America’s Workers Need Freedom, Not More Government

For starters, there has never been a Golden Age in which everything was perfect for American workers and their families. Trade-offs among work, life and family have always existed and always will. Government can’t change this reality.

In many important ways, Americans are much better off today—even after a global pandemic and rampant inflation—than only a few decades ago. People born in the U.S. in, say, 1976 have experienced significant long-term improvements not only in consumer goods and technology but also in real incomes, poverty, life expectancy, infant mortality, education and environmental quality. While the pandemic was terrible for most Americans, it would have been far worse had it happened 20 years earlier.

Most important, the claim that markets have failed American workers ignores the panoply of federal, state and local policies that distort markets and raise the cost of healthcare, child care, housing and other necessities; lower workers’ total compensation; inhibit their employment or personal improvement; and deny them the lives they actually want, rather than the ones Washington policy makers choose for them.

Take one example. Lawmakers in both parties demand ever-increasing subsidies for working families, while ignoring how modest changes to existing regulations would lower child-care prices by thousands of dollars with little effect on quality. These policy makers dismiss how eliminating tariffs on food, clothes, shoes and other household essentials would increase parents’ real incomes even more. They also ignore how reforming housing, licensing, criminal justice, K-12 education, welfare and other harmful policies would boost workers’ mobility, bargaining power and lifetime earnings.

Even worse, many of these same policy makers offer “pro-worker” policies, such as steel tariffs, that harm most of the workforce. As of 2018, workers in U.S. steel-consuming industries outnumbered steelworkers by a factor as great as 80 to 1. These policies’ proponents seem oblivious to recent and radical changes in Americans’ job and life preferences—many fueled by the pandemic. These changes counsel adopting a new approach to policy supporting today’s American worker.

First, lawmakers should reform interventionist policies that lower most Americans’ living standards and discourage them from changing jobs or locales. Simply moving from high-cost, heavily regulated cities such as New York and San Francisco to more affordable ones like Houston and Pittsburgh can mean a better life and more financial stability, especially for low-skilled or less-educated workers. Yet current federal, state and local policies increase Americans’ economic burdens in expensive cities, while mortgage subsidies, welfare rules and employer benefit mandates make it costlier to move or change jobs.

Next, policy makers should implement market-oriented measures on education, remote and independent work, home-based business and employee benefits to maximize worker autonomy. Surveys show that Americans increasingly value flexibility over wages and independence over employment security. Business creation and job switching have both surged. Still, many in Washington think of American workers as helpless, static and in need of government protection from cradle to grave, despite their registered preferences and the documented harms that such policies as European-style labor regulations can inflict on them and the U.S. economy more broadly.

Only after these reforms have lifted the restraints on American workers should policy makers turn to considering new “pro-worker” government interventions. Simply throwing more money at existing government programs or layering a new program atop an old one will yield higher costs and more distortions, not alleviate workforce-related concerns mistakenly blamed on the free market.

A labor utopia won’t magically appear as soon as these policies are enacted. Life will always have challenges. But market-based reforms offer a better way forward for today’s workers than the antiquated interventionist labor agendas now popular on the left and the right.

Time and again, we’ve seen that freer markets can best deliver vital goods and services, often in new and once-unimaginable ways. We’ve seen that protected, subsidized and overregulated markets, by contrast, produce higher prices, fewer choices and shortages when problems inevitably arise. And we’ve seen that through their own initiative, American workers can not only survive our disruptive and messy world but eventually thrive—if governments let them.

Mr. Lincicome is director of general economics at the Cato Institute and author of “Empowering the New American Worker: Market-Based Solutions for Today’s Workforce,” forthcoming Dec. 15.