State legislatures and agencies have an important role to play in improving workplaces for workers.
Louis Brandeis famously wrote, “it is one of the happy incidents of the federal system that a single courageous State may, if its citizens choose, serve as a laboratory; and try novel social and economic experiments without risk to the rest of the country.”
But Brandeis also commented, in a famous dissenting opinion concerning competition between states and regulation, that “the race was one not of diligence, but of laxity.”
In the current world of workplace regulation, where the federal government has stepped back from the proactive role it played during the Obama Administration, an important question to ask is which of Brandeis’ views characterizes the relationship between federal and state workplace policy today: laboratory of democracy, or race to the bottom?
The default assumption is often the latter. States, seeking to increase economic activity within their borders, face strong incentives to reduce regulations. Given that business interests are almost always better resourced in legislative battles than proponents of progressive policies, the predisposition to racing downward is further amplified, as seen during the recent Amazon second-headquarter competition. Recent lobbying efforts in multiple states by platform-based companies to redefine their workforce as “independent contractors” rather than employees similarly suggests a deck inherently stacked against working people.
Yet the record over time of workplace policy is more nuanced, suggesting a more hopeful outcome.
Passing workplace legislation has always been difficult. Major pieces of federal workplace legislation, such as the Worker Adjustment and Retraining Notification Act (WARN) of 1988 or the Family and Medical Leave Act (FMLA) of 1993, took years to move through the U.S. Congress and sign into law.
Yet Brandeis’ laboratory of democracy played a role in the passage of those laws. Major workplace legislation going back to the New Deal were preceded by the passage of state-level laws that broke ground, such as by assuring workers of notification of major plant closings, providing for unpaid leave, or, going back even further in time, providing for minimum wages and child labor protections. Equally, the long gaps between the passage of increases in the federal minimum wages were preceded by many states raising their minimum wages to exceed the federal standard.
In each of these cases, states created innovative workplace laws, moving the bar upward. As more states moved forward, once united business opposition to legislation began to fracture. Large businesses operating in multiple states faced growing incentives to break from their small and medium-sized counterparts that opposed any federal legislation, and instead to pursue greater consistency in regulatory requirements by the adoption of a federal standard.
The repeated failure to pass reforms to the National Labor Relations Act (NLRA) of 1935 can also be read as evidence of this dynamic, since the NLRA preempts states law and therefore undermines Brandeis’ laboratory dynamic.
Seen in this light, the legislative dynamic between state and federal law often “ratchets up” workplace standards. A ratcheting dynamic that could fracture unified business opposition to new workplace laws is particularly relevant today. Some 29 states—and many more localities—currently have minimum wage requirements exceeding the federal minimum wage, which remains mired at $7.25 per hour. Ten states have passed paid sick leave policies, with many more currently being debated in state legislatures. And a growing number of states are passing legislation on scheduling and pay transparency that could lead to a similar fracturing of business opposition.
Ratcheting dynamics, fueled by Brandeis’ model of states acting as laboratories of democracy, can also drive improvement in the implementation of existing laws. This process can be seen in an area of personal experience—wage and hour laws.
During the Obama Administration, the Wage and Hour Division—which I led—put in place a program of “strategic enforcement” of the laws administered by the agency. These efforts entailed adopting a variety of practices, including:
- moving toward proactive and focused targeting of investigation resources rather than relying on complaints to drive priorities;
- taking a systemic approach to changing the factors driving non-compliance;
- working closely with state-level agencies to leverage information and enforcement tools;
- building relationships with worker advocates and unions, consulates, and employers and employer associations to assist in both enforcement and in educating workers and businesses on their rights and responsibilities under the law; and
- rigorously evaluating the impacts of interventions on compliance goals.
In 2014, only a handful of states engaged in efforts embracing these elements. Most relied upon complaint-driven models with a focus on simply recovering back wages owed under state laws. In the past few years, however, a wider number of state agencies have embraced strategic enforcement concepts and are innovating in a variety of ways to expand them. States are sharing and learning from their collective experience, which is a different laboratory dynamic, further spreading and “ratcheting up” effective approaches. And, in the longer term, the lessons from this period of innovation can inform and “ratchet up” future policies at the federal level.
Advocates for instituting progressive economic policies face an uphill battle, particularly in an age of wide and growing inequality. The strength of the business lobby can indeed push to a race to the bottom and undermine protections for working people. Yet the ratcheting perspective provides an important caveat to pessimism about the inexorable forces of political economy and can help guide a progressive approach to improving workplace conditions.
This essay is part of a nine-part series, entitled The Future of Workplace Regulation.