Law Commons^™

Estimating The Impact Of The Age Of Criminal Majority: Decomposing Multiple Treatments In A Regression Discontinuity Framework, Michael Mueller-Smith, Benjamin David Pyle, Caroline Walker

Faculty Scholarship

This paper studies the impact of adult prosecution on recidivism and employment trajectories for adolescent, first-time felony defendants. We use extensive linked Criminal Justice Administrative Record System and socio-economic data from Wayne County, Michigan (Detroit). Using the discrete age of majority rule and a regression discontinuity design, we find that adult prosecution reduces future criminal charges over 5 years by 0.48 felony cases (↓ 20%) while also worsening labor market outcomes: 0.76 fewer employers (↓ 19%) and $674 fewer earnings (↓ 21%) per year. We develop a novel econometric framework that combines standard regression discontinuity methods with predictive machine learning …

Negligent Hiring: Recidivism And Employment With A Criminal Record, Benjamin David Pyle

Faculty Scholarship

This paper tackles a difficult legal and policy challenge—reducing the impact of criminal justice records on job applicants’ chances in a manner that does not spur more discrimination—by looking at how another area of law, tort liability, impacts employers’ decision-making. It uses theoretical and empirical methods to study the most common reason employers report being reluctant to hire workers with a criminal record: legal liability generated by the tort of negligent hiring. While the purpose of the tort is ostensibly to protect and make whole those harmed when an employee misbehaves in a foreseeable manner, I show that, in practice, …

The Long Shadow Of Inevitable Disclosure, Stacey Dogan, Felicity Slater

Faculty Scholarship

A growing body of evidence has highlighted the human and economic costs associated with contractual restrictions on employee mobility. News accounts describe abusive use of non-compete clauses to prevent low wage workers from seeking better options. Economists, meanwhile, have demonstrated that innovation and economic dynamism may suffer when employers can easily prevent their employees from changing jobs. While state legislatures have attempted to address these concerns by restricting employers' use of non-compete agreements, the Federal Trade Commission recently announced a plan to prohibit them altogether. As policymakers focus attention on contractual limits on employment mobility, however, a more insidious threat …

Automatic Reaction - What Happens To Workers At Firms That Automate?, James Bessen, Martin Goos, Anna Salomons, Wiljan Van Den Berge

Faculty Scholarship

We provide the first estimate of the impacts of automation on individual workers by combining Dutch micro-data with a direct measure of automation expenditures covering firms in all private non-financial industries over 2000-2016. Using an event study differences-indifferences design, we find that automation at the firm increases the probability of workers separating from their employers and decreases days worked, leading to a 5-year cumulative wage income loss of about 8% of one year’s earnings for incumbent workers. We find little change in wage rates. Further, lost wage earnings are only partially offset by various benefits systems and are disproportionately borne …

Employer-Sponsored Reproduction, Valarie Blake, Elizabeth Mccuskey

Faculty Scholarship

This Article interrogates the current and future role of employer-sponsored health insurance in reproductive choice, revealing the magnitude of impact that employers’ insurance coverage choices have on Americans’ access to reproductive care, as well as the legal infrastructure that prioritizes employer choice over individual autonomy.

Over half the population depends on employers for health insurance. The laws regulating those plans grant employers discretion in what services to cover, with exceptionally wide latitude for employers’ choices about reproductive care services, like abortion, contraception, infertility, and pre-exposure prophylaxis (PrEP). In their role as health care funders, employers pursue their own economic interests, …

Pov: Why The Crown Act Is Needed, Angela Onwuachi-Willig

Shorter Faculty Works

Imagine, for one minute, that we live in an alternate universe where employer and school grooming policies that ban “unprofessional” or “faddish” hairstyles are routinely employed as a reason for firing, or refusing to hire, individuals with naturally straight hair. The normative standard for hair in this alternate universe is tightly coiled, curly hair—the kind of hair texture that actors like Denzel Washington or Issa Rae are born with, hair texture that is best suited for natural and protective hairstyles like locs, twists, braids, and Bantu knots.

