Bryan Caplan  

If You Don't Like It: Reply to Some Comments

PRINT
You Come to Resemble Your Cust... Is Labor Law More Oppressive f...
Thanks for many thoughtful comments on "If You Don't Like It."  A few that particularly grabbed me:

Tom P:

I think we can give a friendlier interpretation to Roehling's terms.

"Bargaining power": you spend many years working for a firm, developing human capital that is useful only at that firm. The firm effectively has monopoly power over you.

True, but:

1. Just as workers make firm-specific investments, firms make worker-specific investments. (See also Peter H's comments).  Firms gives workers training, access to crucial information, personal contacts (including clients they can steal), etc.  So there's "bargaining power" or "monopoly power" in both directions.

2. More importantly, the same clearly holds for romantic relationships!  People make emotional, financial, and social investments in their relationships all the time.  Once you make such an investment, your romantic partner has room to squeeze you, if he or she is so inclined.  But unless you marry, "If you don't like it, break up," remains your recourse of last resort.

Some other readers argue, like John David Galt, argue:

There's a good reason for what you call the "double standard."

To put it simply, a job is a necessity; that is how employers get away with butting into your personal life habits that are none of their business.

Ybell similarly writes:

For the very poor, being fired leads to a very sharp decrease in the quality of life, one that harms you and your family. Your "exit voice" in a market with many substitutes is very weak.

For the very ugly (only in the sense of having the collection of socially undesirable traits), however, the same does not apply. Yes, being alone is terrible, but it is not as terrible as being hungry.
Two points:

1. As I suggested in my original post, many romantic relationships include financial support.  A break-up can and often does leave the poorer party in dire straits.

2. The causal chain from unemployment to hunger and homelessness is far weaker than you suggest.  Workers can save.  Those who fail to do so can usually appeal to the charity of family and friends.  Of course, many consider asking for charity to be humiliating.  But now we're comparing heartache to humiliation, not heartache to hunger.



COMMENTS (18 to date)
John Fast writes:
1. As I suggested in my original post, many romantic relationships include financial support. A break-up can and often does leave the poorer party in dire straits.
Yes, and this is why we have alimony and "palimony." It's a lot easier for a 50 year old man to find a new wife or girlfriend than it is for a 50 year old woman to do so. (Read George Gilder's Sexual Suicide.)
2. The causal chain from unemployment to hunger and homelessness is far weaker than you suggest. Workers can save. Those who fail to do so can usually appeal to the charity of family and friends. Of course, many consider asking for charity to be humiliating. But now we're comparing heartache to humiliation, not heartache to hunger.
True, and entrepeneurs generally have more savings than proletarians have; and if a business goes broke, the owners are protected by limited liability. More to the point, even a workers who has saved a year or more of expenses is in a worse bargaining position than his employer, because the employer will lose only a small percentage of his profit if the worker quits, while the employee will lose most or all of his income until he finds a new job.

As I said, this is why, if we have laws to protect workers from being fired without cause, we ought to have laws to protect employers from strikes without good cause.

Henry writes:

"Yes, being alone is terrible, but it is not as terrible as being hungry."

Maybe so, but currently there's a lot of government support for poor people and virtually (completely?) zero for lonely people. This forms part of a larger complaint I have about debate about the poor - we fail to focus on the marginal dollar. Sure, it's worse to be starving than whatever else the government could be supporting, but the current welfare system will stop you from starving, so it becomes a question of whether it's better to be living on a low income versus being alone.

Tracy W writes:

John Fast: True, and entrepeneurs generally have more savings than proletarians have; and if a business goes broke, the owners are protected by limited liability.

Actually, the main way of financing a business is by the entrepreneur's savings, or their family and friends' savings, or by debt. And due to limited liability, it's typically by personally secured debt. Limited liability offers protection against being sued, but for small companies that's about it.

More to the point, even a workers who has saved a year or more of expenses is in a worse bargaining position than his employer, because the employer will lose only a small percentage of his profit if the worker quits, while the employee will lose most or all of his income until he finds a new job.

The analysis here depends on how tough it is to find a new job. My brother the chef can walk into a new job at pretty much a moment's notice. I can't see that his employer is in a better bargaining position than him. So we can improve the worker's bargaining power by making it easier for them to find a new job. This has the added advantage of improving the bargaining power of people who aren't yet workers, but want to be.

