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Scott Lincicome, a trade economist at the Cato Institute, updates our understanding of the labor market and explains how to craft policy that can uplift the workers of today and tomorrow.

Scott Lincicome: The Human Progress Podcast Ep. 33 Transcript

By Scott Lincicome @scottlincicome

By Chelsea Follett @Chellivia

The conversation between Chelsea Follett and Scott Lincicome can be found here. The transcript is below.

Chelsea Follet: Joining me today on the Human Progress Podcast is Scott Lincicome, a trade expert and the Director of General Economics at the Cato Institute’s Center for Trade Policy Studies. He’s also a senior visiting lecturer at Duke University Law School, where he has taught a course on international trade law. Prior to joining Cato, Lincicome spent two decades practicing international trade law at White & Case LLP, where he litigated national and multilateral trade disputes and advised multinational corporations on global trade rules and national regulations. He holds a law degree from the University of Virginia, is routinely featured on TV, or radio and print media, and writes the Capitolism newsletter at The Dispatch. That’s Capitolism spelled with an O like the building where Congress meets. And he also has just a great and lively Twitter presence. So if you’re a fan of the Human Progress Twitter feed, I recommend checking out his Twitter as well. And he joins the podcast today to discuss his forthcoming book, Empowering the New American Worker: Marketplace Solutions for Today’s Workforce. Scott, how are you? 

Scott Lincicome: Well. How are you? 

Chelsea Follet: Well. So tell me about the book and what prompted you to write it and edit it.

Scott Lincicome: Sure. Well, I’ll start with what prompted me to write it. So, about a year ago, I was participating in several discussions about policy to help American workers because everybody in Washington these days is into helping the American worker. Starting at least in 2016, you had President Trump talking about helping the American worker, President Biden has a pro-worker trade policy and other things. And all the policies though that they’re offering, really were heavy in new government programs. It was always, “Oh, we need wage subsidies,” or, “We need protectionism,” or, “We need immigration restrictions or paid family leave and we need to ban independent contracting.” All these types of pro-worker policies that struck me, as a libertarian, it is not very pro-worker, certainly not pro-freedom, but also seemed to suffer from a lot of flaws.

Scott Lincicome: And so when I was talking about some of these flaws and some of the things that… Or most of the pro-worker agenda you hear from politicians and wonks in Washington, I realized that there’s a book here to be written. A book that Cato was ideally situated to publish because we have so many scholars here that, while they don’t focus on labor policy in particular, talk about policies and promote policies that workers care a lot about, like say healthcare or education for example. So that was the initial process and what the book essentially is, is a compilation of those ideas. And I think it stems from the fact that these pro-worker policies that we talk about really suffer from a lot of what I would call fatal flaws.

Scott Lincicome: First, they really seem to misdiagnose the situation, kind of the plight of the American worker. ‘Cause in a lot of ways things are okay for American workers, the median American workers, so the guy in the middle. If you look at, for example, median wages, if you look at quality of life, which of course Human Progress knows all about, there are a lot of points of optimism. Median wages in the United States have actually increased pretty substantially since the 1990s. Consumption and material wealth has increased also pretty substantially over that same period. Now, that said though, there are some real challenges that American workers face. Prior to the pandemic, for example, we were seeing declining business and dynamism, labor dynamism, and the rest. In other words, people weren’t switching jobs as much, which is typically a sign of a healthy labor market. Moving jobs typically helps with national productivity, worker productivity. You move to a place that you’re better suited to work, but also helps with wages and other things. But also they weren’t moving from town to town. And so, we had some dynamism problems. Business formation was down, people weren’t going out on their own and starting businesses as much.

Scott Lincicome: And then certainly there were discrete concerns with things like healthcare prices and childcare prices and educational issues and the rest. So there were some real challenges for American workers, but pro-worker policies weren’t doing a great job of targeting them. And this, I think, I mentioned these kind of fatal flaws. I think there’s three big ones that almost all pro-worker policy right now really misses. First, is that for all the things that workers do care about, housing and ability to change jobs or move into new jobs, flexibility in jobs and the rest, these policies tend to ignore, or these proposals tend to ignore all of the existing laws and regulations that are actually harming American workers, making it difficult to improve themselves. So this is things like occupational licensing restrictions or criminal justice issues or labor regulations, problems in… Restrictions on business formation and home-based businesses and so on.

