Could price floors improve worker safety in the meat cutting industry?

My question is inspired by the Future Perfect podcast https://www.vox.com/future-perfect/21502225/chicken-meatpacking-plant-future-perfect-podcast which discusses the poor worker safety record of the meat cutting industry.

My thoughts are that if a price floor is binding that meat companies might compete on product quality including production practices like worker safety. Also, companies that take worker safety seriously could also enter the market since the price floor could support the higher costs of improved worker safety.

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    $\begingroup$ It might work, but why prefer this to other regulatory alternatives that target the issue more directly? Why not tax firms for worker injuries? Subsidize them for good safety? Why not increase monitoring? Or, less directly but still more targeted than price floors, why not mandate worker injury statistics disclosure on meat packaging? Require additional worker disability insurance? Mandate that the government buy meat only from firms with better than average safety records? $\endgroup$ – BKay Oct 16 '20 at 17:23
  • $\begingroup$ I agree other methods may target the problem more directly, I was just wondering since governments do use price floors sometimes and they may be viewed as more business-friendly than other regulations $\endgroup$ – Hal J Oct 16 '20 at 17:58

A priori this is difficult to say without any empirical experiment but it is unlikely due to:

  1. Price floors do not necessarily lead to more competition on quality. Theoretical models do show that price floors can (depending on parameters) lead to an increase in quality (Bilotkach, 2012 and sources cited therein), but they can also just result in intensifying competition along different dimensions (such as location, advertising, and other dimensions without necessarily more differentiation of products (see Bhaskar (2003) and Bilotkach (2012) and sources cited therein).

    So already an issue is that price floors cannot be guaranteed to lead to higher completion on quality. This would first have to be tested in the specific case.

  2. High-quality products do not necessarily imply better working conditions and high safety standards. Apple products could be argued to be of high quality (although I am an economist, not an engineer), yet apple is getting regularly lambasted for poor working conditions in its factories (see this article from the Guardian).

    I was not able to find on google scholar any empirical or theoretical work that would support the idea that price floors on products would lead to better working conditions. Also higher firm profitability is not necessarily associated with better working conditions. Firms can as well just keep working conditions the same and pocket higher profits.

  3. Even if it would work in public economics we are not interested in solutions that just work, but the solutions that achieve goals that we set in an efficient manner. As mentioned by BKay in their excellent comment there are many different ways how to raise work safety, arguably most if not all ideas mentioned in the comment would be more efficient than price floor which would likely have to change with market conditions and be set in a careful manner which might be too difficult to implement.


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