This also has the nice benefit that it provides the worker with more options if they're bored with their job, or want to move for family reasons, or other personal reasons.

Meanwhile, adding personal protection against being fired makes the marginal job less likely to be offered, making the would-be worker worse off, along with the workers who want to move jobs for some non-protected reason.

jva writes:

Sorry, but the employer does have monopoly power over me. Says so right in my contract and every contract I've seen in my industry. "For 5 years after termination Employee is forbidden to use any specific knowledge gained as part of employment. In case of noncompliance Employee will pay back to Employer last 12 months' salary." I've seen this clause being enforced.

Saturos writes:

[Comment removed for policy violations. Email the webmaster@econlib.org to request restoring your comment privileges. A valid email address is required to post comments on EconLog and EconTalk.--Econlib Ed.]

Zippy writes:

First, I'd much rather be in dire financial straits for, say, a year than have my wife divorce me. I'm not at all sure that being a bit hungry is worse than starving.

Second, looking at it from the perspective of the individual employee may give a skewed perspective. Sure, the individual may have less "bargaining power" than the employer. (Though this is certainly not always the case.) But employers compete for workers, and a company that mistreats its employees will have a harder time attracting and retaining a good workforce.

Which is why our friends on the left should favor pro-growth policies. Full employment is a workers' best friend.

Joe Kristan writes:

I've been an employee and an employer. I've been fired, I've quit, and I've fired people (not fun). From my experience an argument against at-will employment is almost self-evidently ludicrous.

I like your analogy between romance and employment. One feature they have in common is that attached people are more desirable. A long-ago work acquaintance who was sort of a rake assured me that he always found it easier to attract women when he had a steady girlfriend. I think the same is true in the employment market -- an employed person is more attractive to a potential employer. I assume this a signaling thing. I don't think either market would work very well without a robust right of exit.

Thomas Boyle writes:
Yes, and this is why we have alimony and "palimony." It's a lot easier for a 50 year old man to find a new wife or girlfriend than it is for a 50 year old woman to do so.

Yes, and that's why so many men are simply refusing to get married (or, where palimony applies, get into an overly-long-term relationship). It's a lot easier for a 50 year old woman to find a new man, than it is for a 50 year old man to replace decades' worth of savings.

This, rather than "choice", is why we see so many articles these days about how so many women are "choosing to remain single". It's also behind those (more honest) articles that wonder why so many women who would like to get married can't find "Mr. Right." Hint: it only takes a few Mr. Rights who decide to protect their assets and freedom (alimony deprives a man of the freedom to stop working or move to a lower-paid career as he gets older), to have a big impact on the marriage market.

Barriers to exit are also barriers to entry.

Tom West writes:

Well, given that in many places the state will consider you married for purposes of division of assets, etc. after 1 or 2 years cohabitation, then yes, the analogy holds. If you don't want any responsibility for a person you've hired/had a relationship with, then don't hire/have a relationship.

Same applies to parenthood.

It can go overboard, of course, as it may have in Europe, but society generally recognizes it's in its best interest to protect the powerless from the powerful (where practical), even in romantic relationships...

(Of course, any protection will be abused in some cases, that's the nature of reality.)

IVV writes:

Definitely this is a side effect of one's personal capabilities.

A high-quality employee can come out the winner of at-will employment by being able to jump for a better opportunity whenever desired. Similarly, a high-quality romantic partner can also protect his/her interests quite handily and get married or not as desired.

If there's anything that prevents the top quality from exercising their power against the lesser endowed, it's the laws against polygamy.

PrometheeFeu writes:

@jva:

You signed that contract? I don't know about you, but when switching jobs, the first thing I look for in my new contract is such a clause. If it's there, my pen does not come anywhere close to the paper. What industry are you in? For what it's worth, many companies are willing to talk about contract clauses even if they initially won't admit to it. I've met a number of people who were told by their employer that such a clause was standard, but the clause was removed when they made it a deal breaker.