Scott Lincicome: We also see a lot of laws and regulations out there at the federal and state level that discourage mobility and independence. So we talked about declining mobility, declining dynamism. Well, we have laws that restrict or discourage remote work. We have laws that make it costly in terms of moving for transportation issues, we have a lot of laws related to benefits, particularly healthcare, but others that tend to tie workers to certain jobs or certain places. And then our welfare system as well tends to keep people trapped in poverty, dependent on welfare, instead of actually pushing people to become independent. And then finally on living standards, we have plenty of laws and regulations that make healthcare more expensive, that make housing more expensive, that make children’s education more difficult, it raised the cost of child care or of clothing and food. And so like I said, pro-worker proposals, totally ignore all of that. So that’s the first problem.

Scott Lincicome: The second problem is pro-worker proposals tend to, in terms of their solutions, really, they don’t try to actually reform the aforementioned problems, they tend to just say, “Ah, okay, well, workers are struggling with child care costs, let’s just give them more money, more taxpayer money.” We’re not gonna actually reform the laws and regulations that make childcare more expensive, we’re just gonna give people money or we’ll mandate that employers do this. And so it’s always just more government programs, bigger government programs, not actually embracing market-oriented reforms. Then again, sometimes it’s just about repealing or reforming the stuff on the books, but the other times, it’s about using markets to do what markets do well, which is the efficient delivery of goods and services, which a lot of concerns workers have are in that space.

Scott Lincicome: And then the third flaw that these proposals really seem to suffer from is that it really tend not to understand who the American worker is. If you listen to President Biden, or a lot of Republicans in Congress, you’d come away thinking that the vast majority of the American workforce is a unionized guy in his 40s or 50s that works at a manufacturing plant, or is a college-educated urbanite, single female that… And there’s really… Of course, those people exist, but they’re pretty outdated stereotypes. The vast majority of the American workforce, for example, works in services, not in manufacturing. Workers are less worried these days about higher wages, everybody wants to boost wages, it’s all about minimum wage policies, and the rest. But workers are actually are less worried about wages than they are about flexibility and quality of life. Workers are increasingly working in remote work or in the gig economy, or independent work. Freelance is a really big part of the economy these days, and by the way, it’s not like Uber drivers, the most freelance workers are really high paid.

Scott Lincicome: And so while the pro-worker proposals in Washington focus on these kind of traditional stereotypical jobs, they ignore the vast majority of the American workforce, and thus, they tend to offer policies that while they might say, might help those stereotypes actually are gonna harm a lot of the rest of the workforce. I’ll give you a really simple example. I mentioned manufacturing, so tariffs on steel might help steel workers, but they’re gonna harm everybody else, and that includes a lot of manufacturing workers in industries that consume steel, which happen to outnumber steel workers by 40:1 or more. So we tend to have these myopic policies that really ignore what American workers want, where the American workforce is and where it’s going, and tend to offer policies that really are gonna do more harm than good, while of course, also expanding government in the process.

Chelsea Follet: Right. So that’s a good overview of the different aspects of the book and how the narrative about the American worker may be unnecessarily gloomy, the reality might be a little bit more nuanced, and how policies have failed to keep up with the changing reality of the American workforce. Could you talk a little bit more about that changing reality? Some things that you mentioned in the Capitolism column introducing this book, which you’re going to link to when we put up this podcast, is the changing nature of education, for example, you write about non-college pathways to success, you talk about how not only our manufacturing workers are smaller and smaller part of the workforce, but most blue collar workers are not manufacturing workers, you talk about many different changes in the American workforce. Could you elaborate a little bit on that? 

