David R. Henderson  

How Many Jobs, Two?

Structural Unemployment... Thoughts on Academic Tenure...

I said in my previous blog that I would give an unspecified prize to the best proposal for getting rid of a government ban on some peaceful activity. The prize, I said, would likely be simple recognition. I was heartened by the creativity that people showed in responding and disheartened by the extent of government intrusion in our lives. I never made clear by what criterion or criteria I would judge the proposals. So let me give the top few and why:

Jacob Kearns: the minimum wage.
Yes, absolutely. I'll do a back-of-the-envelope calculation in a day or two. I predict that even cutting the minimum wage by 20 percent would create somewhere between 500,000 and one million jobs.

Troy Camplin: zoning laws that prevent people from having businesses in their homes.

JKB: Liquor sales prohibitions.

Harold Cockerill: Getting rid of the Fairfax County law that says that getting the second employee for a home office results in an additional fee to be paid to the county of $14,950.

Sisyphus: Get rid of laws against dancing in bars. This is such an attack on our freedom to use our bodies peacefully. I think, though, that it would be like pushing a rock uphill to get rid of this restriction, Sisyphus.

Thanks, all. One of the things I enjoy most about Vegas, by the way, even though I don't do it myself, is that people are allowed to walk the strip carrying a drink of alcohol. One reason I go to Vegas is that I can enjoy one of the trappings of a free society.

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CATEGORIES: Labor Market

COMMENTS (8 to date)
B.B. writes:

In New Orleans, you can walk down the street with a drink in your hand as long as the container is not glass. Fun, but does it increase jobs?

My suburban town prohibits liquor stores (but not private drinking). Does it reduce jobs? I don't think so; people just drive a few miles to the town next door. Jobs are reallocated but not prevented. I think a very large number of regulations just move jobs around without limiting them.

By contrast, minimum wage laws or pro-union laws may reduce the amount of labor demanded nationally.

Regulations can change the type of job without reducing the number of jobs. Carmel California has a lot of regulations to create s certain style of urban environment. Do they destroy jobs? Not obvious. Tourists come to Carmel because they want to experience that special type of environment. If Carmel deregulated and become just another tacky and trashy beach town, it might create one set of jobs but destroy another set. On balance, nothing is gained, but something unique would be gone.

I recommend you consult the Tiebot model of competition. We can have "diversity," including diversity in regulations, and still have jobs.

david writes:

There are laws against dancing in bars?

JKB writes:

Let's say a liquor store in established operation requires 10 people to staff it ensuring cashier and stocker shifts are covered, etc. Now the store in the B.B.'s next town over has 12 people on staff to cover the business that includes that driven over by B.B.'s town policies. A new liquor store in B.B.'s town could be expected to reach the steady state of 10 employees while the older store might lose enough business to drop to 10 employees for a net gain of 8 jobs.

This, of course, doesn't address future potential. In my city is a knife distributor. The guy started out in the '70s selling pocket knives out of his lunch box at a munitions factory. Now he has a large warehouse here with lots of employees and some operations in other countries as well as his own line of knives which someone manufactures. Fortunately, there was no law prohibiting the sale of pocket knives from lunch boxes, well at least back in the '70s.

I often get drawn into watching "Unwrapped" on the Food Network. I'm always amazed at how many companies started in the late 1930s given it was the Depression. Then it hit me, no jobs due to government interference but an easing of the New Deal micromanagement of business. So people needing income were finally able to start selling candy and snacks because the government had loosened its grip spawning several large businesses today.

An example of this is in the story of McKee Bakery, makers of Little Debbie snack cakes and a rather large employer, now.

The McKee story began during the height of the Great Depression when young entrepreneur O.D. McKee began selling 5 cent snack cakes from the back of his car. He was just out of college and newly married, and he was eager to get into the baking business. Soon after, he and his wife, Ruth, bought a small, failing bakery, using the family car as collateral. Money was so tight they had to put up a sheet near the back of the bakery for the family's living quarters.

Selling homemade cakes out of the back of a car and living in the back of a bakery? Which of these might incur a fine or jail time these days?

Another example is Wisconsin recently enacted the "Pickle Law" to permit the sale of homemade pickles, salsas and jams by unlicensed home canners at farmer's markets. Might we see a new employer or two sprout from this bit of free enterprise when someone's recipe catches on so as to surpass the $5000 annual sales limit?

Hyena writes:


Yep! It's extremely common in Los Angeles to have a ring of dance bans around areas with lots of night clubs. The reason is pretty obvious: to keep everything in the area from becoming a night club.

I think B.B. has a point that's often lost on people who don't live in wealthy, highly competitive areas: there's no way that residents can fight businesses on market terms. The most obvious evidence of that has been the steady growth of business models which use contracts and deed laws to permanently destroy options for property owners.

David R. Henderson writes:

Great story!

Doc Merlin writes:


'which use contracts and deed laws to permanently destroy options for property owners'

Both of these are government enforced measures?

Kevin H writes:

Actually it's illegal to drink on the street in Las Vegas but the law is very rarely enforced. I vacation in WDW and it's also a weird novelty for me to be able to walk around with a drink there.

Troy Camplin writes:

Yea, me. Made it into the top five! :-) If I could have a business in my own home without zoning laws, regulations, etc. that are involved, I would have had one by now -- and I probably wouldn't be looking for one. Which means that three other people could be working the three jobs I work at. Plus whoever I would have hired by now.

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