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Trumping Poverty

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The regulatory state disproportionately affects the poor. Casey B. Mulligan writes:

Who would pay most for a revival of the regulatory state? Dividing American households into five income groups from lowest to highest, I have estimated each group’s regulatory costs and expressed them as a percentage of its average income. The costs to the bottom quintile amount to 15.3 percent of their total income—representing as high a burden as all the taxes they currently pay. This group would experience part of the cost as lower wages, but the biggest bite would come in the form of diminished purchasing power due to higher prices for energy, cars, and other consumer goods. The top quintile, by contrast, would suffer the least from regulatory restoration, with labor, energy, and other consumer rules amounting to only a 2.2 percent implicit tax on the highest earners.

My analysis of a hypothetical revival of the regulatory state focuses on ten of Trump’s key deregulatory actions—five of which reverse employment regulations such as employer mandates—and on a revised definition of “joint employer.” These employment regulations held down productivity and wages and reduced job opportunities, especially for less-skilled workers. It’s no coincidence that Trump’s regulatory reversals coincided with an acceleration of wage growth in 2018 and 2019, with low-skill workers seeing the fastest gains.

Revival-of-regulatory-state

[Casey B. Mulligan, "Trumping Poverty," City Journal, April 23]

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