Coyote Blog

Perhaps the largest barrier to housing availability and affordability in places like California are permitting rules, land use restrictions, and construction codes that make it absurdly expensive, or even outright impossible, to construct new single or multi-family housing.  Part of this is a conspiracy of current homeowners to protect and increase the value of their property -- after all, new home construction inevitably reduces their property value (or future escalation) by adding competing inventory and/or by creating congestion and loss of property-value-enhancing open space.  Another part of this is "everything bagel liberalism" where every program has to achieve every Leftish goal -- eg we want new housing but it has to have solar and appliances with a minimum SEER and use recycled materials and have a certain number of units set aside for protected groups and create a conservation easement on part of the land, etc etc -- until even units that can get permitted are too expensive for all but the very wealthy.

But another barrier to housing availability and affordability that is less talked-about is the combination of rent control and tenant protections for existing housing stock.  Alex Tabarrok links to a great video from a Santa Monica homeowner on why he would never rent his home given the local regulations.  The key part is only a couple minutes and Tabarrok has done a fact check on most of the claims and found them to accurately represent local real estate law.  If you are not a video person (I am not, as information density is often too low, Tabarrok summarizes the key points).

The narrator's proposed rent is clearly at the high end of the market, but all his arguments apply at least as well to less expensive rentals.  As some of you know, in my former business life I operated campgrounds on public lands under a lease/concession arrangement with the public authority.  Several of the larger campgrounds had sections that were basically trailer parks occupied by long-term residents rather than overnight visitors  (It is a little known fact that many famous National Parks had these trailer villages -- we operated one of the last ones on NPS land at Lake Mohave).  Some of these trailers were basically weekend homes for people living somewhere else, but many provided affordable living spaces in poorer rural communities.

All these same tenant laws in the linked article applied in these trailer parks, and management was a nightmare in California.  Every tenant had a tenant-rights lawyer on speed dial and any effort to take the smallest action against them -- even enforcement of published rules -- often met with a legal rejoinder.  But here is the ironic part -- the situation has become so hard to manage that several California county governments, themselves author of these very rules, were requiring us to slowly close down the residential parts of their campgrounds because the rules made operation impossible.  And by slowly close down I mean sssslllllooooowwwllllyyyyyy -- closing down the trailer park is not considered proper cause for eviction, so the only way to clear it out is to, over a period of literally decades, wait for the tenants to die or move away.  Even on Federal land, where state and local rules technically don't have to apply and one has the full power of the Federal government, the NPS gave trailer park residents 10-years notice the residential leases were going to end and they still have been in court having to fight for the change every one of those years.

Many people in California let their house sit empty rather than face these hassles, and it is completely understandable.

There is one simple answer to why housing costs rise faster than inflation and incomes -- restricted supply mated with subsidized demand.   In many locales the supply of housing is restricted by the government (rent control, growth limits, expensive and time-consuming permitting, etc) and in every part of the country housing is subsidized by the government (mortgage loan guarantees, tax deductibility of mortgage interest, section 8 housing vouchers, etc).  The net result HAS to be rising rents and home prices.

I bring this up because we are in the insane situation that both the Left and Right are proposing to attack housing affordability by.... subsidizing demand and restricting supply.  Trump's idea is to extend government mortgage guarantees to 50-year mortgages.  All this is likely to do is increase the prices of houses to absorb the new lending limits.  We saw this in another sector -- college tuition -- where there is hugely subsidized demand and increased student loan limits led to almost one for one increases in tuition.

The Left -- from LA to NY -- is advocating for the same thing it always advocates for: rent control.  Rent control is a boon for current renters who have their rents locked in at unreasonably low rates but is a disaster for new entrants to the rental market because the construction of new rental properties drops significantly with rent control (actually the supply can go negative as current rentals are converted to owned units).  Rental rates are nominally kept in check but homelessness soars.  In addition, rent control has the under-appreciated harm of reducing labor mobility, as one cannot afford to move out of a rent-controlled unit to seek better employment.

Via Zero Hedge:

President Donald Trump suggested Monday on Truth Social that companies should stop filing quarterly earnings reports and instead move to a semiannual schedule. Trump’s call to replace quarterly earnings reports with semiannual filings revives a debate that also surfaced during his first term.

I presume Trump wants to be a deregulator and free marketeer here, but he is going at it exactly wrong.  The best free market approach to capital markets is to make sure investors have information to make quality decisions about their investments.   Then, you can clear out all of the other underbrush of regulation and quasi-parental oversight of markets and leave decisions to individual responsibility.  The first, lightest touch regulation is for corporate financial transparency.  Its not the first regulation you would eliminate, its the last one you hang on to.

In addition, six month waits for corporate numbers is way too long.  It can take as much as 60 days after the reporting period is over for results to be released, so that problems that start occurring in January would not come out of the closet until August or even September.  Enron finally blew up when the chickens finally came home to roost in its third quarter 10-Q.  Were they allowed to put this off for 3 more months the damage could only have been worse.

Of course, if the government changes this rule it does not mean that exchanges such as the NYSE and NASDAQ will change their rule to match.  It is still very possible that absent a federal 10-Q requirement the exchanges would still require such reporting.

Gato Malo had a piece the other day that fit in with some of my recent thinking on AI and changes in the workforce.  Most of hispost is about how the market values and pays for labor, and I mostly skimmed it because this way of thinking about value is as natural as breathing to me**.

But it was something he wrote near the end of the article that caught my attention (the lack of caps is gato's long-time style)

over the next 5 years, doctors, lawyers, engineers, accountants, and money managers are all going to come into crosshairs and see industries and payscales demolished. there will be a fearsome rear guard fight from guild systems (the bar, medical boards, CPA association etc) but it’s doomed to fail as they are just more unions trying to keep wages too high and prevent progress and increased access. taking humans out of medicine and breaking the cost spiral is the only possible way for the west to survive the already arriving wave of unfunded entitlement, and in the end, needs must will out and fiscal reality will trump guild control.

this is actually going to be amazing for consumers, a drop in price and expansion of availability in professional services that will rival the gains of the industrial revolution. once, making a pair of shoes consumed so many skilled resources as to cost months of wages. a good shirt was so valuable that people willed them to their children. now shirts are so cheap as to constitute less than an hour of most people’s labor. but the cost of “healthcare” has not worked like this despite being a technology product. law and accounting-services remain domains priced like rare gems.

they are about to be disrupted.

many are lamenting this forthcoming employment apocalypse for the over-educated, but we really should not. it will be amazing for the consumer and just like the tractor and the plow and the combine it will allow all manner of new and better innovation increasing standards of living through productivity gains as resources free up and move to profitable application.

