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July 2, 2013
The Dismal Science
Employing the Future
by Adam Smith

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.


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