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Booming Economy = Labor Shortage = Innovative Pay Model

The typical American worker is paid by his/her employer every two weeks or perhaps once a month. But the fast food restaurant industry is innovating in order to attract workers who have myriad options thanks to our incredibly low unemployment rate. Bloomberg reports:

Restaurant chains are pulling out all the stops to attract and retain cooks and cashiers amid persistently low unemployment. The latest move: Same-day and next-day paychecks. Starting in June, eight Church’s Chicken restaurants will offer employees half of their earned pay the day after their shift. The test will gauge whether the 50% is enough for workers, and the idea is to roll it out more widely going forward. It’s not a loan, and there are no fees.

“It will give the employee the chance to get spending money quicker,” Church’s Chief Executive Officer Joe Christina said in an interview. “Some people just can’t wait two weeks to get paid.”

This is a great example of the power of competition. Now if we could just embrace competition in other industries — health care, for example — we would usher in a more robust marketplace that would increase access to care. Let’s start by repealing North Carolina’s Certificate-of-Need laws. They’re outdated and anti-competitive, as JLF’s Jordan Roberts explains.

Texas did it in 1985. California did it in 1987. Pennsylvania did it in 1996. New Hampshire did it in 2016. Florida did it in 2019.

I’m talking about states that repealed their Certificate of Need laws. CON laws were implemented by almost every state as a condition to receiving federal funding when Congress passed the Health Planning Resource Development Act of 1974. Congress sought to keep the supply of health-care services in check over concerns the high overhead costs of underused facilities would be passed on to patients.

But the federal government would not do the dirty work. Instead, it directed states to create planning boards that would control the approval process. If an entrepreneur wanted to open up a facility that would offer a service regulated under the CON law, they would only receive permission from the board if they survived an elaborate review process.

The outcome was predictable for anyone with basic knowledge of economics. When you keep the supply of a service artificially low, incumbent providers aren’t subject to competition and gain more market power than they otherwise would. The natural consequence is less access and higher prices. Regulating health-care facilities with CON laws makes the patient worse off by putting the choice of health care in the hands of the government rather than the private market.

Whether it’s in the restaurant industry or in health care, embrace competition and you embrace opportunity and innovation.

Donna Martinez / VP of Marketing and Communications

Donna came to the John Locke Foundation in January 2003 after freelance writing for Carolina Journal and contributing to projects for the North Carolina Education Alliance. He...

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