A couple of weeks ago, for our anniversary, my wife took me to a very nice restaurant in a 5-star resort somewhere around Newport Beach in CA.  At the table of 8 next to us were apparently several generations and branches of a single family who talked fairly loudly and included several people who mentioned Yale two or three or twenty times during the evening.  It was a small random sample from the closest thing the US has to a governing nobility, the Ivy-League-educated elite.  And much of the discussion through the evening seemed to focus on the family's fears of AI and its threats to their children's future job prospects.

I agree with Gato that AI has a huge potential to disrupt current work patterns, in the same way that the industrial revolution did.   The 19th century disruptions were severe, and many people suffered as their experience and skill set no longer matched the new economy.  But eventually everyone, from the poorest to the rich, were better off for letting the industrial revolution run its course.

But in the 19th century, the disrupted were essentially powerless.  What happens this time around, though, when the disrupted are the ruling elite themselves?  These potentially disrupted professions include lawyers and doctors who already have shown themselves very willing to organize to block innovation, squash competition, and protect their high pay. Just look at the history of the attempts by Congress to reduce Medicare reimbursements to doctors.  And that was minor compared to the potential AI disruption.  Let me give you another example of the powerful resisting a technological change that should have disrupted their businesses.

When TV first was being rolled out, the industry coalesced around a network of local broadcast stations, many of whom became affiliates of a network like NBC or CBS.  Why this model?  Mainly it was driven by technology -- the farthest a TV signal could reasonably be broadcast was about 50-75 miles.  Thus everyone by necessity got their TV through three or four TV stations in their metropolitan area, each its own small business.

Now fast forward to today.  There are multiple ways to broadcast a TV signal nationwide -- there are several satellite options and many streaming internet approaches.  So now when we watch DirecTV or Youtube TV, we just watch the national NBC or ABC feed, right?  Nope.  Federal law requires that whatever service you use MUST serve up NBC, for example, via the local affiliate.  That is why your streaming TV service harasses you when you travel, because it is worried about violating the law by showing you the Phoenix CBS affiliate when you are staying overnight in Atlanta (gasp).

This is hugely costly.  In order to be able to provide NBC among its stations, Youtube TV must gather the feeds from 235 different stations.  In the Internet streaming era this is costly but in the satellite era it was insane.  DirecTV, with its limited bandwidth, had to simultaneously broadcast 235 stations, most showing identical content, just to legally provide you with NBC.  So why this crazy, expensive, insane effort?  I am sure you have guessed -- pound for pound local TV stations are among the most powerful lobbyists in the country.  First, they have money and a massive incentive to defend their local geographic monopoly -- Car dealers and alcohol distributors are much the same, which is why every potential innovation is resisted in those markets.  But TV stations have one extra card to play -- nearly every Congressman in the House likely depends on the three or four TV stations in one major metropolitan area for a huge part of their publicity and coverage.  No politician is going to screw with that.  At the end of the day, local stations did not get disrupted, they actually became more valuable with this government-enforced distribution of their product.

This is a small example of the fight that is coming in AI.  Congressmen will couch their arguments in fear-charged terminology as if their real fear is some Terminator-like AI apocalypse.  But the real concern will be from the influential elite who are being disrupted.  What would have happed to the Industrial Revolution if the hand-loom weavers were the children of the nobility?  Would the government have allowed the revolution to proceed?   We are about to find out.

** footnote: The only thing I would add to Gato's discussion of labor and value is that I think a lot of our conversations are hamstrung by the multiple meanings of "value" and "worth".  Gato correctly makes the point that one's own self-worth and how one values his or her own labor has nothing to do with how the market pays for one's labor.  But the reverse is true too -- how the market pays for your labor should not necessarily have any bearing on how one values oneself or one's labor.    I saw a beautiful production by the ABT of the ballet Giselle last night.  Most of the ballerinas in the show don't get paid as much as a good plumber, but their labor is worthy and beautiful and -- despite the low pay -- many professional ballerinas love their (often short) life as a dancer.  Most professional athletes before perhaps 1960 were the same, doing the thing they loved and finding fulfillment in excellence even when the market did not see fit to pay them much for what they did.

The new EU regulations on device charging standards are a really bad idea.  Via engadget:

The European Parliament has voted to make USB-C the common charging standard in the EU. All mobile devices with up to 100W power delivery (including phones, tablets and earbuds) sold in the region will have to come with a USB-C charging port by the end of 2024. Laptops will need to make the switch by spring 2026. Products that come to market before these deadlines won't be affected.

Most people I talk to seem to love this.   It is a relief for folks to know that all their devices will charge from the same cord, though it is already that way in my life because I have explicitly bought all my devices to use USB-C.  Yes, I have already standardized on USB-C myself so I have no problem at this moment in time with that charging technology.  The problem is the qualifier -- this moment in time.  Any government regulation that freezes technology in place is a really bad idea.  Sure, the EU says they are open to new technologies, but this makes adopting a new technology a matter of getting permission from one of the slowest and least efficient regulatory bodies on the planet.  When mobile phone technology cycles are 6-18 months long, who is going to bother with spending 3-5 years to get EU permission on a new approach.

When I go on rants like this with people I know, they tell me to calm down -- what, after all, would need to be changed with USB-C?  My answer is: "possibly everything".

Thank God we did not try to do this 15 years ago when mobile phone and charging technology was in flux.  Oh wait, we did!  Because we came inches away from similar charging standard regulation for phones about 2009.  Here is the article in Mother Jones lauding the United Nations-designed (!!) cell phone charger:

Good news: The [United Nationals Telecommunications] Union just approved a universal charger. If enough manufacturers adopt it, the industry could make half as many chargers—thus reducing greenhouse gases from manufacturing and transporting replacement chargers by as much as 15 to 24 million tons a year.

Bonus: The universal charger will likely use half as much energy on standby as conventional chargers, solving the “wall wart” problem.

The EU was trying to do the same thing in 2009, though fortunately it was voluntary.

The articles are helpfully illustrated with pictures of the handsets they were designing for:

Yes, had international regulators had their way 16 years ago, we would be stuck with something designed for these phones where one texted hello as 4433555555666.  It does not take hindsight to understand why this was a bad idea.  I wrote at the time:

There are at least two problems with this.  The first is that consumers are all different.   A lot of cell phones (and other devices like my kindle) are standardizing on a mini-USB connection.  Should I use the UN's solution, which is likely inferior?  Why?  Most of the time I don't even travel with a charger, I plug the mini-USB into my computer to charge.  That way I only have 1 charger on the road, for my computer.  You want me to carry 2, in the name of having fewer chargers?   You might say, "well, I hadn't thought of this situation," and I would say, "that's the point - you can't, there are 6 billion of us individuals out there."

The second problem is innovation.  Who says that innovation won't demand a different type of connection in 2 years?  Do you really want your technology gated to some working group at the UN?  Go back in time and imagine the government locking in a standard on something.  We still would have 801.11a wireless only, or cars would still all have crank starts (but they would all turn the same direction!) or cars would all have the same size wheels.  If the UN had invented something 3 years ago, it would have been power only and not data.  Today, most cell phones have power connections and connectors that double as data ports.