The Economic (In) Significance Of Executive Pay Esg Incentives, David I. Walker

Faculty Scholarship

The hottest topic in corporate governance circles today involves company commitments to and pursuit of ESG (environmental, social, and governance) initiatives in addition to the traditional pursuit of profits. One facet of this debate has to do with how to motivate executives to pursue ESG goals. Increasingly, companies tie executive pay to ESG performance, although even strong ESG advocates debate the advisability of doing so. This Article joins the fray by closely examining ESG-based CEO pay arrangements at a subset of companies with leadership positions on the Business Roundtable, an industry trade group that embraced ESG in a 2019 statement …

The Remainder Effect: How Automation Complements Labor Quality, James Bessen, Erich Denk, Chen Meng

Faculty Scholarship

This paper argues that automation both complements and replaces workers. Extending the Acemoglu-Restrepo model of automation to consider labor quality, we obtain a Remainder Effect: while automation displaces labor on some tasks, it raises the returns to skill on remaining tasks across skill groups. This effect increases between-firm pay inequality while labor displacement affects within-firm inequality. Using job ad data, we find firm adoption of information technologies leads to both greater demand for diverse skills and higher pay across skill groups. This accounts for most of the sorting of skills to high paying firms that is central to rising inequality.

Escaping The Allure Of Joint Employment: Using Fault-Based Principles To Impose Liability For The Denial Of Employee Statutory Rights, Michael C. Harper

Faculty Scholarship

Using joint employment alone to impose liability requires an extension of the strict imputed liability theory embodied in respondeat superior. Employers, including incorporated businesses, under the common law are strictly liable for harms to their employees, as they are for harm to third parties, because of actions of their agents or other employees taken within the scope of their employment. The liability is strict because it does not depend on a finding that the employer, the principal, was negligent or otherwise at fault. Expanding liability through joint employment, even if based on a demonstration of joint control of statutorily protected …

Should Labor Abandon Its Capital? A Reply To Critics, David H. Webber

Faculty Scholarship

Several recent works have sharply criticized public pension funds and labor union funds (“labor’s capital”). These critiques come from both the left and right. Leftists criticize labor’s capital for undermining worker interests by funding financialization and the growth of Wall Street. Laissez-faire conservatives argue that pension underfunding threatens taxpayers. The left calls for pensions to be replaced by a larger social security system. The libertarian right calls for them to be smashed and scattered into individually-managed 401(k)s. I review this recent work, some of which is aimed at my book, The Rise of the Working-Class Shareholder: Labor’s Last Best Weapon, …

Comment On Proposed Regulation: Prudence And Loyalty In Selecting Plan Investments And Exercising Shareholder Rights, David H. Webber

Shorter Faculty Works

In my view, while it is a significant improvement over its predecessor, the proposed rule’s persistent relegation of job creation/preservation to the status of mere “collateral benefit” is a mistake and undermines ERISA’s duty of loyalty. In reality, job creation and preservation are inextricably linked to fund financial health. Relegating that fact to a mere collateral benefit means trustees fail to consider the effect on a pension of investing in projects that eliminate the jobs of the fund’s own participants, or ignore the benefit of creating new jobs and thereby new pension contributors. This runs counter to President Biden’s executive …

The Intersectional Race And Gender Effects Of The Pandemic In Legal Academia, Angela Onwuachi-Willig

Faculty Scholarship

Just as the COVID-19 pandemic helped to expose the inequities that already existed between students at every level of education based on race and socioeconomic class status, it has exposed existing inequities among faculty based on gender and the intersection of gender and race. The legal academy has been no exception to this reality. The widespread loss of childcare and the closing of both public and private primary and secondary schools have disproportionately harmed women law faculty, who are more likely than their male peers to work a “second shift” in terms of childcare and household responsibilities. Similarly, women law …

Perpetuating Inequality: What Salary History Bans Reveal About Wages, James Bessen, Chen Meng, Erich Denk

Faculty Scholarship

Pay gaps for women and minorities have persisted after accounting for observable differences. Why? If employers can access applicants’ salary histories while bargaining over wages, they can take advantage of past inequities, perpetuating inequality. Recently, a dozen US states have banned employer access to salary histories. We analyze the effects of these salary history bans (SHBs) on employer wage posting and pay in a difference-in-differences design. Following SHBs, employers posted wages more often and increased pay for job changers, particularly for women (6.4%) and non-whites (7.7%). Bargaining behavior appears to account for much of the persistence of residual wage gaps.

Common Ownership And Executive Incentives: The Implausibility Of Compensation As An Anticompetitive Mechanism, David I. Walker

Faculty Scholarship

Mutual funds, pension funds and other institutional investors are a growing presence in U.S. equity markets, and these investors frequently hold large stakes in shares of competing companies. Because these common owners might prefer to maximize the values of their portfolios of companies, rather than the value of individual companies in isolation, this new reality has lead to a concern that companies in concentrated industries with high degrees of common ownership might compete less vigorously with each other than they otherwise would. But what mechanism would link common ownership with reduced competition? Some commentators argue that one of the most …