Scott Lincicome: For sure. So let’s start, I think again, let’s start with manufacturing. So there is an obsession in Washington that we need to boost manufacturing jobs via tariffs and industrial policy and subsidies, and the rest. Now, look, manufacturing is fine, the United States is the second largest manufacturing nation in the world, but like you said, when it comes to blue collar work in America, even for less educated males, everybody is worried about labor force participation among less educated males. Well, if you look at the data, you see that men in male-dominated industries, in services, so things like transportation and material moving. So either Amazon workers or truck drivers or whatever, or in installation, maintenance and repair. So plumbers, and air conditioning repair guys and the rest, or in construction and mining. So these industries, these male-dominated blue collar industries actually outnumber manufacturing workers by about 4:1. So there’re about 32 million male-dominated service workers, and about 8 million manufacturing workers. So that should, you’d think, inform our pro-worker policy. Because, again, if you’re slapping tariffs like we do on lumber… Let’s use construction as a really good example.

Scott Lincicome: So eight million workers in construction and extraction, eight million workers in manufacturing is about the same. So if you slap tariffs on construction materials, like we do, we have tariffs on all sorts of construction materials. Now, the ideas are, we’re gonna boost blue collar workers. Well, you might help a couple of manufacturing industries that make those construction materials, that make nails, for example, we have tariffs on nails, but you’re gonna harm workers in construction, the workers that use those exact products. Because you’re of course gonna raise the price of those products, you’re gonna make it costlier for businesses to operate in construction, but in all sorts of other things. And of course, you’re also gonna hurt home buyers, you’re gonna increase construction cost, you’re gonna increase home prices and the rest. You’re gonna end up harming far more workers in the same exact demographics that you’re targeting, than you’re gonna end up helping. ‘Cause I think that’s a really big problem in a lot of this pro-worker stuff we talk about. But I think there are plenty of other examples outside of manufacturing.

Scott Lincicome: You mentioned, I think education is another really good example. There remains an obsession in a lot of Washington, that the only way to have a good job these days is to go to college. You go do a K-12 education, which has really one goal, and that’s to prepare you to go to college, and we can get into whether that’s actually is preparing people for college, but that aside, the goal is… Traditional goal is K-12 education gets you a GPA, you take your SATs, or whatever you end up… You go to college, you get a four-year degree, then maybe you go to law school or whatever, and finally after taking out a bunch of student loans, of course, you get a job. The reality though is that there are plenty of non-college pathways to a really good life and a good job. You look at, for example, one of my favorite headlines recently was that Walmart announced that store managers at Walmart were gonna make upto $200,000 a year. Walmart also said it was gonna pay first year truck drivers $110,000, and is gonna pay for their training and licensing for those jobs, and of course, they’re still struggling to find enough workers to do that.

Scott Lincicome: We see that store managers at Whole Foods can make 100 grand. There are plenty of other hybrid type systems that have some additional post-high school education, but not through a traditional four-year degree. Google, for example, now offers certificates that are the equivalent… They treat, Google treats as equivalent of having a four-year degree in Computer Science. You have online education has become a bigger thing during the pandemic as well, and then you also I think… So that’s, I think, again, a major misconception of how we are preparing the American worker for the future of tomorrow. Now, certainly going to college is the right step for a lot of people, but I think the cultural, political pressure to push everybody through college, we’re gonna subsidize, heavily subsidize student loans, now we’re gonna apparently forgive a bunch of them, we’re gonna saddle people with a lot of debt, and then everybody is gonna end up working in some sort of profession that requires a college degree, is really a problem. Because you end up with, well, what we have right now, and that’s a lot of people with a lot of debt, and then with an education that they’re not really even using, if they even completed those degrees in the first place.

Scott Lincicome: So that actually ends up harming a lot of workers. Not to mention, of course, taxpayers and the rest, when you end up forgiving these loans or subsidizing them. It also, these subsidies can also inflate tuition costs. Everybody worries about the increasing price of tuition. Well, the New York Federal Reserve a couple of years ago did a study finding that it’s, for every dollar increase in federal tuition subsidies, you get about a 60 cent increase in tuition, and this of course, makes perfect sense. When you restrict the supply of higher education as we do through accreditation and the rest, and then you subsidize demand, well look, that’s pretty easy, you’re gonna get higher prices. So that, I think is another really big problem with where our workforce policy really is right now. It’s this kind of one-size-fits-all or maybe two-sizes-fits-all, you have this blue collar track of manufacturing worker, and then this white collar track of college-educated worker ignoring that there is this gray collar area. There’s this giant middle ground that has nothing to do with those traditional pathways that policy is promoting, and it’s kind of, I think, siloing people into the wrong approach. And then, I think… Sorry, go ahead.

