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Economists Sound Off on Elizabeth Warren’s Plan to Reform Labor Laws

October 8, 2019, 2:09 PM UTC

Elizabeth Warren (D-Mass.) has released a comprehensive plan to reform America’s labor laws. While the Democratic presidential hopeful’s campaign says her proposal will empower American workers and raise wages, it has economists from across the political spectrum sounding off.

“What really struck me the most is the framing of it around the issue of power—the fact that workers collective power is at a historic low,” said Sharon Block, executive director of the Labor and Worklife Program at Harvard Law School.

Warren’s proposal, which calls to strengthen labor unions and protect workers when they take to the picket line, comes as the United Auto Workers strike enters its fourth week. Under the plan, a worker cannot be permanently replaced by a company in the event of a strike. 

According to figures from U.S. Bureau of Labor Statistics provided by the campaign, there were 20 major work stoppages in the United States last year involving nearly 485,000 workers. About 90% of the work stoppages came from the healthcare, social assistance, and education industries. One of the largest was in Arizona between the state’s legislature and the Arizona Education Association. The stoppage involved 81,000 teachers and staff.

Arizona is one of 28 states with ‘Right-To-Work’ laws—which prohibit labor unions and employers from crafting contracts that would only employ unionized workers—on the books. Warren wants to prohibit such laws.

Conservatives see banning prohibiting right to work as problematic. 

“I think individuals have a right to seek work at whatever rate they want and should not be forced to join a union,” said John Tamny, director of the Center for Economic Freedom at FreedomWorks and author of Future of Work. “I think if someone can figure out a way to get a job within a certain industry without joining a union that should be their right. I think individuals have infinite rights to seek work as they see fit.” 

Notably, Warren’s policy takes into account the growing prevalence of gig work in American economy.

“Warren has a proposal to change antitrust laws so that workers who are independent contractors like Uber and Lyft drivers but who don’t have power when offering their services alone can come together without violating antitrust law,” said Block. “They can collectively bargain and have some agency over their working conditions.”

Warren wants to ban non-compete clauses from employment contracts. As reported by Bloomberg in March, 30 million Americans have non-compete clauses in their contracts. The campaign says the banning such clauses from could help boost hourly wages by 2%-3%, citing a ban in Oregon from 2008 which fruited such results.  

Tamny agrees that non-competes hurt growth but disagrees on the solution.

“While I think non-compete clauses are generally abhorrent, I think markets should work them out. I just don’t think you need a law here” says Tamny. 

The Massachusetts senator also is calling for reforms on how employment contracts are constructed calling for a ban on ‘no poach agreements.’

“There have been cases around fast food companies that enforce these agreements that limit workers from moving from one franchise to another,” said Block. “I think that is just the kind of constraint on worker mobility that gives workers very little power in this economy. Taking away even their ability to take their labor and move it somewhere else where people will pay them more is problematic.”

Earlier this year, alongside fellow Democratic Presidential hopeful Cory Booker (D-N.J.), Warren introduced the End Employer Collusion Act, which prohibits agreements between employers to restrict employment.

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