The Other Janus And The Future Of Labor’S Capital, David H. Webber

Faculty Scholarship

Two forms of labor’s capital—union funds and public pension funds—have profoundly reshaped the corporate world. They have successfully advocated for shareholder empowerment initiatives like proxy access, declassified boards, majority voting, say on pay, private fund registration, and the CEO-to-worker pay ratio. They have also served as lead plaintiffs in forty percent of federal securities fraud and Delaware deal class actions. Today, much-discussed reforms like revised shareholder proposal rules and mandatory arbitration threaten two of the main channels by which these shareholders have exercised power. But labor’s capital faces its greatest, even existential, threats from outside corporate law. This Essay addresses …

Automation And Jobs: When Technology Boosts Employment, James Bessen

Faculty Scholarship

Will new technologies cause industries to shed jobs, requiring novel policies to address mass unemployment? Sometimes productivity-enhancing technology increases industry employment instead. In manufacturing, jobs grew along with productivity for a century or more; only later did productivity gains bring declining employment. What changed? The elasticity of demand. Using data over two centuries for US textile, steel and auto industries, this paper shows that automation initially spurred job growth because demand was highly elastic. But demand later became satiated, leading to job losses. A simple model explains why this pattern might be common, suggesting that today's technologies may cause some …

Employer Losses And Deferred Compensation, David I. Walker

Faculty Scholarship

Most large public companies offer their executives the opportunity to defer the receipt and taxation of their salary or other current compensation until retirement or some other future date, and equity compensation, which also entails deferral of pay and taxation, constitutes a large fraction of the typical executive pay package. Conventional wisdom holds that employer net operating losses (NOLs) improve the joint economics of deferred and equity compensation (henceforth together "deferred compensation") for the parties. However, empirical studies provide little evidence of an association between employer NOLs and deferred compensation use. This paper focuses on two potential explanations for this …

Reforming Pensions While Retaining Shareholder Voice, David H. Webber

Faculty Scholarship

Public pension and labor union funds have been the driving force in diversified shareholder activism. They have also fended off attacks on jobs and proactively created jobs for fund contributors. These funds currently represent almost $4 trillion in assets over which workers have substantial control. That worker control - and the collective nature of defined benefit pension plans - is the necessary precondition for their shareholder activism. Both worker control and collective investment are directly threatened by the rise of defined contribution funds, particularly by well-funded efforts to promote the 401(k) in the public sector, the last bastion of the …

Using The Anglo-American Respondeat Superior Principle To Assign Responsibility For Worker Statutory Benefits And Protections, Michael C. Harper

Faculty Scholarship

When viewed flexibly, not to find doctrinal rules, but rather to find insight from judges' collective judgment on social values, the common law may have particular value for modern policy makers. For instance, a common law insight could set policy makers in both the United States (U.S.) and the United Kingdom (U.K.) on a promising path for defining when workers are to be protected and benefitted by employment statutes. That insight reflects the underlying rationale for the common law that made relevant the initial distinction between employees and independent contractors - the common law of vicarious liability through respondeat superior. …

A Common-Sense Defense Of Janus: Forthcoming Changes In The Public Sector, Maria O'Brien

Faculty Scholarship

Many scholars and others have, for some time now, been calling attention to the alarming growth in post-employment and other benefits for unionized employees in the public sector. ¹⁷ A fairly well-understood phenomenon is thought to explain the inability of state and local governments to resist outsized demands from their public unions. As ¹⁸ Is and others ¹⁹ have argued, the central problem with public sector unions is that they find it easy to capture their employers (taxpayers) in ways that private sector unions cannot. The role played by often eager and feckless elected officials in this process has also …

Op-Ed: California’S Most Powerful Voice On Wall Street? Its Pensions, David H. Webber

Shorter Faculty Works

The fight over public pensions in California is almost exclusively described as a dispute between people worried about tax hikes and public servants wanting to get paid what they were promised. But this is only part of the pension story — one focused on the “liability” side of the balance sheet.

Combating Discrimination Against The Formerly Incarcerated In The Labor Market, Angela Onwuachi-Willig, Ifeoma Ajunwa

Faculty Scholarship

Both discrimination by private employers and governmental restrictions in the form of statutes that prohibit professional licensing serve to exclude the formerly incarcerated from much of the labor market. This Essay explores and analyzes potential legislative and contractual means for removing these barriers to labor market participation by the formerly incarcerated. First, as a means of addressing discrimination by the state, Part I of this Essay explores the ways in which the adoption of racial impact statements — which mandate that legislators consider statistical analyses of the potential impact their proposed legislation may have on racial and ethnic groups prior …

