Employers are prevented by law from subjecting workers to income management. What if they weren’t?
Libertarians favour freedom of contract. They believe the government’s role is to enforce contracts not tell people what should be in them. One way governments have interfered with freedom of contract is by insisting that employers pay workers in cash. Laws like the nineteenth century truck acts were designed to prevent employers from paying workers in goods or forcing them to spend their wages in company stores. This restriction on freedom of contract continues today through the Australian Fair Work Act 2009.
Recently Andrew Forrest has suggested that a Healthy Welfare Card could help welfare reliant families by preventing spending on alcohol, drugs and gambling. According to Forrest, the card could offer stability and "help the most vulnerable families manage the routines required to hold down a job."
Many people who make this argument seem to assume that once someone moves into paid work, their drinking, gambling and substance abuse problems disappear. Or alternatively, they believe that until a person manages to overcome these problems, no employer will offer them a job. But in reality there are plenty of people with full time jobs who abuse alcohol, take drugs and have gambling problems.
What if someone proposed a scheme that allowed employers to offer jobs to people on income managed welfare payments and pay them using something like Forrest’s Healthy Welfare Card? They could argue that employers would be more likely to take on someone with long standing alcohol or drug problem if they knew their wages would be spent paying off a car that they could use to drive to work rather than on beer. The card could allow more people to get jobs, stabilise their lives and become self sufficient.
It’s hard to see how a strict libertarian could object to this arrangement. If a worker was willing to agree to this contract and an employer was willing to offer it, then making it legal would be an expansion of liberty. But this raises the question whether libertarians should support this expansion of freedom for everyone.
In a libertarian utopia with complete freedom of contract, employers would be able to offer payment on any terms they liked. If they were worried about hungover workers crashing company cars, damaging machinery or injuring themselves on the job, maybe they’d appreciate a Healthy Wages Card that prevented workers from spending money on alcohol and drugs. The only limitation would be finding workers willing to agree to these terms.
A libertarian approach to freedom of contract would allow the privatisation of income management. To me this seems like a restriction on freedom rather than an expansion. I think governments should put limits on things like employment contracts. But I’m not a libertarian.