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Economic dimensions overlooked

By A Contributor

Noah Feldman, in the July 1 Op-Ed column, “Conservatives keep the faith in Hobby Lobby case,” does yeoman service in presenting the political and religious issues involved in the Supreme Court’s decision to allow at least some companies to withhold coverage for certain kinds of contraception their owners consider contrary to their religious beliefs.

Like almost all commentators on the case, Mr. Feldman fails to look at the economic dimensions of the decision; that oversight is addressed below.

I know that normal peo-ple, i.e., non-economists, think of our profession as sharply divided on nearly everything. That’s understandable because the 5 to 10 percent of economics issues where strong differences of opinion do exist get so much attention. One area where practitioners of the dismal science do agree involves the generally beneficial results of competitive forces in so much of the U.S. economy.

Most economists would argue that markets work best when they are characterized by a fairly large numbers of buyers and sellers, relative ease in finding alternatives for buyers to purchase and sellers to produce, high levels of information available to both buyers and sellers, and relatively low levels of costs borne by people who are neither the buyer nor the producer of a particular good or service. Labor markets tend to score pretty well in terms of these criteria.

Hobby Lobby’s job-seekers (they are the suppliers in this instance) compare wages, fringe benefits (such as health-care coverage), working conditions, chances for advancement, etc., there with other places they might find work.

Like all other employers (the buyers in labor markets), Hobby Lobby’s task is even less complicated. Its decision to hire job applicants is based on the bottom line: hire applicants if and only if the company believes that the odds are high that potential workers will deliver value to the company at least somewhat greater than ALL the costs — wages, fringe benefits (including health-care insur-ance), training, and the like — incurred as result of adding workers to the payroll.

See where this is going? Employers do NOT pay for health-care insurance — it is the WORKERS who pay for the insurance in the value of whatever it is they produce. Now, labor markets are not perfect, but they are better than many other markets because job-seekers are highly motivated to know about what various jobs will pay, and employers are equally motivated to be sure that their employees pay their way and then some.

The Supreme Court justices missed an opportunity to settle this case simply and fairly by allowing workers to decide just what medical services they might want to spend their money on. I leave it to people more knowledge-able about the Supreme Court than I am to say whether the majority willfully chose to focus on such a divisive issue as religion when a much more straightforward and less con-troversial option was readily available to them.

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