The
news came out recently that the United States economy grew at a very
paltry 1.8% in the first quarter of 2013. The bad economy that
started five years ago continues. With that bad economy, jobs
continue to be hard to find and keep for many people. There are
still more than 20 million people unemployed, underemployed, or who
have just given up looking for a job.
I
am predominately a believer in free markets. However, government has
a role to play protecting workers from corporate and business leaders
that have no ethics and providing a sufficient safety net for people
when individuals and families have difficult economic times.
I
am for the people. For government laws, regulations and policies
that help people.
For
that reason, I have been disappointed with some issues that I have
heard in the news and reports I have heard from conferences I have
attended.
Let
me begin with what is new in employment law. The current
administration in Washington D.C. has loaded up the Equal Employment
Opportunity Commission and the Department of Labor with lawyers and
they are coming to a business near you. The administration has
expanded the definition of what is discrimination, and they are going
after companies.
There
is a definite need for the government to help protect employees. I
previously worked for a division of a company that was considered to
be getting “too old” by corporate headquarters. Over the
next two to three years, several people approaching 62 were deciding
to “retire” (with severance). Some of these retirees
were good friends of mine, and it still infuriates me that they were
discriminated against just for their age.
I
believe these employees were betrayed by a company they had worked
hard to build and make profitable, and the government should be able
to stop this type of unethical behavior. However, what the
government is doing now is confusing and even frightening businesses.
Businesses are being held to such high standards, and many of the
high standards have not even been defined yet by the government.
All
of these additional employment regulations and potential regulations
make it more costly to hire an employee.
Any
time you increase the cost for something, you get less demand for
that good or service. In this case, employees. A case in point is
the recent statement by the President of the United States about the
Environmental Protection Agency producing regulations that will
eliminate the use of coal as an energy source in America. What does
this mean for the average person?
First,
over time, the utility bills we get from our power companies will go
up. This is inevitable. When you go from one source of energy to
one more expensive, then the customers will pay more. When the
customers pay more, then they have less money to spend on other goods
or services. For people, this could be clothes, cars, food, and
other important expenditures. For businesses, this could be
supplies, an office refurbishment, or employees.
When
people demand fewer goods, then businesses require fewer employees.
When a fixed cost, like energy, increases in a business, then the
business looks to cut costs other places, like fewer employees.
The
affordable healthcare act became law in the United States a few years
ago and is a disaster. I support some of the initiatives in that
bill, but they tried to do too much too fast. One of the
consequences of the bill is that medium-sized businesses are working
hard to keep their number of employees below 50 or to eliminate as
many full-time employees as possible.
They
do this because it helps them reduce their cost implications from the
bill. A business is exempt from many provisions if they have fewer
than 50 employees and you do not have to offer healthcare to
part-time workers.
Many
lower skilled jobs will never again be full-time work. With only
part-time work available, people with fewer skills now have to work
at least two jobs to survive. And if you are a business, think about
how expensive it is to hire that fiftieth employee. For some
businesses that have great margins this is not problem, but for those
businesses with tight margins, the fiftieth employee is just too much
of an increase in cost to survive.
I
have listed three very obvious issues that continue to dampen
employment in the US. It is not the case that those in charge do not
care if people have a job. That statement would be false and unfair.
However, it is obvious that increasing the number of jobs is not the
top priority for the current administration.
Considering
businesses to be evil and attacking them, being committed to reducing
greenhouse gases, and providing healthcare to all, are all policies
that have taken precedence over creating jobs. And there are many
people in the US that would agree with this priority list. The
problem is that creating the jobs first and then working on and
completing this list is possible. Working on this list first will
make it very difficult, if not impossible, for those 20 million to
ever find work.
Adam Smith is obviously not the actual name of the author of this column. The real author has
worked for two Fortune 500 companies, one privately held company, and a public accounting
firm. His undergraduate degree was in accounting, and he earned an MBA for his graduate
degree. He also has completed coursework for a PhD. in finance. He continues to be employed
by one of the Fortune 500 companies.
The author grew up in the Washington D.C. area but also lived for several years in Arizona. He
currently resides with his family on the East Coast.
The author has held various callings in The Church of Jesus Christ of Latter-day Saints.