before overtime pay kicked in.
In 2016, however, years of lobbying by unions and other groups finally paid off when the Legislature decreed that the eight-hour day and 40-hour work week for agricultural labor would be phased in. ThenGov. Jerry Brown signed the legislation, Assembly Bill 1066, despite warnings from farm groups that it would disrupt their industry.
Recently, the University of California's Cooperative Extension branch, which researches agricultural issues, released a study indicating that having a 40-hour work week has not been as beneficial to farmworkers as its sponsors promised.
Alexandra Hill, an assistant professor at UC Berkeley, concluded that many workers who had hoped for a cornucopia of overtime pay saw their incomes reduced when employers limited them to 40 hours a week. Her study found that many workers experienced reductions in the $100-$200 range each week because farmers could not automatically pass on overtime costs to their customers.
“It's really important to think carefully about how we can best implement policies that really benefit the people that we're trying to (help),” Hill told The Sacramento Bee.
Hill's research exemplifies the phenomenon of unanticipated consequences that often afflicts political actions. Legislators may have thought they could help farmworkers by giving them a 40-hour workweek but failed to consider the potential downsides when applied in the real world.
In recent years, the Legislature has been particularly prone to passing laws affecting workplace conditions — not surprisingly, given the close relationship between the Capitol's dominant Democrats and labor unions, which seek benefits they are unable to achieve in unionization drives or negotiations with employers.
The most spectacular example was 2019 legislation that severely limited employers' ability to use contractors, in effect converting several million workers to payroll employees.
Hill's study was released just months after the Legislature had set new minimum wages for the fast food and medical care industries, $20 per hour for the former and $25 for the latter, to dampen threats of ballot-box wars.
As with the 2016 law on farm labor, unions and other advocates of the new minimum wages said they would lift workers in the affected industries out of poverty.
“Today California is putting a stop to the hemorrhaging of our care workforce by ensuring health care workers can do the work they love and pay their bills — a huge win for workers and patients seeking care,” Tia Orr, executive director of SEIU California, told CalMatters.
However, there will be real world impacts.
Fast food franchisees will adjust by hiring fewer workers, raising prices or adopting more technology, such as the self-serve kiosks now common at McDonald's.
One effect of the health care wage bill has already surfaced. When it was passed, legislators were not given any estimates of the financial impact, but after Gov. Gavin Newsom signed the measure, his administration said it would cost the state budget, which has a $68 billion projected deficit, about $4 billion a year split 50-50 between state and federal taxpayers. And that doesn't include the multibillion-dollar impact on private health care providers and insurers.
On one level, it's perfectly understandable why politicians would like to raise wages for some of the state lowest paid workers. But they shouldn't ignore the potentially negative effects of their actions.