When ‘Pro-Worker’ Policies Hurt Workers

Pushing back on recent pro-worker populism on the right, the American Enterprise Institute’s Michael Strain writes that “workers need a growth-and-participation agenda.” It is important that we add “participation”, to the traditional pro-growth ideas, today.

Millions of pages worth of research and commentary has proved that economic growth can lift all boats. However, without removing existing barriers that prevent entrepreneurship and work from taking place, it won’t suffice to boost economic growth. This won’t solve the problem of low-income Americans and workers being trapped in a participation crisis.

Many people see intrinsic value in working and the support we receive from the work environment. There are some reasons to not work. For example, a desire to be at home with the children. However, whether or not we choose to work should not be a result of any government incentives.

Left-leaning people have been more inclined than ever to help alleviate poverty and other social problems with benefits from the government. They don’t seem to be concerned about their programs’ unintended, notable consequences. These people often ignore the fact that these policies can lead to lost work hours, lower wages and lower prospects for advancement, particularly for women. They push for higher minimum wage increases, but they also want federal paid-leave programs. People on the right are joining the chorus of those calling for counterproductive policies.

Consider the enthusiasm shown by some conservatives about universal programs, such as the extended Child Tax Credit. Its generosity, lack of work requirements and inability to marry make it vulnerable to negative impacts on child poverty and labor force participation. This could be similar to the effects that were created by pre-1990s reform American welfare systems. The same is true of other left-wing policy favorites now endorsed by some people on the right—namely, industrial policy to boost manufacturing employment and protectionism.

Contrary to the way they sound, these policies are not designed to address genuine concerns.

Indeed, over the last 20 years, some Americans—disproportionately working-age men—have dropped out of the labor force despite low unemployment numbers. In the past, such economic shocks as the Great Recession have been followed by an increase in unemployment. As people left to look for work, the unemployment rate dropped to a lower level. Today, not so. It is alarming for policymakers and scholars alike. This is concerning for policymakers and scholars alike. Americans, especially those not educated at college, tend to stay in difficult-hit areas where they are unemployed.

Right-leaning populists are quick to blame the market and demand that entitlement programs be expanded. However, the exact initiatives they are calling for result in reduced geographical mobility and lower labor force participation.

For example, take the Social Security Disability Insurance Program. This program was established to assist those with disabilities or health issues that render work difficult or impossible. This role continues. Researchers have found that many adults who are physically capable and with low earning potential stay out of the workforce. The majority of those who are interested in becoming workers are men.

The pandemic created another set of problems when many policies were put in place to prevent people working. Pay leave, child tax credits and large individual “relief” check checks are some of the most notable. Many Americans were able to receive more than one and saw their incomes increase above the amount they made while working. Although it is understandable initially, the consequences can last a long time. Despite the fact that the pandemic is over, many workers are still reluctant to go back to work. Politicians encourage them to do this because they want the government’s handouts to continue forever.

This scenario is financially and economically unsustainable. This situation is unhealthy and financially unsustainable. It’s only a beginning. Congress needs to remove barriers that prevent workers from participating in long-term programs. This would open up more possibilities and improve the lives of those who were previously denied access to most benefits.

Although these are not the only steps, failure to address barriers to participation can have a devastating effect on other government initiatives to improve economic growth and help people. Americans deserve better.