The Role of Labor Market Regulation in Rebuilding Economic Opportunity in the U.S.

By Annette Bernhardt |


At the start of the 21st century, millions of Americans face a daunting labor market that, absent coherent and sustained policy intervention, will very likely provide them with fewer career opportunities and less economic security than their parents enjoyed. While globalization is often blamed for the deterioration in labor standards, it is domestic service industries where the low-wage problem is most acute.

One of the key drivers of precariousness in these sectors is employers’ growing evasion and violation of both legal and normative standards, facilitated by the withdrawal of government’s hand in the labor market. Myriad factors describe this new world of work: the weakening of employment and labor laws; under-resourced enforcement of a host of regulations; production chains that mask legal accountability; the exclusion of groups of workers from legal protection; and a dysfunctional immigration policy. To reinvigorate labor market regulation opportunity, government should: establish a strong floor of labor standards; vigorously enforce that floor; and build a base of good jobs on top of that floor.

Key Arguments:

  • The days of business self-regulation are long gone, or never existed in today’s low-wage industries; therefore, government’s hand must be visible again.
  • Labor market regulation should play a central role in the U.S. policy response to rising inequality, via three main strategies:
    • strengthening the floor of labor standards (wages, health and safety, and right to organize chief among them);
    • vigorously enforcing that floor (and holding employers accountable for the working conditions they control, whether directly or indirectly); and
    • leveraging government contracting and grants to build a base of good jobs on top of that floor.
  • In the current political climate, winning change at the national level will require ratcheting up from state and local policy campaigns to federal reform.

Annette Bernhardt, a leading scholar of low-wage work, is a former Fellow at the Roosevelt Institute, a visiting professor at the UC Berkeley sociology department, and a visiting researcher at the Institute for Research on Labor and Employment.