So many things would have been wrong with these.  They were power only and not data and power as we use today.  The cable was hard-wired to the wall-wart which would be incredibly annoying today.  It would have been either an old barrel connector, or if it was a form of USB it would likely have been one of the old hated non-symmetrical kind.  I don't think there was any data capability but if there were it would have been horribly slow.

Every single EU regulator would look at that old standard and say, yes it was misguided and would have been a mistake.  But THIS time it is smart?

Like many who do business in California, I often complain about the regulatory burden (free at last!)  People will ask, "So what one regulation would you get rid of?"  The problem is that this is a really hard question to answer because in most cases it is not any one regulation in particular, but the accumulation of regulation.  When a building collapses under a snow load, it is impossible to blame any single snowflake.

Have you noticed when you buy a product, you still get an insert that looks like the old instruction manuals we used to get, but that is in fact just page after page of legal and safety warnings with the actual useful stuff moved online?  Well companies have the same thing for employees, typically called an employee handbook.   Most of this is not really useful to employees but it is critical for compliance with a myriad of government regulations.  Our company always had an employee handbook, but starting around 2005 we were forced to have two -- one for California and one for everywhere else.   Each were reviewed and updated every few years.  Then in 2012 or so we were forced to switch to annual updates of the California handbook.   And then around 2018 we had to shift to twice a year updates of the California handbook, as the California legislature was creating so many new rules every session and California courts were creating so many new precedents and interpretation of existing rules that we had to constantly work to keep up with it.

Rules for meal breaks, arbitration agreements, non-compete agreements, cell phone use, background screening, privacy notices, and a million other things kept changing.  Just to pick one example at random, the California legislature keeps adding new forms of employee leave entitlements to this list:

• Sick Leave
• New Parent Leave
• Pregnancy Disability Leave
• Family and Medical Leave
• Bereavement Leave
• Voting Leave
• Jury Duty or Subpoena Leave
• Domestic Violence Victim Leave
• Crime Victims Leave
• Leave for School Activities
• Literacy Education Leave
• Drug/Alcohol Rehab Leave
• Kin Care
• Organ Donor/Bone Marrow Donor Leave
• Military Injury Leave
• Military Spouse Leave
• Reproductive Loss Leave

The last one I think really gives you a flavor of how the California Legislature spends its time.  Here is more detail:

Under Government Code 12945.6 (SB 848), employees at a company with at least five employees are allowed to take five days of leave within three months of a:

• failed adoption,
• failed surrogacy,
• miscarriage,
• stillbirth, or
• an unsuccessful assisted reproduction.

Seriously -- someone had to get worked up enough to create and sponsor a bill and push it through the entire process and get the governor to sign it to provide mandatory work leave for someone whose artificial insemination did not yield a child on the first try.  Good God my brother-in-law probably would have built up 6 months of leave as he had to try for years to finally be successfully, so long we started calling him the sperminator from all the times he had to fill a cup.

There is nothing too small to catch the California legislature's regulatory eye.   And almost every one of these laws might individually look OK or at least strike some empathy chord.  But in sum it is just overwhelming, particularly when it will not sit still.  There is always more and more piling on.

I will tell you a California labor regulation story.   California requires every employee to get a 30-minute unpaid meal break after working a certain number of hours.  The requirement is not to give the employee an opportunity to eat undisturbed, the employer has an affirmative obligation to make sure the employee gets and TAKES their meal break.   That seems like a nice thing to do -- what kind of Scrooge would deny their folks lunch?

Our first interaction with this law happened years ago where we had a gatehouse at a lake in California that required someone in it for 8 hours.  But by California meal break rules, we had to allow them an unpaid lunch for 30 minutes in the middle of that so they only got paid 7.5 hours per day.  Several employees who had this shift on various days approached us and begged to be able to work through lunch because they needed the extra money.  We let them.  And then come October (timed to get money for Christmas) and boom we get hit with a suit (turns out they were being advised the whole time and the entire situation was a trap they explicitly set for us).  We eventually had to settle -- though we had their request in writing, a California court decided that the employee could only waive their right to a work-free meal break with a signed letter EVERY DAY.  After this the rules got tighter and tighter.  Later we got sued when an employee who was wearing a company radio got a call on the radio during their break.  Boom, another suit for not giving them an uninterrupted 30 minutes without work.  So we started requiring everyone to check their radios and cell phones in a special locker before their break.  Eventually, to avoid lawsuits, we automatically paid the 1 hour missed meal penalty to any employee who started their lunch late -- we hired an extra person in the payroll department to audit time cards looking for meal break violations.  But then a few employees were intentionally starting their lunch late in order to collect the penalty.   Eventually we got to the insane work rule -- a rule that many companies in California have -- that it is a firing offense not to take one's meal break and to start it no later than 4:49 into their shift.

And this is just one example.  We have gone through similar hoops on everything from mediation agreements to background screening.

However, I will answer the question of what one or two regulations I would get rid of it I could waive a magic wand.  I would say

1.  the private attorney general act (PAGA) because it makes all the others worse.  PAGA authorizes aggrieved employees to file lawsuits to recover civil penalties on behalf of the State of California for Labor Code violations.
2.  The other change I would make is to eliminate the California Coastal Commission.  This is the single most destructive regulatory agency I have ever encountered, made worse by its incredible mission and scope creep and the fact that it has a history of giving special treatment to those with friends on the board or some kind of political pull.

I usually don't quote other blog posts in their entirety, but this is so classic that I feel the need to.  This is from Holden Law Group, an excellent resource we use to try desperately to remain in compliance with California Labor law when such law can sometimes change many times in a single year, sometimes retroactively.  California has very onerous rules on businesses for COVID occupational health compliance.  This is an update on those rules:

[[ORIGINAL POST]] Cal/OSHA continued its burlesque impersonation of a 6-year-old child at an ice cream shop this past week.  Originally, on May 7th, the state bureaucracy unveiled proposed changes to the COVID-19 Prevention Emergency Temporary Standards (“ETS”).  However, shortly thereafter, Cal/OSHA announced that it was tabling its final vote on the revisions; and instead, was scheduling an “emergency” meeting for June 3^rd because the proposed changes were not in-line with the guidelines of the California Department of Public Health and federal Centers for Disease Control and Prevention (“CDC”). Then, last week at this “emergency” meeting, Cal/OSHA initially indicated that it would indeed reject the proposed ETS changes because they were not consistent with the CDC guidance. However, by the end of the meeting, Cal/OSHA unanimously voted in favor of adopting those very same revisions.  Vanilla.  Chocolate. Yes, Chocolate…. Well…. actually Vanilla.  Definitely, Vanilla. Click here to read on – blog posted June 8, 2021….

