Undoubtedly, leftist opponents of Supreme Court nominee Amy Comey Barrett are going to bring up the Supreme Court’s decision in the 1905 case of Lochner vs. New York. In Lochner, the court held that a state law that set a maximum limit on the number of hours worked by employees was unconstitutional.
This was the time, however, that the Progressive movement was battling hard to usher in a different way of life for America, one based on socialism and interventionism. The socialism came in the form of the welfare state, with its crown jewel being Social Security. The interventionism came in the form of government regulation, control, and management of people’s economic activities.
The Court’s decision in Lochner was simple and straightforward. The Court relied on the 14th Amendment to declare the law unconstitutional, specifically that part of the amendment that prohibits a state from depriving any person of life, liberty, and property without due process of law.
The Court correctly held that liberty encompasses the right of people to enter into mutually agreeable contracts with each other. These include labor contracts, i.e., those contracts in which people to work for an employer.
From an economic standpoint, when two people enter into an exchange, they are both benefiting. That’s because at the moment of the trade, they are both giving up something they value less fro get something they value more. Thus, when an employer and employee mutually agree on a labor contract in which the employee is working more than, say, 60 hours a week, both sides are benefiting, from their own individual perspective.
Leftist critique of Lochner
Leftists criticize the Lochner decision because they say that workers are not equal to employers in terms of bargaining position. Employers, they say, are always better off economically and therefore can “force” employees to accept subsistence wages.
That reasoning, however, is pure nonsense. For one thing, market conditions are sometimes such that workers have the upper hand in wage negotiations. If there is a severe scarcity of labor and a large number of employers, wages will soar. Thus, oftentimes employers are paying employees more than the legally mandated minimum wage. Why would they do that rather than simply pay subsistence wages?
Moreover, regardless of respective bargaining power, no one forces a worker to go to work for an employer. The fact that a worker accepts a particular labor contract is evidence that that he finds it in his own personal interest to do so. By entering into the contract, he figures that he will be better off than he would be without the contract.
From a legal standpoint, however, economic policy is irrelevant. The only question is whether the law is constitutional or not. Since the state’s maximum hours law interfered with the liberty of employers and workers to contract with one another, the Supreme Court declared the law in violation of the 14th Amendment.
For the next several years, however, the Progressive movement did not let up. They were bound and determined to eradicate America’s free-market way of life and replace it with a welfare-state, regulated economy system. Once the Federal Reserve brought on the Great Depression, the Progressives got their chance to achieve their goals.
The Progressives’ success was manifested by President Franklin Roosevelt’s New Deal, which revolutionized America’s economic system through the adoption of a welfare state and a managed, regulated economy. With the advent of this dual economic system, America’s heritage of economic liberty came to an end.
It was no different in the Supreme Court. Although Roosevelt’s shameful court-packing scheme went down to defeat, he was successful in shifting the Court in his direction. The critical decision came in the 1937 Supreme Court case of West Coast Hotel vs. Parrish, where the Court upheld a state minimum wage law. The decision effectively overruled Lochner, and the Court made it clear that never again would it declare unconstitutional any law that infringed on economic liberty.
If Barrett is asked about Lochner, it’s a virtual certainty that she will go through the formalities of condemning it, knowing that if she doesn’t the leftists and even some conservatives, along with the mainstream press, will vilify her. But it sure would be refreshing if she were to say, “Lochner was correctly decided. It was West Coast Hotel that was incorrectly decided.”
For a closer examination of the fight for economic liberty in the Supreme Court, see my FFF book Economic Liberty and the Constitution.