Emily writes:

@Thomas: The college-educated women who are writing those articles are non-standard for their demographic group: their peers are largely married. The big drops in terms of who's getting married aren't happening in groups where the "men are forgoing marriage to protect their assets" hypothesis makes sense. The big drops are happening in groups where men have very limited assets, and where a more likely explanation is that women can now, by working and with state support, live and raise children without income from a male spouse.

Tracy W writes:

Tom West:

Yes, that's the problem with these laws. They at the margin discourage employers from hiring people, as you say "don't want any responsibility, then don't hire them". It means that society winds up protecting those with jobs at the expense of those without jobs who want them. Society winds up harming the even-more powerless. I can't think of any moral reason why that's a good idea.

Andrew writes:

If TomP's stance was correct, we would see employers seeking out people with little to no skills so they can be molded into what the employer wants. We would also see people with in demand skills unable to move from one employer to another. Employers would also seek to hire the longest term unemployed before they would take someone currently working or recently let go.

This would also link to your education signaling model. If incompetence is what employers look for, why do they seek out those with education?

Thomas Boyle writes:

Emily,

Certainly, there's a lot of mud in the water here. The big drops are, as you point out, in demographics where the men don't have assets to protect. Of course, family law also means that if those men have children, as they often do, when you consider other benefit "taxes" they typically face very high effective tax rates - so they never will have assets. Or legal jobs. I've encountered a few who live off their children's mothers, in exchange for being a man the women (and the children) can simply have in their lives, and they were well aware of what would happen to them under family law if they should ever prove to be employable.

The second thing you see is that men who do have prospects marry "across" much more than in the past. In other words, they minimize their marriage downside by putting a lot more emphasis on their prospective wives' ability to earn their own living.

The third is that, as you point out, it IS college-educated women who are writing those articles. These are accomplished women with a lot to offer, astonished at their inability to find a husband. Yes, most of their peers are married, but there's a sizeable population of unhappily single women. It takes only a few percent of men saying "not on your life" before you start seeing a real bargaining shift in the marriage market. Laws against polygamy work both ways: a woman can't decide to be the 2nd wife of a more "giving" man; she has to compete with other women to be the wife of one of the (slightly smaller) number of men who are willing to marry at all. It's musical chairs, and the "walk away" option isn't another man (even as his second wife), it's being single. Part of what women are "giving up" to win the slot, is the ability to retire at 22. If it weren't for alimony, it would be a lot easier to marry and retire (from the workforce, to raise children) at 22, as used to be the norm in the middle class.

rpl writes:
True, and entrepeneurs generally have more savings than proletarians have; and if a business goes broke, the owners are protected by limited liability.
Is it just me, or has "limited liability" become the go-to excuse for curtailing the property rights of business owners? That line of argument has never seemed like much of a winner to me, but in this case it makes absolutely no sense at all, since employees are no more responsible for a business' debts than its limited-liability owners are. In fact, they are in a wholly better situation than the owners, inasmuch as they don't have to risk any of their own money by investing it in the business. If the business fails they walk away with the money they earned up to that point and no investment loss; the owner, on the other hand, will probably be wiped out.
guthrie writes:

My feeling is that relationships, whether personal or work-related, are 'sticky'. As much as there might be 'firing adverse' managers, there are also 'quitting adverse' workers. Breakups are hard, and they're hard for reasons as widely varying as the individuals themselves. We all have known people (or have ourselves been) in bad relationships, and bad jobs. What keeps them/us in them? Why do we persist, even while objective reasons to quit mount? Fear, pride, habit, etc. could all be possible reasons, so it's not something that can be pinned down with much certainty.

However if a bad boss or romantic partner can gather an intuitive understanding of a 'quitting adverse' trait (if you will), then it might be possible to exploit this hunch, while never having to explicitly state they are doing so.

This by no means implies an onus to regulate either, however.

Vinnie writes:

Bryan,

Your point about the bidirectional monopolistic relationship that often exists between employer and employee is an issue that is near and dear to my heart, as this situation seems to be both my present and my destiny. The notion seems paradoxical on its face, but as an economist, maybe you could offer some examples of how such relationships can work to the mutual benefit of each party (if they can at all) and discuss whether "fair" compensation is attainable when both parties have tremendous leverage over one another (which, it seems to me, implies that neither party has leverage at all).

Comments for this entry have been closed
Return to top