Tying Workers to Their Employers

The other day, a coworker and I had a discussion — while we worked, of course — about the many ways the law seems intended to lash us to our employers, in turn providing them with a measure of protection from competition. If they go out on their own, carpenters in Rhode Island must register with the state, which requires an application and fee as well as proof of liability coverage. Also on the form is a requirement of proof of continuing education, although that requirement is currently waived pending somebody’s figuring out what carpenters could possibly need to know that they don’t learn on the job.
Then there’s the tax side. The self employed must pay income tax and self-employment tax, for which (as I understand) they are required to make quarterly estimated payments, all of which begins to make the hiring of an accountant an advisable option.
Then there’s hiring employees. With a single hire, the new business must adjust for thousands of dollars in insurance and various payments, which leads many small players in the construction industry to hire employees as subcontractors.
And then there’s health insurance, with which Congress looks likely to cinch employees a bit tighter:

Three powerful House committee chairmen have agreed to work together on legislation to overhaul the health care system, starting with the view that most employers should help finance coverage and that the government should offer a public health insurance plan as an alternative to private insurance. …
Many issues, including the question of how to pay for it, are unresolved. But the House chairmen said they had informally agreed to plow ahead on the assumptions that individuals would be required to carry insurance and that most employers would be required to help pay for it.

Of course, that required “healthcare assistance” will come right out of employees pay, yet it will create that much less incentive for employees to take educated risks to break out on their own, and providing it will create one more barrier to growth for the striving entrepreneur. All of which will increase employers’ power over their employees, while increasing the financial benefit to most employees not at all.
Furthermore, as regulations seek to provide workers protection, they create incentive for employers to behave in ways that would leverage loopholes. With Rhode Island’s unemployment insurance system, employers have reason to motivate employees to quit (or to trick them into doing so, as I have seen done).
Eventually, we can hope, Americans will figure out — and elect representatives who appreciate — that freedom and opportunity are the best protections against abuse, poverty, and healthcarelessness.

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Ken M
Ken M
14 years ago

Agreed. And ironically enough, such de-linkage from employers is accomplished much better by countries that we consider socialist!
Take Canada, for instance:
– Health care is single-payer in each province and funded via general tax revenues.
– Unemployment coverage is much more generous and is very encouraging of employee retraining and of helping in creation of small businesses after loss of employment.
– RRSP instead of our patchwork 401k/403b/IRA retirement accounts. This allows for contribution of 401k-like amounts (about $ 15,000 per year) but is NOT linked to employer. Also, amounts not contributed in a given year can be carried forward indefinitely (so that you can contribute and deduct more in future years) – instead of our “deduct it now or lose it” system.
Result: Workers in Canada are much less tightly bound to their employers than in the US.

Justin Katz
14 years ago

But they’re more bound to the government. Must we be slaves to one to avoid being slaves to the other?

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