Recreational cannabis use is rife in New Zealand.When we chatted about it earlier, I asked Nick why an employer would ever test employees where it didn't make a difference for job performance and where it does annoy the employees. In short, Becker's discrimination model applies: companies compete for workers, and companies with an irrational fear of employees who are not less productive but who smoke marijuana on their own time will wind up having to pay more to attract staff. On the job drug testing is a disamenity in the overall pay packet requiring compensation.
There are, according to Auckland University's Alcohol and Public Health Research Unit, about 1.5 million pot smokers in this country, about 18 per cent of people aged 15-45.
More than half the adult population have inhaled at one time or another.
Illegality aside, it is uncontroversial to assert that what people do in their own home and in their own time is their business, not that of the Government or their employer.
So, corporate examination of people's personal lives by drug testing represents, at the very least, a gross invasion of privacy.
There is also an issue of fairness.
Cannabis stays in the system for up to 30 days and a positive urine test does not mean an employee is under the influence; it means that at some point in the last month they have consumed an illegal drug.
Nobody is arguing in favour of smoking on the job but workplace drug testing is being extended way beyond its initial, although dubious, safety justification.
If it were the Government rather than private companies implementing such policy there would be a public outcry at nanny state intrusion.
Perhaps this can be seen as another example of outsourcing government functions to the private sector.
Welcome to the new corporate nanny state.
I generally start from a model where I expect all employers to be completely selfish jerks and then work out why they’d give employees anything: from decent coffee machines to air conditioning in the office. They’re competing with other employers over a total compensation bundle, and if some amenities can be provided at cost lower than their monetary value to employees, then they’ll be provided with a lower monetary salary package. If some other disamenities, like mandatory overtime or working odd shifts or having to take drug tests, increase employer revenue by more than the monetized value of the disutility they impose on workers, then they’ll also provide those disamenities and higher wages. If we had monopsonistic employers with lots of power, then they’d have lots of scope for providing even inefficient disamenities, but that doesn’t characterize most of the workplaces out there. So I could buy inefficient employee drug testing in the “company town” in days of yore, but they don’t much exist anymore and mobility is cheap.
So why then would companies put in place drug tests where the workers' performance isn't likely to be an issue? Can we build a model generating inefficient workplace drug testing - testing where the value to the employer in improved productivity is less than the disutility to workers either of lifestyle changes or privacy violations?
There are a couple of ways. First, if customers put high value on that the product is delivered by a firm with drug testing, then it will be done regardless of whether drug use has any effect on workplace productivity. I don’t buy that story because I think it requires implausibly large customer willingness to pay for something that doesn't have any real effect on product quality. Second, you could maybe build a Glenn Loury statistical discrimination story leading to self-reinforcing equilibria where drug users underinvest in human capital because they expect workplace discrimination (and so drug users are in fact less productive, but only because of the inefficient self-reinforcing equilibrium), but I don’t particularly buy that one either.
Nick's finished piece has a better answer: union regs.
Madison Recruitment's Justin Pipe confirms the trend, saying increasing numbers of professionals are being asked to submit to drug and alcohol testing as part of companies' overall risk management policy.If pilot testing is efficient, and sufficiently so that the benefits of it outweigh the costs of imposing testing on all workers given a union constraint of an all-or-nothing regime, then I have a hard time blaming the company for pursuing testing. I can find fault with the union, but I have a hard time finding fault with the firm. If pilot testing is only efficient because of the tort regime, then blame should go to the tort regime.
Usually, Pipe says, it is firms that already have identified ''safety sensitive'' areas, such as operating heavy machinery or onerous driving requirements, that institute such intrusive policy.
On the basis that it is unfair to single out only one employee group, these businesses demand that all workers submit to regular drug and alcohol tests, he says.
Hays' Jason Walker disagrees, noting that such practices are still largely confined to the construction and roading sectors but, he says, testing in these areas are on the rise.
Greg Lloyd, Engineering, Printing and Manufacturing Union general counsel, sides with Pipe. His members, irrespective of the nature of their work, are being asked to provide urine samples for testing.
The EPMU took unsuccessful court action against Air New Zealand over testing of pilots and, Lloyd says, the airline now extends its policy to all members.
I just have a hard time seeing why a firm in a competitive labour market would implement an inefficient employment practice. Some might do it by error of course.
And, I would be annoyed if the University here started imposing mandatory drug tests. I don't use anything that would upset them, but I'd still reckon it an intrusion eroding about 5% of the value of my overall pay bundle.
Any better models out there that would generate firms implementing mandatory employee drug tests when those tests are in fact inefficient?