[[UPDATE]] After this blog was originally posted, Cal/OSHA had yet another “emergency” meeting on June 9, 2021, this time unanimously voting NOT to adopt the proposed new revisions to its regulations.  Mind you, this is the same Cal/OSHA who unanimously voted TO adopt the revisions just a few days ago – and no new guidance from the CDC or public health officials has occurred in the interim – just a letter from the State Health Officer to Cal/OSHA reminding them that their proposed revisions were inconsistent with federal guidance and that the rest of the State would be following that federal guidance starting June 15th.

So where does that leave us, you ask. By voting not to adopt the proposed revisions, the same old Cal/OSHA regulations which have been in effect since the height of the COVID-19 pandemic will remain in effect for the foreseeable future – regulations which are even MORE inconsistent with federal guidance than were the proposed revisions.  So, for now, Cal/OSHA is back to Chocolate ice cream – stale, well past its expiration date, Chocolate ice cream.

This is an excerpt from an email from one of my suppliers.  This is happening everywhere:

We are not a company that makes excuses as to quality or service. When things are beyond our control, we will not point fingers and say it's not our fault. However, the climate to conduct business is becoming more difficult daily.

...Employees were allowed to file for financial relief thus finding they could make more money sitting at home than working. The snowball effect started and is getting bigger.

Orders that were placed back in the fall are being filled at this time, 6 months later. Because of the shortage of materials some prices have almost doubled. I cannot tell my customers sorry I know we have an agreement for that however I now have to charge you this. We have honored our prices, we have not been able to honor our time of production to shipping because of circumstances beyond our control.

The list is endless of the domino effect in just about every industry in the country.

It is no accident that today we had a really week payroll report -- we have high unemployment, huge demand for labor, but no one wants to work as long as the government is writing checks to stay home and play Nintendo.  We're experiencing 1970's Swedish socialism, something that turned out to be such a mess that Sweden today is probably more free market in many ways than the US.

Regulation can be sortof kindof tolerable in stable, predictable, and unchanging markets.  But what markets act like that?  In the labor regulation world, for example, regulatory authorities are doing everything they can to kill a wave of innovation in labor markets.  As I tell everyone I discuss this with -- regulators picture workers as punching a time clock in a Pittsburg mill with their supervisor right there and present every moment, with an on-site HR department, and a cafeteria with huge walls for posting acres of labor posters.  Try to have any other relationship with your employees, and it will be like pounding a round peg into a square regulatory hole.  Even something as staggeringly beneficial to worker agency like letting remote workers schedule themselves tends to run afoul of the shift scheduling laws that are sweeping through progressive jurisdictions.

Here is a great example of the cost of regulation to consumers that our company is experiencing in the insurance market.  Last year after all the fires in California, the property insurance market was left in disarray.  My landlord, in many cases the US government, requires that I insured the assets I am leasing from them against wildfire (leave aside the question of why the Federal government which is supposed to be self-insured is paying for such insurance in the form of lower rents from me).

Suddenly, wildfire insurance on wilderness assets like the ones we operate became unobtainable.  After a LOT of education, we convinced the US Forest Service to allow a temporary moratorium on the wildfire insurance requirement in our agreements.  Good news, right?   Now we can just go out and get a property insurance policy that covers all damage but excludes wildfire.

Not so fast!  It turns out every single microscopic variation in insurance rates in California have to be approved by the state insurance commissioner in a time-consuming process that begins long before the policy year.  Well, it turns out most insurance companies don't actually have an approved rate that excludes wildfire coverage.  They won't sell us a policy with the coverage (too risky) and they can't sell the policy without the coverage (not approved).

Regulation can always be costly but can be particularly so when markets need to react quickly to changing conditions.

I sit on a lot of boards of trade groups and business roundtables of various sorts.  And the #1 exclusive topic -- seriously, we talk about nothing else right now -- is the inability to hire people because the government is still paying millions or people to not work.  In restaurants, campgrounds, stores, manufacturers and scores of other industries, companies are ready right now to put more people to work but cannot because the government is paying people too much money to stay home and they can't get the workers they need.  Bounties, higher salaries, and incentives are all futile when candidate after candidate says that they won't look for work until the government payments stop.

So of course, the Biden Administration is proposing to pay more people not to work:

According to a White House fact sheet, the AFP would create a national comprehensive paid family and medical leave program, funded through tax increases, and paying workers up to $4,000 a month. Under that cap, it would replace a minimum of two-thirds of average weekly wages, rising to 80 percent for the lowest-wage workers.

The proposal does not define "lowest-wage workers," however, and left out details about whether eligibility would differ from current FMLA. Those specifics will be addressed when Congress drafts an actual bill.

Biden proposed that the program be phased in over a 10-year period, guaranteeing 12 weeks of paid parental, family illness, personal illness or safety-related leave by year 10. Workers would receive three days of bereavement leave per year starting in year one.

This is one of those bait and switch programs that are sold on the most extreme forms of eligibility -- ie they talk about leave to help a dying child but in the FMLA there are so many random and poorly defined leave rules that pretty much everyone qualifies.  We had a woman in California who worked for us that liked the job but hated the busy summer season and so scheduled elective surgery every year around Memorial Day to get out of working the summer -- and that was when it was unpaid!  I can't even imagine the abuse of a leave program paying up to $48,000 a year for not working.

So a $15 national minimum wage will almost certainly be on the table in Congress this year, and if past such legislative efforts are any guide the Republicans will probably eventually go along in exchange for reducing the $15 to a lower number and slowing the rollout.

I have talked a lot about the negative effects of higher minimum wages on low-skill workers.  Two good example background posts are here and here.  I covered how a broad range of labor regulation hurts unskilled workers in a cover story for Regulation magazine a few years back.  Unfortunately, in a country where the average American buys about $1000 in lottery tickets each year, the willingness to believe we can get something for nothing is strong.

But I want to talk specifically about a Federal minimum wage increase, where one other problem emerges.  The best way to state this is -- how can one possibly set the same minimum wage for San Francisco at the same rate as one does for rural Mississippi?  Here is one source for comparative state cost of living.  Doing this by county would make the curve even wider.

Cost of living in Hawaii is more than 2x that of Mississippi.  CA and NY are not far behind.  A minimum wage that might comfortably be accommodated in San Francisco (and note even there the rise to $15 was ending service jobs in that city long before COVID), would be an economic disaster for rural Alabama.  I don't tend to think primarily along racial lines as seems to be the case on the Left today, but basically this is a policy driven by rich white tech guys in San Francisco that is going to devastate the employment prospects of rural blacks.

Whatever one's misgivings about minimum wages, it is certainly true that allowing states to take the lead on setting minimum wages (counties would make even more sense) makes a lot more sense that trying to take action at the national level.  Even with state action there are disparities.  Look at this unemployment map of the rural counties in CA vs. the tech. enclaves in the Bay Area (the chart below is January 2020, I wanted to dial back pre-COVID).  Those rural counties are being slaughtered by the $15 minimum wage.  Just think about rural areas in states less costly than CA.

