It’s no secret that there are dozens of major issues and policies that we will need to look at in the years to come. Healthcare costs, childcare, housing, transportation, substance abuse, voting systems and more, will all be tackled in the not-too-distant future. I’m a believer that the biggest issues need to solved by convening willing experts on the topic to find new and useful solutions. However, I’ve begun to notice a trend in policymaking that I can only describe as “reverse engineering”, and I have to say for public policy it’s a really difficult path forward, and can result in bad policymaking.
Let me use a ridiculous scenario to demonstrate reverse engineering, and then I’ll show you some much more common scenarios. Let’s say, a policymaker wanted to lower transportation costs. In good faith they thought that cars were not affordable enough for everyone so they propose a bill that car dealers can’t sell a new vehicle for any more than $10,000. Constituents love the suggestion as they want to pay less for vehicles, and they cheer for how much they can save — the politician has another feather in their cap.
The problem is the car manufacturer can’t produce a new car for $10,000 while still paying the workers to make it and keeping it safe. The engine and computer parts alone are $4,000. Add to that the wheels, axles, tires, steering wheel, only two doors, headlights and you’ve got another $3,000. Now add the body, the windows, all of the wiring, and the labor to build it, and you are far over $10,000 in total. The dealership would have to sell the car at a loss-it can’t happen.
In this scenario, it’s clear you can’t set the price for something without accounting for the costs associated with creating it. You need the content experts to help figure out what’s the lowest amount a vehicle that could be built for, so then you can figure out the lowest amount it could be sold for. Only experts know what the true costs are.
Yet we use reverse-engineering a lot in policymaking. Minimum wage, education funding, state budgets, school budgets, town budgets, and so much more, have policies often created by well-meaning people declaring what the answer needs to be before allowing experts to answer the question.
Let’s take wages in general, even more than minimum wage. Employees are pretty confident they know how much they should be paid, and most employers try to do all they can to get there. Sometimes though the business doesn’t have enough revenue yet to get there- especially with growing businesses. Many business owners don’t take a salary the first year or two of their business so they can be their own free labor while they build up their customer base.
I know for our own chamber I’d love to have a bigger salary and benefit package for the employee I work with. Personally, I’d like to get paid more too, but our organization and our revenues need to grow so we can afford that. If a new rule dictated all chamber staff people need to be paid $25 per hour, we simply couldn’t afford that. If forced to pay that rate, we would then have to reduce the hours worked by the employee to keep the overall payroll cost down.
This is exactly what it’s like for minimum wage for some small companies and growing ones. Many may not believe that, but it’s true. This was seen when businesses in Portland, crunched by supply chain costs, hiring costs and more during the pandemic, who said they couldn’t afford the proposed hazard wage rates suggested by the city council.
Another example of reverse engineering is telling the Road Commissioner that they only have $300,000 for plowing this winter. Again, well-meaning people want to keep the taxes down so they try to reverse engineer the number they want. But if the number doesn’t include the input of content experts, then it is unachievable. If the Road Commissioner in certain cities were dictated to cut their budget to $300,000 for plowing the answer would be ‘then which two days would you like us to plow.’
Now I will say, the private sector has used reverse-engineering for decades, but it was their choice. For example, a private business may set a goal of “hey let’s see if we can build a car for $9,000,” and they would get a team of innovators to look at their process and find the cost savings. Maybe they have a new composite material that is cheaper to make then the metal for the car’s frame, or maybe they have invested in technology that makes the engine one-third of the size and producible for $400 in parts. The key here is they chose this, and it wasn’t mandated to them. They can only achieve it with innovation, and innovation costs money. You can’t demand all businesses create innovation to reach difficult policy goals — the majority don’t have those resources for research and development.
The point is this: for policymaking you need content experts. Just putting out a policy without the input of those it will affect is irresponsible. Now perhaps you will make the correct guess at the right limitations, but there’s a better chance that you won’t.
This is why our chamber is convening groups of experts this summer and fall to tackle workforce needs. We believe in experts, and their opinions are necessary for success. Plus, a funny thing happens when you get experts in a room- sometimes they disagree. And when they do, the debate that happens enlightens everyone in the room who are fortunate enough to hear two experts dig into these topics they know so well. From those types of conversations, new solutions get created. That’s what we need- new solutions. Rather than one group dictating policy, let’s all get together and work on new solutions together.
Cory King is the executive director of the Bath-Brunswick Regional Chamber.
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