Ah, for a return to the good old days of the Great Recession … when the unemployment rate soared into double digits and everyone who still had a job was perfectly happy to keep it.
Not really, of course. The economic downturn that began in 2008 and remains a painful memory was hard on American workers from all walks of life. However, the return to relative prosperity and record lows in new unemployment claims has created a fresh set of problems for employers and employees alike.
The return to good times has also given policy-makers, state and federal, a whole new set of issues to debate — and quite possibly mishandle.
Read this commentary in the Milwaukee Journal Sentinel here.
One example is the minimum wage, which some states and cities are pressing to raise to $15 per hour for all workers or certain classes, such as fast-food workers. Seattle, New York, Los Angeles and San Francisco have all joined the bandwagon one way or the other — and the reaction among most employers has been negative.
The political split on raising the minimum wage is basically partisan, with Republicans arguing the market should set wages and Democrats pushing for a higher government-mandated floor.
Another issue is the prevailing wage, a Depression-era law that was changed in Wisconsin by the latest state budget.
The old law required all public construction projects to pay workers a wage calculated by the state to reflect comparable, or “prevailing,” wages for similar private projects in the region. Under the new law, projects funded by municipalities, school districts, technical colleges and public utilities would be exempt from paying a prevailing wage, although it would still apply to larger state or federally funded projects.
Republicans say the change will save taxpayers millions of dollars every year; Democrats, unions and some contractors say it will hurt the middle class and make it harder to find good workers.
Even the advent of the “gig economy” has become a subject for political debate. The gig economy is a phrase that describes the movement away from traditional jobs to freelancing, contracting, temporary work or outsourcing. While some workers describe those options as liberating, and many employers like the efficiencies it can bring, others worry the gig economy will harm the middle class and suppress wages.
Again, Republicans tend to be more laissez faire in their approach to the gig economy and Democrats more interested in setting boundaries.
Another issue on the horizon in Wisconsin and nationally is the debate over “restrictive covenants,” or noncompete clauses, which limit a worker’s ability to move to a different job in the same industry and region for a prescribed length of time.
On this issue, it’s the Republicans who want stronger government controls and the Democrats who look more like Adam Smith.
A noncompete clause, or covenant not to compete, is usually premised on the possibility that upon a worker’s termination or resignation, that employee may begin working for a competitor or start a business, and gain competitive advantage by exploiting confidential or sensitive information.
Wisconsin law is already clear on the question of exploiting confidential information, trade secrets and other intellectual property or sensitive information. Such activities are illegal.
In addition, existing Wisconsin law related to noncompetes is well within the mainstream of law in other states. Wisconsin law already permits restrictive employment covenants as long as the terms are reasonable and necessary to protect certain business interests of the employer such as customer relations, trade secrets or confidential information.
An emerging problem is that some employers apply noncompetes too broadly, reaching well down into their salary ranks. In fact, that problem has sparked federal legislation to ensure noncompetes can’t be required for workers who earn $15 or less.
None of that has stopped the introduction of two Wisconsin bills (Senate Bill 69 and Assembly Bill 91) that would place new, unnecessary limits on a departing employee’s ability to work within a free market.
These bills would upset the balance in employee-employer relations. It would make movement of talent more difficult, not only within Wisconsin, but from markets outside Wisconsin to the state. Talented prospects from outside the state would be less likely to pursue and accept positions in Wisconsin if they suspected a noncompete clause would restrict their movement and earning power within Wisconsin.
National organizations such as the Ewing Marion Kauffman Foundation in Kansas City, Mo., believe noncompetes inhibit entrepreneurism by making it harder for workers to jump from a corporate job to a start-up or emerging company.
“It’s one more barrier entrepreneurs may counter,” said Kauffman researcher Jason Wiens.
While proponents believe it would enhance Wisconsin’s ability to attract companies from Illinois, which aggressively enforces noncompete laws, that’s hardly an economic justification. Marginal incentives for border-hopping don’t hold a candle to Wisconsin’s need to create a robust and free labor market. Let’s make sure Wisconsin can build the workforce it needs, not drive it away.