Economic Analysis of Labor Regulation
75 Pages Posted: 14 Aug 2017 Last revised: 12 Apr 2019
Date Written: April 12, 2018
In an era when administrative agency actions succeed or fail based on the thoroughness and rigor of their cost-benefit analyses and expertise, the 1940 statutory ban on hiring economists at the National Labor Relations Board (NLRB) is a shocking anachronism. The ban, accompanied by the Board’s failure to solicit external expertise, severely limits the success of the Board’s actions on judicial review, its institutional competency, and its ability to assess the economic effects of its labor regulation in achieving a central goal of the National Labor Relations Act: equal bargaining power between workers and their employers that secures competitive wages and increases worker purchasing power.
This Article proposes the reestablishment of a Division of Economic Research at the NLRB to integrate the study, analysis and propagation of labor-related social science into the Board’s enforcement and policy-making. In doing so, it draws on the history of the Board’s short-lived Division of Economic Research (1935-1940) and on the broader development and incorporation of economic and social scientific expertise into the administrative state to consolidate best practices for a new Division. Rejecting the development of expertise through interagency working groups (IWGs) and Office of Information and Regulatory Affairs (OIRA) review as insufficient, the Article provides the first roadmap of its kind on how a new internal “think tank” could integrate micro- and macroeconomic analysis into the Board’s labor regulation. The work of a new Division would not only develop and hone the Board’s ability to achieve the Act’s goals through rulemaking and adjudication, but it would also enhance the standing of the Board before the courts and the Board’s ability to contribute to national debates on how to fight inequality and reverse the dramatic decline of labor’s share of national income relative to capital.
Keywords: Labor Law, Administrative Law, Legal History, Law and Economics
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