Chelsea Follet: So a big theme then seems to be that the economy is such an ever-changing thing, that government policy literally cannot keep up, and it tends to be based on heavy misconceptions.

Scott Lincicome: For sure.

Chelsea Follet: And you write that workers are in more fluid labor markets, like that in the United States, versus labor markets with more regulations, more so-called worker protections in places like many countries in Europe, they actually get a number of benefits from that because the market’s better able to keep up with that changing reality. What are some of the benefits for workers in more fluid markets? 

Scott Lincicome: And this, this I think gets to another fundamental misunderstanding of a lot of pro-worker policy. If again, you listen to Joe Biden, and if you listen to a lot of congressional Republicans these days, so on the more popular side of things, you think that the American worker is not only struggling with paying bills and wages, but also really needs protection. Needs protection from foreign competition, needs protection from greedy corporations that have say monopsony power in the workplace, and needs government help. So the workers really can’t help themselves as much as they need the government to basically protect them from cradle to grave. That in fact, that was actually a political headline earlier this year talking about Biden’s proposals for the American worker are support from cradle to grave. Now, the reality, as you know, is that too much protection from the government can actually be a very bad thing. Leaving… I mean, we can start, of course, with a lot of protectionism just simply raises prices. When you restrict imports of say nails, you increase nail prices, when you restrict imports, we have… Of food and clothing and the rest, you make workers have to pay more for those things. Now, that of course makes us poorer in real terms than we would be if we had easy access to lower-cost necessities.

Scott Lincicome: Energy is another major area where we jack up prices of basic necessities for workers. I mentioned child care, that’s another area where regulations increase those prices. So protection raises a lot of prices for American workers, but it also harms American workers on the worker side of things, in terms of wages and job quality. Because what happens is in places like Europe that have these very, what we call active labor market policies, they essentially restrict firing, hiring and firing, and they really limit the ability of workers to change jobs and kind of keep workers in the same place. Job security is the goal. Well, what studies show, there was a great study out last year by an economist who simply tracked wage growth and productivity growth for workers in the United States, where we have a looser, more fluid labor market with fewer protections. This is a very scary thing, I guess, according to the political class in Washington, a problem to be solved, and he, what the economist did is compared that to the more protected and less fluid labor markets in Europe, in the rest of the OECD industrialized economies.

Scott Lincicome: And what he found was that the American workers in this more fluid, less protected market, actually ended up with substantially higher lifetime earnings and wage growth than their European counterparts. So essentially, the price we all pay for having less protection is we actually end up wealthier, we actually end up with higher wages. Now, how can that be, right? Well, this goes back to what I was talking about, about labor dynamism, about the ability to change jobs. If you stay in the same job for your entire life, and especially if your employer knows you’re staying in that job for your entire life, now that might sound good to certain policymakers, “Oh, you… ” 50 years of stable employment. But the fact is that changing jobs has a lot of benefits. It… First of all, job moves tend to be linked to higher wages. When you stay in your current job, you might get a 2% raise per year, when you move to a different job, you end up with a 10% raise or whatever, and that bumps you up to that next level. But it’s also is just simply about productivity, workers sort better. They move, they tend to move to better jobs, jobs to which they’re better suited to do.

Scott Lincicome: If you start, for example, working for a certain company, making a certain product or delivering a certain service, and you realize a few years in, “You know what? This probably isn’t my thing,” and you move to a totally different profession or you just move to a different company that has a better match, or you end up being more productive, and productivity tends to drive lifetime earnings and wage growth, and that of course is good for the US economy as well. So we want this type of labor market fluidity that is only, again, associated with United States-style labor markets. And unfortunately, again, a lot of pro-worker policy today really wants to shut that down, wants to create a far more sclerotic labor market in which it’s very difficult to hire or fire people, wages are far more regulated, the types of jobs that we allow are far more restricted, so we’re not going to allow independent workers, freelancers, only in very limited conditions. California has already done this with AB5, which really dramatically limits not just gig work, but say owner operator truckers who own their own rig and working, and a lot of freelance work as well, so say photographers and that kind of thing.

