New Washington Research Council report delves into state/local labor policies affecting costs and employee compensation

A new Special Report published by the Washington Research Council examines in detail labor policies enacted or under consideration by state and local government here. There are a lot of them. We reported on various approaches to the minimum wage in Pacific Northwest states yesterday; the WRC research will be of interest to anyone seeking a deeper understanding of the scope and effects of wage and benefit policies.

We recommend reading the whole thing, but will call attention to this key conclusion:

It is important to remember that employee compensation does not consist only of wages—benefits and working conditions are also important components. An employer may offer a mix of wages, health insurance, leave, scholarships, flexibility, etc. as compensation. In the absence of government intervention, that mix will reflect the preferences of both the employer and employee. Because the mix will differ from employer to employer, prospective employees can shop around for the mix that best suits them.

But when the government mandates specific benefits or working conditions, the optimal mix for a given employee may no longer exist.

…labor policies should be considered as interconnected parts of total compensation. If one policy is mandated, there will be an opposite reaction in the compensation mix. Restricting scheduling practices will necessarily result in less flexibility—something that many workers value to the extent that they are willing to accept lower pay. Further, labor policy should be set at the state level so as to provide uniformity and more certainty for employers—to promote continued employment growth in Washington.

In our foundation report we wrote:

In terms of wage and benefit policies, Washington has long had the nation’s highest statewide minimum wage. That has now been exceeded in multiple jurisdictions as local governments have adopted their own wage and benefit laws…

In addition to the absolute costs of these measures, and the challenge they create in competing with other employers not subject to the same mandates, local governments’ wage and benefit regulations create compliance problems for employers operating in multiple jurisdictions. They also create difficulties as employers look to align their human resource policies among cities with different mandates.

As the WRC makes plain, wage and benefit policies are a growing source of concern and complexity. And, as the Seattle Times reports today, a source of litigation. The special report provides a good primer for policymakers.