Ai And Jobs: The Role Of Demand, James Bessen

Faculty Scholarship

In manufacturing, technology has sharply reduced jobs in recent decades. But before that, for over a century, employment grew, even in industries experiencing rapid technological change. What changed? Demand was highly elastic at first and then became inelastic. The effect of artificial intelligence (AI) on jobs will similarly depend critically on the nature of demand. This paper presents a simple model of demand that accurately predicts the rise and fall of employment in the textile, steel, and automotive industries. This model provides a useful framework for exploring how AI is likely to affect jobs over the next 10 or 20 …

Recoupment Of Pension Overpayments: Equitable Liens And Meaningful Reform After Montanile, Maria O'Brien, Jeanne Medeiros

Faculty Scholarship

This short paper reviews the current state of the law governing recoupment actions for defined benefit ERISA plans and focuses in particular on actions against retirees who are without fault for the overpayment. The paper argues that the current practices of many plans which focus on recovering overpayments without taking the consequences to the retiree into account are not required by either ERISA or the IRS. The practices which include ceasing all pension payments, huge cuts in payout amounts and unlimited reach back even in cases where the plan fiduciary has clearly breached its duty to participants, cause tremendous harm …

The Practice And Tax Consequences Of Nonqualified Deferred Compensation, David I. Walker

Faculty Scholarship

Although nonqualified deferred compensation plans lack explicit tax preferences afforded qualified plans, it is well understood that nonqualified deferred compensation results in a joint tax advantage when employers earn a higher after‐tax return on deferred sums than employees could do on their own. Several commentators have proposed tax reform aimed at leveling the playing field between cash and nonqualified deferred compensation, but reform would not be easy or straightforward. This Article investigates nonqualified deferred compensation practices and shows that joint tax minimization often takes a backseat to accounting priorities and participant diversification concerns. In practice, the largest source of joint …

Information Technology And Learning On-The-Job, James Bessen

Faculty Scholarship

Economists disagree how much technology raises demand for workers with pre-existing skills. But technology might affect wages another way: through skills learned on the job. Using instrumental variables on 9 panels of workers from 1989 to 2013, this paper estimates that workers who use information technology (IT) have wage growth that is about 2% greater than non-IT workers, all else equal, implying substantial learning. This effect persists over time, implying sustained productivity growth from IT. Also, it benefits workers both with and without college degrees. Because many more college-educated workers use IT, college wages grow faster, contributing to economic inequality.

How Computer Automation Affects Occupations: Technology, Jobs, And Skills, James Bessen

Faculty Scholarship

This paper investigates basic relationships between technology and occupations. Building a general occupational model, I look at detailed occupations since 1980 to explore whether computers are related to job losses or other sources of wage inequality. Occupations that use computers grow faster, not slower. This is true even for highly routine and mid-wage occupations. Estimates reject computers as a source of significant net technological unemployment or job polarization. But computerized occupations substitute for other occupations, shifting employment and requiring new skills. Because new skills are costly to learn, computer use is associated with substantially greater within-occupation wage inequality.

Friedrichs And The Move Toward Private Ordering Of Public Employee Wages And Benefits, Maria O'Brien

Faculty Scholarship

In its recent Harris v. Quinn opinion the U.S. Supreme Court (in particular Justice Alito) seemed to welcome a future opportunity to reconsider the 1977 landmark Abood decision in which public sector closed shop employees were not required to join a union but could be subject to fees that cover the costs of “collective bargaining, contract administration, and grievance adjustment purposes.” Supporters of the Abood approach argue that it is a reasonable compromise that prevents non-members from free riding on the union’s efforts (i.e. enjoying the wages and benefits negotiated by the union without sharing the costs incurred.) Detractors and …

Introduction To Thinking About A Post-Aca World: Litigation, Cost Shifting And Enforcement Of Statutory Rights, Maria O'Brien

Faculty Scholarship

At its annual gathering in 2016, members of the Employee Benefits and Executive Compensation and Law, Medicine and Healthcare Sections of the Association of American Law Schools (AALS) jointly sponsored a discussion of the future of the Affordable Care Act (ACA) following the Supreme Court's decision in King v. Burwell.' What follows are the papers generated for the panel discussion. The panelists² were asked to evaluate the future of the ACA from a distinct perspective.

A More Fundamental Distinction For The Contemporary Economy Between Employee And Independent Contractor Status, Michael C. Harper

Faculty Scholarship

The common law remains an intellectual battle ground in Anglo-American legal systems, even in the current age of statutes. This is true in significant part because the common law provides legitimacy for arguments actually based on policy, ideology, and interest. It also is true because of the common law's malleability and related susceptibility to significantly varied interpretations.

Mere contention over the meaning of the common law to provide legitimacy for modern statutes is most often not productive of sensible policy, however. It generally produces no more than reified doctrine unsuited for problems the common law was not framed to solve. …