California

Post image for Dear Labor, Don’t Fear the Robot

In California, a war is quietly being fought: workers versus technology. And the war has materialized in the form of a bill that seeks to ban the sale of alcohol by automated checkout machines at grocery stores. You may have seen them, those machines that allow customers to scan and bag their own items, which can speed up the process and keep lines smaller. Those machines also allow grocery store owners to reduce their costs by employing fewer workers. Herein lays the problem: workers fear that they are slowly being replaced by machines and that increased reliance on automatic check out machines threatens their jobs.

The legislation, AB 183, would ban the sale of alcohol at self-checkout aisles. The bill’s proponents drag out the old “save the children” argument, claiming that minors can easily purchase alcohol without the human oversight a traditional checkout process offers. Of course, the robots aren’t completely automated and require a worker to authorize any purchase that contains an age-restricted item such as alcohol. Additionally, the numbers of “sales to a minor” violations submitted by the state’s alcohol control board seem to indicate that most of these sales do not occur at grocery stores, but rather at liquor stores and in restaurants.

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California legislators are set to pass a bill that would reduce the number of babysitters. Not on purpose, of course. But when you make babysitters more expensive, parents won’t hire as many of them. California Sen. Doug LaMalfa lists some of the bill’s requirements:

Under AB 889, household “employers” (aka “parents”) who hire a babysitter on a Friday night will be legally obligated to pay at least minimum wage to any sitter over the age of 18 (unless it is a family member), provide a substitute caregiver every two hours to cover rest and meal breaks, in addition to workers’ compensation coverage, overtime pay, and a meticulously calculated timecard/paycheck.

The intentions behind this bill are noble, one assumes. But when it comes to regulations, good intentions don’t matter. Results do. And it’s pretty easy to see that if it passes, this bill will result in a lot of unhappy nights at home for frustrated parents — and a lot less income for sitters who have been priced out of a job.

You can read the full text of the bill here [PDF]. It would also raise unemployment for maids, nannies, and anyone else who makes a living helping others around the house.

Post image for Regulation of the Day 195: Fitted Sheets

California’s state legislature is poised to pass SB 432. It would, of all things, make it a crime for hotels to use non-fitted sheets. Here’s the relevant section of the bill:

The standard shall require all of the following:

(1) The use of a fitted sheet, instead of a flat sheet, as the bottom sheet on all beds within the lodging establishment. For the purpose of this section, a “fitted sheet” means a bed sheet containing elastic or similar material sewn into each of the four corners that allows the sheet to stay in place over the mattress.

This writer is a fan of fitted sheets. I even use them at home. But it is unclear why a law is necessary to require California hotels to use them. Hotels that don’t already have them would be forced to take a financial hit at a time when business is down. SB 432 is hardly an engine of job creation.

California is one of the few states with a full-time legislature. Perhaps they should consider becoming part-time. Giving them less time to satisfy their urge to regulate unimportant business decisions in astonishing detail could only help California’s ailing economy.

It would also make for fewer stories like that of entrepreneur Erica Douglass, is leaving California because of its hostile business climate.

Post image for Regulation of the Day 182: The Definition of a Hot Dog

Having solved the state’s fiscal crisis, California’s state legislature has moved on to more important issues, such as the legal definition of “hot dog.” According to S.B. 946 [PDF, p. 32], that definition is:

“Hot dog” means a whole, cured, cooked sausage that is skinless or stuffed in a casing, may be served in a bun or roll, and is also known as a bologna, frank, frankfurter, furter, garlic bologna, knockwurst, red hot, Vienna, or wiener.

The intention is to differentiate cooked hot dogs from uncooked sausage products.

Most states have part-time legislatures. California’s is one of the few full-time bodies. Every so often, there are calls to change that; maybe this hot dog bill will spark someone to move on that much-needed reform.

