Written by John Goodman
Like most economists, I suffer occasional fits of exasperation when I read editorials by otherwise intelligent people who completely misunderstand even the most basic principles of economics. You would think a publication as erudite as The New York Times would insist that its op-ed writers actually know something about a subject if they are going to write about it. Alas, apparently that's asking too much.
The piece that offends at the moment was written by a woman who fondly recalls her own teenage babysitting experience in an unregulated market before arguing that no modern teen should be allowed to repeat it. Today's teens, she says, should be barred from the market unless they have a minimum wage, maximum working hours, payroll taxes and even mandatory health insurance!
My own view is diametrically opposite: What we need is a completely laissez-faire labor market - no taxes, no regulations, no nanny state bureaucrats to harass the nannies - for anyone under 21 years of age, provided the child's parents give their permission.
The biggest mistake noneconomists make in thinking about the labor market is the failure to realize that most people most of the time get paid what they're worth. That is, their wages reflect the value of what they produce. Piling on taxes, mandated benefits and other restrictions does not make anyone more productive. At the low end of the market, these burdens are likely to price people out of the market altogether. But if they do manage to find work, it will be at a much lower wage, as taxes and mandatory benefits substitute for cash compensation.
The second thing that noneconomists (and even many economists) fail to understand is that the wage paid to teenagers is the least important aspect of teen labor. What's far more important is a skill set that is not likely to be learned elsewhere: the importance of showing up for work, being on time, following instructions and interacting with coworkers and superiors in a civil manner.
(Have you ever wondered why many summer interns work for free? It's because the things they learn are more valuable than the forgone wages. Yet, as previously reported, New York is pulling out all the stops to end such violations of its labor law.)
An unskilled teenage girl is not worth very much as a babysitter. She's not a nurse. She doesn't have a teaching certificate. She really doesn't have many skills at all. So, nobody is going to pay very much for her babysitting services - probably not even the minimum wage. But pricing her out of the market and making it impossible for her to work has major social costs. For boys, I assume the costs are even greater than for the girls.
The only check I can see that we need on child labor is the parents. Will they always make good decisions? Of course not. But if we are going to allow parents to make unlicensed, unregulated decisions to have children in the first place - to decide what they eat, where they sleep, what TV programs they watch, what magazines they read - decisions about the labor market would seem to be a no-brainer.
I know what you're thinking. What if the parents (ghost of Charles Dickens) rent their kids out to a gang of pickpockets? What if they sell their kids into slavery? What if they sell them into prostitution?
The answer is simple. We take the kids from the home and put the parents in jail. I'm not for repealing the prohibition on child abuse. But the laws I'm talking about are not keeping the criminally minded from engaging in criminal activity. They are keeping good people from reaping the benefits of life-enhancing experiences.
Now before you disagree with my proposal, take a look at the two charts below and consider that:
Where are all these out-of-work teenagers going to learn the basic interpersonal skills that only an entry-level job can teach them?
John C. Goodman is president and CEO of the National Center for Policy Analysis. The Wall Street Journal and the National Journal, among other publications, have called him the "Father of Health Savings Accounts," and the Media Research Center credits him, along with former Sen. Phil Gramm and columnist Bill Kristol with playing the pivotal role in the defeat of the Clinton Administration's plan to overhaul the U.S. health care system. He is also the Kellye Wright Fellow in health care. The mission of the Wright Fellowship is to promote a more patient-centered, consumer-driven health care system.
Dr. Goodman's health policy blog is the only right-of-center health care blog on the Internet. It is the only place where pro-free enterprise, private sector solutions to health care problems are routinely examined and debated by top health policy experts throughout the country-conservative, moderate and liberal.