Scott Lincicome: So to the extent that our labor regulation restricts that type of dynamism, and that type of fluidity, and creates a European style system, it has long-term harms for the very workers that we’re trying to help. Now, I’ll conclude with saying that this is all very nice, and it’s very nice and academic, but how does this actually translate to the real world? Well, it turns out we’re actually conducting a real-time experiment with this theory or this proposal from this economic study, because Europe, again, we’ve gone through a major labor market shock in the pandemic that was highly disruptive to traditional labor markets in all sorts of ways. I mentioned remote work earlier, we’ve seen a dramatic increase in remote work, but also just in the types of industries that were open and closed. All of a sudden, restaurants didn’t have any need for workers, and we saw an increase in e-commerce and delivery, so massive disruptions in the global economy, in national economies. And so then we say, “Well, let’s take the more dynamic US labor market and compare it to the more dynamic European market.”

Scott Lincicome: Well, The Wall Street Journal did just this a few months ago, and they found that underemployment was far more pervasive in Europe that… So this is, basically, people who are working, but not working as much as they want. So they found that that was… That unemployment, so underemployment and unemployment were higher in Europe than in the United States, wages were more depressed in Europe than they were in the United States, and that the US labor market had basically fully recovered by the Spring, whereas the European labor markets… And this is of course, before the Russia-Ukraine stuff, which is a different animal. The US labor market had totally recovered while Europe’s labor market remained severely depressed, and again, before Russia-Ukraine scuttled all of that experiment. So we have some real-world evidence that labor protections sound great, they sound very much like they’re pro-worker, at the end of the day, they can actually make us worse off.

Chelsea Follet: Right. And I know they have issues with higher youth unemployment in much of Europe as well. But to move to some of the details of the chapters in the book, we would be remiss if we didn’t discuss the rise of remote work that has been a huge change, obviously, for the American worker, and you wrote the chapter on remote work in this book. How does that affect things? 

Scott Lincicome: Well, this is personal for me, because I’ve been a remote worker since about 2010. So early on, I was an OG remote worker and have experienced first-hand the benefits of remote work, but also US government, state and federal policies that restrict remote work. And then I’ve also had the joy of watching the rest of the world come to my style of work, at least large chunks of it. So let’s start with what’s happened. Pandemic, obviously, created a dramatic need for people to not be leaving their houses, not be going into offices, particularly early on, not be sitting on trains with each other and the rest. So this led to a dramatic spike in remote work, which was greatly assisted, of course, by technologies. It was something… Megan McArdle at The Washington Post had this awesome article about a year ago about how, yes, the pandemic was bad, but just imagine if it had happened 20 years ago in terms of technology for things like remote work. I’m talking to you right now via a remote, basically a remote work setup, and that technology didn’t really exist. Heck, when I started in 2010, it was a dinosaur-level technology in comparison to what we have today.

Scott Lincicome: So that allowed a lot of remote workers, and not just in lawyering or white collar knowledge work, even in a lot of blue-collar fields, more workers were able to engage in remote work. Now, that was expected during the early days of the pandemic, but what we’ve seen is that it’s actually persistent for a large chunk of the US workforce. Today, even as more places are re-opening, even as you read the stories, bosses are calling people back into the office, as of late Summer 2022, you still had about 30%, give or take, of all work hours being done remotely. About 30% of days, in other words, were being… So about two days a week, people were working remotely. We still have large chunks of the workforce that were full-time remote. And that’s up from, so that 30% number, figure I gave you, that’s up from about 5% before the pandemic. Now, to give you an idea of how many workers that is, ’cause, what’s 5%? What’s 30%? We’re talking about tens of millions of Americans who are suddenly not going into the office, and might be moving long distances to… Away from their offices since they don’t have to go in as much.

Scott Lincicome: Now, this has all sorts of economic implications. We’ve seen the housing market has changed pretty significantly. No, New York City isn’t dying, but commercial space in New York is radically different than it was before the pandemic. Different cities known for quality of life like, for example, where I live here in Raleigh, North Carolina, saw a dramatic influx in people who used to live in New York City who now had the freedom to live elsewhere, and were moving there. And that’s gonna have implications for the local economy, for the housing market, and all that. Very cool, interesting stuff. It’s actually also gonna have implications for different types of workers. So, we’ve seen, for example, that remote work has been a boon for disabled workers because now there’s no commute involved, a lot more can be done from a desk, and we’ve seen it, of course, it’s a boon for parents, working parents. I can speak from experience here. When I worked remotely, I still do, I’m able to put my daughter to bed every night, I can do a lot more of that type of family activity. Now, I will say you need a lock on your office door if you’re gonna do that, but as long as you have some space, it’s a pretty awesome thing for parents as well.

