Making it Harder to Hire

I've made no secret of my distaste for the current administration. I have many reasons for this, ranging from the president's incredible, relentless use of strawmen to his insistence on making everything political to his Machiavellian approach to pushing the health care bill to that deeply frustrating style of rhetoric where he is always the synthesis to a traditional thesis-antithesis argument.

These are mere pet peeves. More broadly, I find the president's faith in the efficacy and wisdom of top down, government solutions to be misplaced, and I think that this core misjudgment colors much of his policy agenda.

But in terms of policy, if I had to point to one particular issue that irritates me most, my largest qualm with the current administration would be its consistent focus on policies that actually serve to make it more difficult (or less desirable) for private businesses to hire people.

For the most part, I buy into Tyler Cowen's arguments about how structural problems are the main source of our continued unemployment woes. But the president's policies and policy preferences have consistently made the issue worse. You can argue that some of these laws were genuinely good ideas in isolation. Indeed, some may have made perfect sense in a time of economic strength. But that is not where we stood in 2009, and it's not really where we stand in 2014. Here's my list of things that serve to cool the climate for hiring and employment expansion. These are just off the top of my head; we could add to this list going forward. (Note: I will not be engaging with the wisdom of the policy other than its potential employment effects.)

- Lilly Ledbetter Fair Pay Act: This law essentially increased the statute of limitations on pay discrimination suits from 180 days from the "discriminatory decision" to 180 days from any paycheck associated with the discrimination. Businesses may decide that they would rather not hire additional employees if they may becomes sources of litigation, and this law made litigation immensely easier.

- Paycheck Fairness Act: This is essentially the next step after the Lilly Ledbetter law, and takes that logic much, much further, dramatically increasing the difficulty for companies in pay inequity lawsuits. With the risks of wage discrimination suits increasing (higher thresholds mean more likelihood of success for prospective plaintiffs, who will file more suits), it may make more sense simply to avoid expansion and hiring entirely.

- Push for a minimum wage hike: This one is straightforward, in that it directly increases the cost of hiring a new worker and the costs of employing people at the minimum wage at all. Employers can easily respond by making one-time capital investments to automate their processes or simply by hiring fewer workers.

- Appliance efficiency standards: I use this one as representative of most of Obama's minor environmental regulations, but they add up. These efficiency standards cut into company margins because companies are forced to spend more on development, which cut into potential hiring or expansion. (They also may drive up prices, but that is a different issue.)

- Keystone XL Pipeline: The Keystone XL Pipeline has become symbolically important and remains so for many on the environmental Left. Its approval would create 20,000 jobs. It remains in legal limbo.

And, of course, the big kahuna:

- Patient Protection and Affordable Care Act (PPACA): The employer mandate dramatically drives up the cost of hiring new workers. The "full time hours requirement" incentivizes employers to reduce employee hours and avoid bringing on new full-time workers. The increased mandatory benefits--like birth control--drive up the price of insurance, which further increases the cost of employment.

I love the metaphor of regulations as "pebbles in a stream", in that no one regulation is going to negatively affect a business, but a whole slew of them serves to depress economic activity. I don't think the Obama Administration sees it this way; I think they see their regulations as smoothing out the rough edges of capitalism and making it work better. The regulations, on their own, might be a good idea. Indeed, I make no argument (here) about the relative overall merits of any of these policies; all policy decisions are tradeoffs between multiple priorities. But in a time of great pressure on the job market, they do not make sense if our goal is to keep people working and prevent the suffering that is long-term unemployment and the tragedy that is human capital depletion. And I remain unconvinced that President Obama, for all of his rhetoric about getting people back to work, really gets that.