Amazon.com is standing strong against California’s attempts to extort money from the online bookseller. Just a few days ago, Governor Jerry Brown (whose aura smiles and never frowns) signed a bill into law aimed at extracting taxes from online retailers. As it is now, the state requires consumers to keep receipts of online purchases, calculate sales tax on those purchases, then send a check to Sacramento. Obviously, this policy proved difficult to enforce.

California’s Board of Equalization (the sinister-sounding body charged with collecting the state’s sales tax) issued a stern warning to Amazon and its comrade-in-arms Overstock.com: pay up or we’re coming after you. California’s case against the retailers rests on going after affiliates and subsidiaries in the state. Amazon has already begun cutting affiliates like gangrenous limbs. California still thinks the law will work; fortunately, they might be wrong, as a Declan McCullagh of CNET writes:

The only problem for enthusiastic politicians and tax collectors is that the new law might not be entirely, well, legal.

In 1994, a California appeals court rejected state tax collectors’ arguments when they tried a similar approach. The case involved a Colorado-based company, Current, which sold greeting cards, gift wrapping paper, and so on through the mail. It had no contacts with California.

Current’s parent company, Deluxe Corp., did do business in California. The state Board of Equalization, operating under the theory that the finer points of corporate structure weren’t that relevant, levied $344,088 in taxes on Current.

The appeals court tossed out that argument, saying that courts in Pennsylvania, Illinois, and Connecticut had considered similar cases and had all ruled against the tax collectors. Those decisions were “persuasive,” a three-judge panel unanimously ruled, and Current and Deluxe “did not have integrated operations or management” and were “separate and distinct corporate entities.”

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Post image for Regulation Roundup

With the unemployment rate still over 9 percent, regulators have been very busy tending to their own job security. Here are some of their more recent make-work programs:

Post image for CEI Podcast for June 23, 2011: Bunker Fuel

Have a listen here.

Bunker fuel is  a heavy fuel used by large ships around the world. Oil tankers, container ships, and more rely on bunker fuel because it’s cheaper than other kinds of fuel. Land Use and Transportation Policy Analyst Marc Scribner takes a look at new environmental regulations in California intended to reduce bunker fuel usage. The rules are actually causing many ships to use more bunker fuel, not less. If proposed fixes succeed, the result would essentially be a tariff on most global trade — cargo valued at approximately $16 trillion.

Sometimes the green part of green regulations isn’t the environment. It’s money.

Economics says that people act according to their incentives. Public choice theorists say that politicians and regulators also act according to their incentives — just like the rest of us. Those incentives include maximizing agency budgets and winning elections.

This short video from Reason.tv shows public choice theory in action:

That the large Republican gains in the 2010 midterm elections pose a setback for organized labor’s agenda is hardly news. What will be newsworthy is how incoming policy makers at both the federal and state level will fight back against union power — especially government union privileges — over the next couple of years, and to what extent they succeed.

The Economist sums up the challenge elected officials face as they stare down the government union political machine (and offers a good overview of the global nature of this problem):

It would be a mistake to write off the public-sector unions. They are masters of diverting attention from strategic to tactical questions. Undoubtedly the unions will lose some of their privileges over the coming years; the scale of the debt crisis makes this inevitable. But will governments have the courage to tackle the root causes of the problem (such as pensions) rather than dealing with secondary problems (such as wages)? And will they dare to tackle questions of power rather than just pay and perks? If they are to claim victory in the coming fight, they need not just to restore the public finances to health. They also need to breathe the spirit of innovation into Leviathan.

And not all politicians challenging government unions are Republicans. As The New York Times reported this week:

State officials from both parties are wrestling with ways to curb the salaries and pensions of government employees, which typically make up a significant percentage of state budgets. On Wednesday, for example, New York’s new Democratic governor, Andrew M. Cuomo, is expected to call for a one-year salary freeze for state workers, a move that would save $200 million to $400 million and challenge labor’s traditional clout in Albany.

Indeed, as I noted recently, the longstanding alliance between government employee unions and Democratic politicians has become strained. Public sector unions may be among the Democratic Party’s most loyal constituencies, but the gaping budget deficits to which unionized government employees’ generous compensation packages have substantially contributed bear no party label.