Scott Lincicome: So, remote work has a lot of benefits. Certainly, it’s not for everybody, but we’ve seen that the early data also showed that workers are more productive when they work remotely. The productivity goes up by 5-10%, and that’s, again, contrary to the conventional wisdom. Conventional wisdom is that we would all sit home in our pajamas, we wouldn’t do much work, we’d watch Netflix all day, and the whole economy would collapse. That really hasn’t been the case. That workers like this, they want this, they’re willing to take a little bit of lower wages so they can have this flexibility and this freedom from remote work. So that’s, for the most part, remote work has been a really good thing, but, and here’s where the policy recommendations come in, the fact is that US policy is years if not decades behind where it needs to be when it comes to remote work. You start with somewhat easy things, you think, like taxes. So, for example, some states tax workers based on their physical location. So, since I’m in North Carolina, I pay North Carolina taxes. Some other states, however, tax based on where your company headquarters are.

Scott Lincicome: So, I instead… Since I work for Cato in Washington, I would have to pay Washington DC taxes. So, this creates a ton of confusion for workers. It potentially subjects workers and businesses to penalties, and it just, again, really hasn’t kept up. There are also tons of confusion right now about benefits and about… Is the laptop that a worker… A remote worker is given to do work remotely, is that a fringe benefit? How do we tax that? What about commuting? Tax law says that business travel is deductible, but your commute isn’t. Well, if I travel four hours up I-95 to Cato, is that a commute or is it a business travel expense? So all that kind of confusion and the rest can discourage remote work, because to the extent there’s uncertainty, the extent that workers might end up on the hook for additional taxes, to the extent that employers might have penalties or have to go through some kind of bizarre tax issues, that all confounds remote work. And there are plenty of other issues out there. For example, occupational licensing restrictions come into play. So I was, for a while, a practicing attorney. Now, even though I was doing international trade law for a Washington DC-based law firm, I had to join the North Carolina bar because I was practicing law in North Carolina.

Scott Lincicome: Now, I wasn’t doing any North Carolina law. I wasn’t, I didn’t throw out a shingle on my house saying, “Please come in, I’m gonna give you legal services.” Most of my clients were overseas, didn’t matter, I had to be a practicing member of the North Carolina bar. So, occupational licensing restrictions can again inhibit remote work and inhibit worker mobility, and again, the kind of natural beneficial term. So what we do in the remote work chapter is we say, “Look, remote work tends to be a pretty good thing, a lot of workers really value this, this seems to be the new normal, but state and federal policy really haven’t kept up.” And then we offer reforms about how to improve the law to provide consistency and clarity and to allow workers to work where they wanna work and do what they wanna do. And again, this isn’t for everybody. I know some people love going into the office, I think those people are psychotic, but they like to go into the office and that’s still perfectly fine.

Scott Lincicome: But for the big chunk of the workforce, for the millions of American workers that have found they like remote work and for the employers that think remote work is a good thing for them, they have a bigger work pool, they see better productivity or a happier workforce, we should have policy that it doesn’t discriminate against remote work as it currently does. We shouldn’t be subsidizing remote work. That’s, of course, the wrong approach too. Policy should just simply be neutral as between the two, and I think that’s kind of a big theme of this book, is we shouldn’t try to predict what the future of work is either. Well, I say, look, a lot of worker policies are outdated, they’re all very stereotypical. I’m not saying, “Oh, this is the new worker,” even though the title of the book is New Worker. Instead, what we need is policy that maximizes flexibility and adaptation, is neutral across platforms and let’s workers and employers sort it out themselves, because quite frankly, markets are really good at that sorting process over time and we should just let them work a little better.

Chelsea Follet: Absolutely, and because this is the Human Progress Podcast and we usually try to end on a positive note, could you just sum up, although you’ve covered many different aspects of this, why you believe market-based solutions can help empower the American worker and create a more prosperous future.