So a state by state approach is WAY better. There are three reasons, in increasing order of cynicism, why Democrats in Congress will still insist on a higher national minimum wage.

1. Democrats in Congress believe they are carrying salvation to the powerless masses in Alabama who are held in slavery by state Republicans.  Democracy and the "will of the people as expressed at the ballot box" are only sacred when it's our team in charge.
2. Folks in Congress did not spend a career fighting to win a seat in that body only to find that there is something that would be best done by state legislators.  They didn't work to get promoted to have LESS power (though that is exactly how the country was originally designed).  This is the enemy of all Federalist notions
3. The fact that a $15 minimum wage will devastate many rural areas, mostly Republican bastions, may be a feature and not a bug for some.  Think of the $15 minimum wage as Democratic revenge at the heart of red states for the Trump reductions of SALT deductions in the tax code (which were a dagger at the blue state model).

Years ago I was arguing with my mother-in-law about Executive power and the Presidency.  She, like many Obama supporters, was arguing that gridlock in Congress over legislation she considered critical was sufficient justification for President Obama to wield new executive powers and go around Congress.  I told her this was a terrible precedent, and asked if she would be just as happy to have President Lindsey Graham wielding such power (this being the prime Republican bogeyman for her, neither of us even imagining Trump).

So now, Obama (and Bush) precedents firm in hand, Trump is reacting to deadlock in Congress over further stimulus by picking up his pen and firing off some executive orders.  I want to discuss one of these, which is to allow at least temporary non-collection of the employee share of social security and Medicare taxes (a bit over 7.6% of wages).

Leave aside as to whether this is really appropriate stimulus for the current economic problems.  A tax break to people who still have jobs might help in certain recession scenarios, but the current situation of having large numbers of people unemployed because their workplaces have been forcibly closed by the action of various governors probably will not be helped a lot if the employed have more money in their pockets -- the problem is that local government officials are not allowing them to spend it. (I will note that no one ever suggests reducing the employer share of these taxes, which might actually increase employment by reducing total employment costs in a way that changing the employee share does not).

The problem I want to discuss is the terrible situation this potentially creates for businesses like mine.  All Trump can do is defer collection of the tax -- he cannot actually set it to zero or forgive it, which must be done by Congress.  This means that if our business does not withhold these taxes from employees, they accrue and build up as a debt still owed to the government by the employee.  Six months from now, when a new administration takes over and ends the deferral, our employees (who are paid twice a month) might get a deduction in their next paycheck not for 7.6% of wages but 91.2% of a paycheck (12 missed paychecks times 7.6%).

But here is why our company is really screwed:  We have 400 employees today, but since we are a summer seasonal business we will have fewer than 100 in January.  If there is a catch-up repayment in January (meaning Congress chooses not to forgive the taxes altogether), most of my employees who would need to repay the tax will be gone.  Do you think the government is just going to say, "oh well, I guess we lost that money"?  Hah!  You don't know how the government works with tax liens.  My guess is that for every employee no longer on the payroll for whom back employment taxes need to be collected, the government is going to say our company is responsible for those payments instead.  We could be out hundreds of thousands of extra dollars.  President Biden will just say, "well I guess you should not have participated in a Trump program."

So this is the vise we are in:  Either we participate in the program, and risk paying a fortune in extra taxes at some future date, or we don't participate, and have every employee screaming at us for deducting payroll taxes when President Trump told them they did not have to pay it anymore.  And what happens if Congress does come along later and forgive the taxes, what kind of jerk am I for not allowing my employees to benefit from the tax break?

Essentially I am forced to guess what legislation might be in the future.  Sort of the opposite of ex post facto law.  Pre facto law?

Update:  LOL, I r stupid, had "vice" instead of "vise"

Inspired perhaps by back episodes of the Sopranos or his experience with payoffs required in New York to get any real estate development project going, Donald Trump is attempting to establish a regulatory regime right out of any kleptocracy

President Trump confirmed Monday he is open to a deal in which Microsoft Corp.  or another U.S. company buys the video-sharing app TikTok, but said the government should receive payment for clearing a purchase.

“I did say that ‘If you buy it…a very substantial portion of that price is going to have to come into the Treasury of the United States, because we’re making it possible for this deal to happen.’ Right now, they don’t have any rights unless we give it to them.”

Mr. Trump, a former real-estate developer, compared his demand for a piece of the purchase price to the “key money” a tenant who wants a lease pays a landlord.

“It’s a great asset,” Mr. Trump said of TikTok. “But it’s not a great asset in the United States unless they have the approval of the United States,” he said, reiterating that the Treasury should get “a lot of money.”

Great.  Already there are too many regulatory hurdles to doing about anything, and Trump wants agencies to use regulatory approvals to hold up corporations for payments.   And you can be sure this is a precedent the Democrats will be only too happy to latch onto -- want a pipeline built, where's our vig?  Who wants to be that this is the first Trump decision AOC comes out in support of?  The Republican Party sure has come a long way in my lifetime.

Waaaay back in April of 2015, I prophesied that California's efforts to turn Uber drivers into employees would kill Uber, though it would take some years to bleed out.  California has since embodied that court ruling into law (a law which Uber is currently ignoring).  Now, New Jersey is going after Uber:

Two months after Uber decided to ignore new ignore new California legislation requiring companies to reclassify contract workers as employees - a measure which would affect up to one million residents who work as contractors and drastically impact Uber's bottom line - more states are lining up to demand a pound of flesh from the world's formerly most valuable startup (and subsequently one of the year's worst IPOs).

On Thursday, New Jersey picked up where California left off and found that Uber owes the state about $650 million in unemployment and disability insurance taxes because the rideshare company has been misclassifying drivers as independent contractors, the state’s labor department said.

As Bloomberg reports, Uber and its subsidiary Rasier LLC were assessed $523 million in past-due taxes over the last four years, the state Department of Labor and Workforce Development said in a pair of letters to the companies. The rideshare businesses also are on the hook for as much as $119 million in interest and penalties on the unpaid amounts, according to other internal department documents.

The New Jersey labor department has been after Uber for unpaid employment taxes for at least four years, according to the documents, which Bloomberg Law obtained through an open public records request. The legal battle goes back to 2015, when New Jersey first informed Uber that it had obtained a court judgment ordering the company to pay about $54 million in overdue unemployment and temporary disability insurance contributions. It’s not clear whether the company ever paid any of that bill.

The tax issue in my mind is not the biggest problem.  I still think that the worker "protections" states are starting to insist Uber adopt (e.g. minimum wage, shift lengths, shift scheduling, etc) are death for their whole labor model, and in fact will hurt most of their workers by killing what attracted drivers to Uber in the first place.  To summarize that article, there is a huge irony in that for decades labor advocates have been decrying the loss of agency by hourly workers in a capitalist economy.  Uber has given its drivers agency they don't have in almost any other hourly job, and labor advocates are doing all they can to kill it.