And it’s not as if bloated state budgets guarantee a high quality and adequate supply of public services. As Arnold Kling puts it so well in EconLog blog:

If you do not have enough sanitation workers because you cannot fill job openings at the current level of pay, then those government workers are underpaid.

On the other hand, if you do not have enough sanitation workers because your budget is busted by the ones you have, then those government workers are overpaid.

Thus, the bipartisan nature of this pushback should not be that surprising — yet it has taken government union leaders by surprise, being unaccustomed as they are to finding themselves on the defensive. Naturally, they plan a response.

And what the unions want should worry anybody who cares about fiscal sanity. As Politico reports:

Labor leaders take hope in the story of California, where Schwarzenegger arrived after a recall with an apparent mandate for dramatic change and, in 2005, moved to shift state employees from a defined benefit to a defined contribution pension plan — the goal of many Republicans, but anathema to unions that see it as a threat to traditionally secure retirements.

Instead, Schwarzenegger found himself stymied by a state Legislature whose Democrats were tightly tied to labor, as well as by failures at the polls. Most public workers ultimately negotiated new benefit “tiers” with Schwarzenegger, but the changes fell far short of the Republican wish list, and the governor leaves his Democratic successor, Jerry Brown, a large budget gap.

We all know how that turned out.

(Hat tip: F. Vincent Vernuccio)

For more on public sector unions, see here and here.

An ill-informed left-wing group, the Center for Science in the Public Interest, is suing McDonald’s in California to ban toys from Happy Meals. It is bringing a class-action lawsuit on behalf of “an activist employed by the California government to advocate the ingestion of vegetables, though some pains seem to have been taken to obscure this connection,” abetted by the gullible liberal media, which continue to depict her as just a “random” California mom.

San Francisco earlier banned Happy Meals, even though the meals in San Francisco’s own public schools are less healthy than at McDonald’s.

Why is the plaintiff in the suit against McDonald’s suing? She claims that “[b]ecause of McDonald’s marketing, her daughter has frequently pestered her into purchasing Happy Meals, thereby spending money on a product she would not otherwise have purchased,” and that “when she said no, her kids became disagreeable” and “pouted.”  If that’s a basis for suing, then, as Walter Olson notes, “McDonald’s isn’t the only company that should worry. Other kids pout because parents won’t get them 800-piece Lego sets, Madame Alexander dolls and Disney World vacations. Are those companies going to be liable too?”

The Center for Science in the Public Interest is the left-wing group that has ignorantly disparaged “normal food items such as baked potatoes, hamburgers, pizza, pork chops, and bacon as unhealthy. Never mind that a baked potato has only 100 calories, gives you 30 percent of your day’s supply of vitamin C (more than a banana), some protein, and many important minerals.”

People claim that McDonald’s makes poor people fat by selling them cheap greasy food, but its customers aren’t that poor (even so-called “poor” people in America have significant disposable income, which is why they often pay $3.69 for a Big Mac, when they could easily buy a McDonald’s double-cheeseburger that’s almost as big and has as much meat for a mere $1.19, even in “poor” places like the inner city).  And its food isn’t particularly fatty: a Big Mac or a Quarter Pounder is a lot leaner and healthier than many dishes people cook at home like Quiche Lorraine.  I am not poor, and I periodically feed my 3-year old daughter cheeseburgers or double-cheeseburgers without being nagged to do so (although she certainly enjoys them).

New fast food restaurants were recently banned in South Los Angeles, based on a kooky “food apartheid” claim by the Los Angeles City Council.  Never mind that baked goods are a bigger source of calories for kids than fast-food items like pizza, and that some people lose weight eating at McDonald’s, like me, Soso Whaley, and a Richmond man who lost 86 pounds.  A court recently blocked a class-action lawsuit against McDonald’s over obesity.

While liberal busybodies are suing McDonald’s, they are using federal funds to subsidize the opening of an International House of Pancakes in Washington, D.C., and the development of high-calorie foods to benefit agribusinesses.