A Lesson in the Limits of Employee Costs

Always on the lookout for the practical lessons of economics, I have to highlight an article by Marcia Pobzeznik from Friday’s Newport Daily News even though it’s not online.

The Tiverton Town Council is deciding what to do about trash pickup because the costs are rising, and there are two basic options:

  1. Continue with a system using workers to pick up the trash.
  2. Switch to an automated system that uses machines.

If I’m reading the article correctly, at first, option 2 will be more expensive because the town would buy every household the totes in which the machine requires garbage to be placed, but apart from that initial charge, the price is essentially the same.  The lure of the machines, though, is the expectation for the future of workers:

“I’d like to see us go automated,” said [Director of Public Works Bill] Anderson. That would happen in October if Waste Management wins the bid.

Companies are transitioning to automated pickup because of safety issues for workers and the high cost of Worker’s Compensation insurance, Anderson said.

Like many other rackets in Rhode Island, workers compensation is a private operation but is largely a creature of state law, which is heavily weighted to drive up costs.  On top of every other regulation that lawmakers have decided Rhode Islanders can’t live without, it makes employing people increasingly expensive, which in turn makes automation look increasingly attractive, even with an initial cost for the transition.

That puts people out of work, shifting leverage from all workers in the state to all employers, which suppresses salaries and benefits.  This change in the balance creates incentive for politicians to meddle, which produces new ways in which hiring people becomes more expensive.  And repeat.

Disclaimer: The views and opinions expressed in The Ocean State Current, including text, graphics, images, and information are solely those of the authors. They do not purport to reflect the views and opinions of The Current, the RI Center for Freedom & Prosperity, or its members or staff. The Current cannot be held responsible for information posted or provided by third-party sources. Readers are encouraged to fact check any information on this web site with other sources.

  • No products in the cart.