Scott Lincicome: Sure. So I think the place to start with that answer is simply to look at where markets aren’t functioning right now when it comes to the American workforce. And time and time again, what you see is that the things that workers are worried about, the things that they care about are not a result of a market failure. They’re not that free markets have failed and we need more government. And what turns out when you dig into this is that time and time again, the problem is that we haven’t allowed markets to work, that we have just simply bogged down the either labor dynamism, like I mentioned, with all sorts of rules and regulations and restrictions, or we’ve increased the cost of basic necessities, and so the solution there, and there’s plenty of research showing that you can actually improve these issues by embracing market-based reforms. For example, in child care, there are simple things that can be done to allow for a greater supply of childcare services, to lower prices in terms of child care.

Scott Lincicome: So I think that the first point is that we really need to acknowledge that the vast majority of those market failures out there aren’t market failures at all, they’re government failures, and that embracing market-based solutions can provide cheaper, better delivery of those essential goods and services, can provide, again, allow workers to achieve the lives that they really want, not the lives that serve some policymaker somewhere in Washington thinks they have to have or should have. But the second reason I think for optimism is that in certain areas, and we note this throughout the book, particularly at the state level, we’re seeing market-based experimentation with reforms that are proven to be wildly successful in the near… At least in the short term. A lot of these things are just recently embraced. So you take… I think criminal justice is a great example of this. Research shows that workers with a criminal record, even just an arrest that was later acquitted, so you didn’t even go to jail, you didn’t even get convicted, well, those arrest records can dramatically inhibit your ability to get a job, to change jobs, because a criminal record is a tough thing, you have to carry around, you have to tell your employers about an arrest.

Scott Lincicome: So some states have embraced expungement, which simply automatically wipes that record away if you’ve been in good standing for a few years. Well, we see again a robust response in the workforce in terms of less unemployment, higher wages for a lot of workers. We’ve seen reforms in occupational licensing in places like Arizona that have started to say, “You know what, come on in. If you’ve been licensed anywhere in the country for law, medicine, whatever, you are welcome in Arizona. You just basically have to fill out a form, and we automatically grant you the ability to work.” We’ve seen really positive response there. And heck, during the pandemic, we saw governments at the state level waiving a lot of these same restrictions because they needed a supply of workers, they needed to have a better functioning system in times of crisis, and that again has worked out quite well for them and helping to make the pandemic a little less terrible than it otherwise would have been. So I think time and time again, we’re seeing that there are good solutions out there, and that the solutions when they’ve been experimented with at the state level, or even some things at the federal level, like tariff reform, for example, these things tend to be effective.

Scott Lincicome: And so I think the message here is not that we need no government policy or whatever, but I think the starting point is to make those market-based reforms, then let’s see where the remaining problems are and then act to fix them, because right now, everybody just wants to spend more money and regulate more, and so it’s just adding another layer of government problems on top of the government-related problems we already have, which is just gonna make things worse. So workers turned out to be, during the pandemic, incredibly resilient, incredibly dynamic, starting their own business. We saw a massive spike in entrepreneurship during the pandemic as people lost their jobs and had to go make ends meet elsewhere. And so the workers tend to be a lot smarter and more resilient than, I think, our political class makes them out to be. They tend to want the best for themselves and for their families, they wanna improve their lives themselves, and we just need to kinda get out of the way and let them do that, and then we can deal with any remaining challenges that might be there.

Chelsea Follet: Thank you so much for joining me, Scott. This has been a really fascinating and uplifting conversation. And again, that book is The New American Worker: Marketplace Solutions for Today’s Workforce, out this winter, I believe? 

Scott Lincicome: Yeah. So we’ll start rolling out chapters actually next month, and then the full book will be out in… The electronic version in December, and then hard copy about a month after that.

Chelsea Follet: Oh, very exciting. I look forward to reading it in full. Thank you again so much for joining me.

Scott Lincicome is a trade economist at the Cato Institute, where he writes on international and domestic law and economics.

Chelsea Follett is the managing editor of HumanProgress.org and a policy analyst in the Cato Institute’s Center for Global Liberty and Prosperity.

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