Many politicians seem to be jumping on the "ban vaping" bandwagon due to a series of respiratory illnesses potentially associated with vaping that are still being investigated.  Politicians absolutely love to ban sh*t during public panics like this irrespective of logic and unintended consequences, especially in an election cycle.

I think most thinking human beings understand that banning vaping could hurt those trying to give up cigarette smoking (which is at least an order of magnitude more dangerous than vaping) even if they don't think this outweighs the risk of vaping.  OK, all except this knucklehead.

But here is another unintended consequence.  Start with this:

Media outlets, following the lead of the U.S. Centers for Disease Control and Prevention (CDC), continue to blame recent cases of severe respiratory illnesses among vapers on "vaping" and "e-cigarettes" in general, falsely implying a link to legal nicotine products. This misinformation is fostering public confusion that may lead to more disease and death, both from smoking and from the black-market products that have been implicated in the lung disease cases.

Based on the available information, the overwhelming majority of patients with respiratory illnesses had used black-market cannabis products. While a small percentage of patients say they vaped only nicotine, they may be reluctant to admit illegal drug use, and they may not know what they actually vaped if they purchased cartridges on the black market. If nicotine products are involved in any of these cases, it is almost certainly because of additives or contaminants in counterfeit cartridges or e-fluid, since legal e-cigarettes have been in wide use for years without reports like these.

So if vaping is banned (or at least flavored vaping is banned), won't that take these dangerous street black market products from a tiny percentage of the market to 100%?  If you want to vape in the future under these bans, the only product available to you will be exactly the dangerous street products that led to the ban in the first place.  Effectively the ban will cover all safe products and effectively exempt all unsafe products.

Apparently California is close to a new law mandating that Uber drivers (and other "gig" economy workers) be treated as employees rather than independent contractors.  Progressives are cheering this as a victory for the drivers:

Billionaires who say they can’t pay minimum wages to their workers say they will spend tens of millions to avoid labor laws. Just pay your damn workers! https://t.co/PtyP4JZ7W0

— Lorena (@LorenaSGonzalez) August 29, 2019

I have explained before why this will likely kill Uber (e.g. here) but let me summarize quickly the argument of why this is bad for most drivers (self-plagiarized from a Twitter thread).  The key issues are driver productivity and driver agency.

Let's define worker productivity as far as Uber is concerned as the amount of customer revenue a driver brings in per paid hour. In the current model, this is not a real concern for Uber as they are only paying Uber drivers when they are actually driving customers.  Essentially, Uber drivers and Uber have a revenue share agreement to split customer revenue. Uber has set the share low enough to maximize its revenue (of course) but high enough to still attract drivers. It tweaks this formula fairly frequently.  Uber driver productivity as we have defined it is essentially locked in by the formulas in this revenue share agreement.

Given this arrangement, note what Uber does NOT have to worry about. It does not have to worry that drivers are working hard enough or are positioning themselves in productive locations and productive times of day.  Uber drivers can drive anywhere they want at any time they want.  An Uber driver currently can turn on the app at 4am in the suburbs of Peoria and Uber does not care, even if this positioning is unlikely to get many rides. Why? Because Uber only pays if there is a ride.  It doesn't care if the driver is sitting around unproductively, because it is not paying the driver for that time.

So today, it is left up to the driver to make trade-offs between the most productive time & positioning and the demands of their own personal schedule & life choices. This sort of flexibility has real value to many drivers. It is agency that many hourly workers don't have, and that has attracted many people to become Uber drivers.  My neighbor, for example, sits in his living room all day with the app on and runs out to the car whenever he accepts a ride (and then turns the app off so he can come back home).  He gets few rides in our area but he is happy with the lifestyle and the little bit of extra money he makes from Uber.

But this all changes if drivers must be Uber employees and subject to wage and hour laws.  The key difference under such wage and hour laws is that Uber would have to pay drivers whether they have a passenger or not, as long as the app is turned on.  Suddenly, forced to pay for labor whether the labor is working or not, Uber is going to get real interested in driver productivity.

If Uber pays by the hour, my neighbor's preferred way to drive is a dead loser for the company. In fact, if I am a driver and paid by the hour, I could go find a library in an out of the way place at an odd time of day and sit and read and collect hourly paychecks -- All without having to drive much. Now, instead of productivity choices being in the driver's hands because it's the driver that makes more or less money with greater or lesser productivity, these choices now land in Uber's lap. Uber can no longer allow so much driver agency.

If making Uber drivers hourly workers does not kill Uber altogether, then Uber is going to be forced to monitor driver productivity and do one or both of two things:

1. Establish productivity rules, such as driving time windows and allowed geographic ranges and/or
2. Set a minimum productivity threshold below which Uber will have to let those drivers go

Interestingly, like a lot of labor regulation, this one will benefit the middle while hurting the lower-paid drivers.

1. Top drivers will be unaffected, because they already make the minimum
2. Middle drivers may get a small boost
3. Lower-earning drivers will lose their driving jobs entirely

A better way to characterize this law is that it will greatly reduce the flexibility many Uber drivers love, while causing the lowest paid drivers not to make more, but to lose their driving gig altogether.

I wrote a great deal more about how much of labor regulation actually hurts the lowest rungs of unskilled workers in an article here for Regulation Magazine.

When I saw the headline of this post by Kevin Drum -- Our Personal Data Is Worth a Lot. Facebook Should Pay For It -- I was just going to use it as the starting point for a quick post saying that if we should be paid by Facebook for our personal data, the government should pay my company for all the data (Census, DOL, etc) that we are asked to provide.

However, when I actually read the post, I was simply amazed at the way Leftists think about solutions to this.  To me, the least intrusive solution is say that Facebook needs to be transparent about the data it gathers so users can decide intelligently if they want to be on the platform.  Or, if we decide that Facebook is not a near-monopoly common carrier, the second least intrusive solution is to require Facebook to allow users to opt out of having their private data used for things beyond providing core services of the platform.  If Facebook can't make that business model work, they might charge users $10 a month but waive the charge if you opt in to their using the data for a defined set of other purposes.  Because we already are being paid for our data in the form of free usage of a (to some) valuable platform.  Its just a very non-transparent transaction where both the costs and benefits are hard to evaluate.  The best role for the government is to make it easier for us as individuals to better understand this cost-benefit tradeoff.

But here are the default solutions from two folks on the Left:

Shapiro thinks we all deserve a cut of that since this personal data is, after all, ours. He suggests a complicated mechanism where the government collects the money and then cuts everyone a check. But why not just levy a tax and be done with it? That would be simpler. Put all the money in a special fund designed to . . . I dunno, fight income inequality or buy everyone computers. I’ll bet Elizabeth Warren could come up with a plan for it.

