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Monday, July 8, 2013

Unionizing Nanny

What’s Wrong with Domestic Workers’ “Bill(s) of Rights”

California is debating a nanny state law—literally.

A.B. 889, or The Domestic Workers' Bill of Rights, extends labor “protections” to those who work in the home of others to whom they are not related. They include nannies and health- or home-care providers.

Estimates of how many domestic workers are in America vary widely, but they run well into the millions. Because minorities, immigrants, and poor women constitute the majority of domestic workers, A.B. 889 purports to defend the most vulnerable within society. 

But the opposite is true: The bill would harm the people it claims to defend as well as harm the elderly and disabled. The beneficiaries would be government bureaucrats, labor unions, and large health-care institutions.


The Birth of a Legislative Trend

Domestic workers are in a legal gray area. 

The National Labor Relations Act of 1935 cemented the power of unions by guaranteeing that private-sector employees could unionize and enjoy legal privileges such as collective bargaining. Domestic workers were excluded, but unionizing them would have been problematic in any case. Victor Narro of the UCLA Labor Center explained, “We can't unionize these people because there is no big employer to organize against.”

In 1938, The Fair Labor Standards Act established a minimum wage and other labor standards but excluded domestic workers until a 1974 revision. But, again, implementing a minimum wage is problematic. Many in-home workers are illegal immigrants or unable to speak English well enough to file complaints; others work under the table or on the basis of flexible verbal contracts. Moreover, the application of regulations depends on various factors such as whether the worker lives in. 

In 2007, the United States Supreme Court ruled that a full-time home care aide was not entitled to overtime pay based on existing regulations. Under Obama, there has been a federal push to have the Labor Department revise those rules. The push is a vote-winner for Obama, of course: His base includes labor unions that wish to extend their influence to domestic workers, as well as immigrants and women who gravitate toward that kind of work. A statement from the AFL-CIO captures the overlap: “As Women’s History Month continues, it’s important to highlight the often unsung heroes doing great work that continues to push the union movement forward, like domestic workers and groups advocating on their behalf.” On March 18, 2013, Obama nominated Thomas Perez as Secretary of Labor. Significantly, Perez sponsored a Domestic Workers’ Bill of Rights in Maryland while holding office there.

Meanwhile, a number of bills are moving forward on the state level. In November 2010, New York became the first to enact a Domestic Workers' Bill of Rights, which has become the model for other states. It spells out labor basics, such as an eight-hour workday as well as more detailed requirements. For example, an employer cannot deduct money from paychecks without written permission from the worker, and the employer must maintain a payroll record, presumably for tax purposes. 

In Hawaii, a bill awaits an expected signature by the governor. In California, a bill passed the Assembly and is headed to the Senate where it should pass; similar legislation was vetoed by the governor last year, however. Illinois, Massachusetts, Oregon, Texas, and Ohio are in various stages of drafting and debate. Meanwhile, organizations like the National Domestic Workers Alliance (NDWA) have spread in the last few years. The NDWA now has 35 affiliates in 11 states and claims a membership of over 10,000. 


Harms in the Proposed Bills 

Economist Milton Friedman called the minimum wage “the most anti-black law on the books.” The reason: it raised the unemployment rate for blacks, especially black youth. The same dynamic would be in play for the minorities, immigrants, and poor women these “bills of rights” address.

A domestic worker competes for limited jobs with others who are willing to accept $5 per hour, for example. If wages are forced to $6, then she also competes with anyone willing to accept that amount. Especially with high unemployment, employers become more selective and less likely to hire those without experience, with poor language skills, or with other disadvantages.

In his article “Minimum Wage Causes Maximum Pain,” Burton W. Folsom noted the impact of the minimum wage on disadvantaged minorities. “The bias of minimum wage laws … has been conspicuous ever since 1956, when the minimum wage shot up from 75 cents to $1.00 an hour. During the next two years, nonwhite teenage unemployment spiraled from 14 to 24 percent. The recent 1996 hike in the minimum wage to $5.15 an hour had a similar effect: Unemployment among black male teenagers jumped from 37 to 41 percent.” 

A minimum wage also shrinks the job market because employers who can pay $5 may not be able to afford $6. Others may not hire due to the inconvenience of paperwork or the legal risk of workplace violations. For example, the New York bill provides redress under the state's Human Rights Law to workers who are harassed because of gender, race, sex, religion, or national origin. Through harassment laws, the government becomes a third party in what should be a private employment arrangement; it becomes a de facto watchdog of an employer's behavior in his or her own home. The risks of a lawsuit for an ill-spoken word or for choosing a white nannie over a minority one would be especially high for people who have deep pockets. This is a disincentive to hire anyone. Increased competition within a shrinking job market is a formula for high unemployment, which has the greatest impact on vulnerable workers. This makes the bills anti-minority, anti-immigrant, and anti-poor.

New regulations would also inflict harm on the elderly and disabled who rely upon a home care worker to stay at home rather than moving into an institution. Baby boomers are aging; the number who require such services is growing quickly. They and their families already confront far higher health-care bills due to Obamacare requirements. In his article “Rate Shock: In California, Obamacare to Increase Individual Health Insurance Premiums By 64-146%,” Avik Roy of Forbes used a 25-year-old male nonsmoker as a baseline for the increase because such a person would probably qualify for a low rate. 

The result? The five least-expensive plans currently available came in at a median cost of $92 a month, whereas “the cheapest plan on Obamacare’s exchanges … costs an average of $184 a month…. Obamacare will drive [his] premiums up by between 100 and 123 percent.” 

Cash-strapped families confront difficult choices. One of them may be to place an elderly or disabled relative in one of many state-run institutions notorious for poor care. Even those who can afford home care are likely to experience reduced quality. The California bill includes a “right” to eight hours of uninterrupted sleep, meals, and rest breaks. But the elderly, the disabled, and children often require attention that may not be particularly convenient. Advocates of the bill dismiss such concerns as panic-mongering, but no one knows how the law will be applied. 


Who Benefits?

Government benefits. Domestic workers constitute a large black-market category of employment that would become more closely regulated and taxed. Moreover, full-time domestic workers would be entitled to workers' compensation insurance and disability benefits. California is already estimating the hundreds of thousands of tax dollars required to hire a staff to handle the increase in claims.

Unions benefit. With declining membership, unions look longingly at immigrant labor and domestic workers, whom they wish to woo. 

Large health-care institutions—state-run and private—would benefit from a sharp increase in demand. 

Who pays the price? Disadvantaged workers, the elderly, the disabled, children, and taxpayers.

Disadvantaged workers need the right to trade the one thing that enables them to advance in the world: their labor. Workers need the right to compete and to contract on their own terms. These “bills of rights” are anti-worker because they remove this freedom from vulnerable workers and give control to the State. If California cared for the dignity and autonomy of domestic workers, it would seek private remedies for whatever wrongs exist. 

One example: A new form of mediation is being tested in Massachusetts by a domestic worker who wants to avoid going to court. “A worker brings a complaint” to her center, “for example, a wage dispute. The center contacts the employer to see if they’d like to meet with trained mediators to find a solution—instead of taking legal action.” California will not pursue alternatives because they offer no advantage to government, unions, and corporate interests. 

All the alternatives do is help people, and where is the political advantage in that?


  • Wendy McElroy is the author of over a dozen books on individualist feminism and libertarian history. Her upcoming book, "The Satoshi Revolution," applies the concepts of classical liberalism to cryptocurrency. She has been published by such diverse venues as Penn State to Penthouse, FEE to Marie Claire.