Ugh, really?  If I did not read his blog all the time I would almost think Drum's personal solution is parody.   Does he really think giving my money to Elizabeth Warren to spend is a way for me to recover any value?

Conservatives rightly criticised the Obama Administration for rewriting rules so frequently and seemingly arbitrarily that businesses were reluctant to make long term investments.  As the WSJ editorialized in 2016:

Pfizer CEO Ian Read defends the company’s planned merger in an op-ed nearby, and his larger point about capricious political power helps explain the economic malaise of the last seven years. “If the rules can be changed arbitrarily and applied retroactively, how can any U.S. company engage in the long-term investment planning necessary to compete,” Mr. Read writes. “The new ‘rules’ show that there are no set rules. Political dogma is the only rule.”

He’s right, as every CEO we know will admit privately. This politicization has spread across most of the economy during the Obama years, as regulators rewrite longstanding interpretations of longstanding laws in order to achieve the policy goals they can’t or won’t negotiate with Congress. Telecoms, consumer finance, for-profit education, carbon energy, auto lending, auto-fuel economy, truck emissions, home mortgages, health care and so much more.

Capital investment in this recovery has been disappointingly low, and one major reason is political intrusion into every corner of business decision-making. To adapt Mr. Read, the only rule is that the rules are whatever the Obama Administration wants them to be. The results have been slow growth, small wage gains, and a growing sense that there is no legal restraint on the political class.

I am willing to believe this is true. On my own smaller scale, our company has disinvested in California because we simply cannot keep up with the changing rules there.

But all this forces me to ask, why doesn't this same Conservative criticism apply to Trump's trade policy?  The rules are changing literally by the day -- Consumers of goods from Mexico are going to be hit by new tariffs, Mexican goods are not going to be hit by new tariffs, China is hit by new tariffs, a China deal is near, a China deal is not near, Company A got a special tariff exemption, Company B did not get a special exemption, etc. How can any company with a global supply chain, which is most any US manufacturer nowadays, plan for new products or investments in this environment when they have no ability to make long-term plans for their supply chain?

I got this in the mail from the US EEOC:

EEO-1 filers should begin preparing to submit Component 2 data for calendar year 2017, in addition to data for calendar year 2018, by September 30, 2019, in light of the court's recent decision in National Women's Law Center, et al., v. Office of Management and Budget, et al., Civil Action No. 17-cv-2458 (D.D.C.).  The EEOC expects to begin collecting EEO-1 Component 2 data for calendar years 2017 and 2018 in mid-July, 2019, and will notify filers of the precise date the survey will open as soon as it is available.

As a reminder, the schedule 2 data is an order of magnitude increase in the amount of information the government wants on our employee's skin color and reproductive plumbing.  Instead of just asking for counts of employees by race and gender (a distasteful exercise every time I have to do it) but they want a hugely expanded amount of salary data for every race-gender combination.  As I wrote before:

Forget for a moment that the whole purpose of this rule is to provide litigation attorneys a database they can mine to legally harass businesses.  The reporting requirements here are incredibly onerous.  It takes the current EEO-1 (the annual exercise where we strive for a post-racial society by racially categorizing all of our employees) and makes it something like 15-20 times longer.  In addition, rather than simply "count" an employee as being on staff in a certain race-gender category, we now have to report their income and hours worked.  Either I will have to hire staff just to do this stupid report, or I will again (like with Obamacare) have to pay a third party thousands of dollars a year to satisfy yet another government reporting requirement.  This is utter madness.

Get this -- the report has 3600 individual cells that must be filled in.  And this is in addition to the current EEO-1 form, which also still has to be filled out.  The draft rule assumes 6-7 hours per company per year for this reporting.  They must be joking.

Making this worse, the email implies that they are going to demand retroactive data for 2017 and 2018, which is simply insane.  We pay an extra couple thousand dollars every year for extra payroll program functionality to be able to accommodate this madness, but certainly did not have it in place back in 2017.

In the aftermath of the two Boeing 737MAX crashes:

For years, the FAA has allowed plane manufacturers to self-certify parts of the oversight process for new planes, called Organization Designation Authorization. This process, in which the aircraft manufacturer’s employees perform some of the safety tests and inspections with FAA oversight, reportedly saved the government body time and money.

That practice was examined at Wednesday’s Senate hearing.

Department of Transportation Inspector General Calvin Scovel III, who testified at the hearing, said the FAA will significantly change the oversight process for new aircraft by July. Speaking in vague terms, Scovel said that the changes would include new ways for the FAA to evaluate the self-certifying process.

Sen. Richard Blumenthal said that putting manufacturers in charge of their own safety audits was like putting “the fox in charge of the henhouse.” Saying he would introduce regulations to ban the practice of companies self-certifying, Blumenthal stated that “the fact is that the FAA decided to do safety on the cheap, which is neither safe nor cheap.”

A few reactions:

1. The fox in the henhouse analogy is not apt.  The fox wants to eat the chickens, whereas Boeing does not want to have airplane failures.  In fact Boeing is going to be paying out on a bunch of really big lawsuits, not only to families of the folks that died and the airlines that lost their planes but also to airlines that have had to change their flight schedules due to these issues.  Airbus sales people will use this story in their pitches until the end of time.  Regulation is not the only, or the most important, check on Boeing's behaviors.
2. That being said, aircraft regulation is a dumb hill for libertarians to die on.  This is just not that big of a deal.  Regulation and capital intensity has pretty much reduced choice in large aircraft to two companies and that will not likely change no matter what extra regulatory hoops are added.  Aircraft are a bit more expensive and spare parts are way more expensive due to our regulatory regime, but I don't think there is a public constituency for making a different trade-off.
3. Whatever the regulatory environment, it is unlikely to actually catch more failures of this sort in the future.  Regulators are notoriously bad at this sort of thing (see: US financial system).
4. I did engineering failure analysis early in my working career and my experience is that this sort of multiple stacked failure -- lack of pilot training for a bad software response based on a failed piece of instrumentation that was not reported as needing maintenance -- is hard to predict.  What will happen now in addition to some software fixes will be more mandatory training on this particular subsystem and likely a requirement that the specific piece of instrumentation involved needs to have redundancy.  At best we should hope they will also do a review of other instrumentation failures that might lead to a flight control issue and consider redundancy or software changes.  But there's always the problem of failure of imagination, the best dramatization of which is in the fabulous From the Earth to the Moon episode on Apollo 1.

A perfectly reasonable way to read this chart is to note the high correlation between state taxation and regulatory intensity and states that are gaining or losing population

Unfortunately, my experience in Arizona (one of the "inbound" states above) has been that people have zero ability to correlate specific elements of public policy with particular outcomes.  In particular, people who flee California because it is too expensive and dysfunctional come to Arizona and immediately begin voting for exactly the same policies that made California expensive and dysfunctional.  Therefore, I tend to read being in an "inbound" state with dread, knowing that folks are moving in right now to make us the next Illinois or California.

Readers of this blog know that I have always been skeptical of the value of net neutrality rules.   I see the Internet just like any other vertical value chain with multiple players, which we might oversimplify as content providers who hand off to bandwidth providers to get in front of the customer.  Nearly every industry has these vertical value chains with multiple players -- think Coke and Pepsi fighting for floor space and margins through Wal-Mart.  What is amazing to me is how the large content streamers, particularly Google, Netflix and Facebook, have somehow convinced the public that the whole future of the Internet depends on the government hamstringing the bandwidth providers in their relationship with the content producers.

When Youtube wants to stream at 4K rather than 1080p, the majority of the instractructure hit is on the bandwidth provides, and Google/Youtube wants that bandwidth to be there but does not want to have to pay for any of it.  That is why these companies are the main supporters of net neutrality, but they are smart enough not to say this, but to instead flog some mythology that bandwidth providers might block or discriminate against certain providers.  Even supporters of this meme are forced to agree that it is wholly hypothetical, that no one can really point to any good examples of it happening (I have always suspected that general public hatred for Comcast in particular has created more support for net neutrality than anything else).

This argument for net neutrality is even odder as clear discrimination and deplatforming is happening on the Internet apparently everywhere BUT with the bandwidth providers.  Or as I wrote on Twitter:

I might be unable to get a domain registered. I might not get hosted. I might not get anyone to handle my payments. I might not be able to syndicate on any social media. Google might not show me in searches. But by God Comcast is going to give equal treatment to my traffic!

— Coyoteblog (@Coyoteblog) November 29, 2018

This is my usual long-winded lead in for a very good article I read a while back and forgot to link.  It's from Drew Clark at Cato and is titled "Seeking Intervention Backfired on Silicon Valley".  I recommend the whole thing but here is a small piece:

The companies that drove the engine of America’s information technology machine essentially argued as follows: We provide the good stuff that you — the American consumer — want. You go to Google to get your searches answered. You want Facebook to keep up on posts from friends, families, and trusted content providers. Access to the content in the Apple iTunes store or to Amazon Prime streaming video subscriptions doesn’t need to be regulated because we tech giants compete vigorously among ourselves. But Washington does need to step in and regulate the telecom market because of a lack of competition among ISPs. And the FCC agreed in 2015 with what was officially dubbed the Open Internet Order. ...

Major content companies like Google, Facebook, and Netflix feared that ISPs would seek to throttle their services as a way of extracting payment for prioritization. Particularly for data-intensive video- streaming services like Netflix and Google’s YouTube, this concern had a certain economic logic, even as it remained hypothetical. Having long courted Silicon Valley as a key constituency and facing a highly visible public demand with enthusiastic grassroots support on the left, Obama complied....

Silicon Valley’s regulations-for-thee-but-not-for-me attitude has come back to bite them. They want the strictest form of regulation for telecommunications providers but no scrutiny of themselves, and now the tables have been turned.

Pai has not hesitated to point out the hypocrisy as he has moved to undo the net neutrality rules. In a November 29 speech in the lead-up to his net neutrality rollback, he said that the tech giants are “part of the problem” of viewpoint discrimination. “Indeed, despite all the talk about the fear that broadband providers could decide what internet content consumers can see, recent experience shows that so-called edge providers are in fact deciding what content they see. These providers routinely block or discriminate against content they don’t like.”

"Brown signed more than 1,000 bills this year. The governor Tweeted that he decided on nearly 20,000 bills in his 16 years." (source)

This is 100% the reason we have been exiting most of our business in CA and will not accept any new business there. All of our training time with managers there goes to compliance with a myriad of new interventions from the legislature.  There is no time left to improve the business, serve customers better, or get more efficient.  California has hit, at least for us, the regulation singularity where new regulations are written faster than we can manage compliance to them.

Now all these veterans of California regulation madness are fanning out into national government.  Beware.

From the recently released study, "The Unintended Consequences of 'Ban the Box': Statistical Discrimination and Employment Outcomes When Criminal Histories Are Hidden"

Jurisdictions across the United States have adopted “ban the box” (BTB) policies preventing employers from asking about job applicants’ criminal records until late in the hiring process. Their goal is to improve employment outcomes for those with criminal records, with a secondary goal of reducing racial disparities in employment. However, removing criminal history information could increase statistical discrimination against demographic groups that include more ex-offenders. We use variation in the timing of BTB policies to test BTB’s effects on employment. We find that BTB policies decrease the probability of employment by 3.4 percentage points (5.1%) for young, low-skilled black men.

This is a pretty predictable outcome, and one that was discussed in my recent paper "How Labor Regulation Harms Unskilled Workers."  The effects of these regulations are synergistic.  Taken alone, one might expect this outcome from ban-the-box.  But combine it with minimum wage laws, rules that increase the monetary risk to employers for hiring unsuitable employees, and the increased regulatory difficulty in terminating employees (particularly minorities) and the effect is likely greater.  I explain this all in depth in the paper but here is a taste:

It used to be that the worst human resource risk a company faced was hiring employees who simply did not justify their salary. However, given the current body of regulation, any poorly selected employee is a potential ticking bomb who, through bad behavior with customers or other employees, could tie up the company for years in expensive litigation or regulatory actions. But as a firm’s liability for the negative activity of a poorly chosen
employee rises, regulations are making it harder to get good information to make better hiring choices,while simultaneously making it harder to terminate employees who were poorly chosen and present threats to the workplace or customers. When employers begin to look at their employees not as valuable assets but as potential liabilities, fewer people are going to be hired.

One potential way employers can manage this risk is to shift their hiring from unskilled employees to college graduates. Consider the risk of an employee making a racist or sexist statement to a customer or coworker (and in the process creating a large potential liability for the company). Almost any college graduate will have been steeped in racial and gender sensitivity messages for four years, while an employer might have an hour or two of training on these topics for unskilled workers. Similarly, because good information on prospective employees—credit checks, background checks,reference checks, discussions of past employment and salary—all have new legal limitations, employers who hire college graduates benefit from the substantial due diligence universities perform in their admissions process.

I made a vow a while back to try to get better at appealing to progressives using their assumptions, not mine.  So here is my shot at it here.  Prejudice exists among some employers that hold a stereotype of African-Americans as disproportionately criminal.  The best way to fight prejudice is through information and education.  But ban-the-box laws and other restrictions on background checks do just the opposite -- they restrict information.  Employers who see full criminal record information, say for African-American applicants, will be struck by how few have criminal records.  "Hey, these guys are OK," I can imagine someone saying.  Without this information, all that the employer has to work with are his pre-existing prejudices and misinformation, and in that context he might avoid African-Americans thinking "they are probably all criminals."