Want to Increase Jobs? Eliminate These Laws

Last Updated Aug 17, 2011 2:09 PM EDT

Politicians are always proposing new laws to fix problems. But what if we eliminated laws instead? Reason.com asked several policy wonks, economists and writers what changes they would implement to increase job growth in America. Some of their suggestions are the opposite of what the unemployed want. For instance, writer Ira Stoll asks that Congress should stop extending unemployment benefits. He doesn't end there, however, and suggests:
...better yet, restructure the unemployment insurance program or block-grant it to the states to allow them to experiment with ways of doing so. The idea is to change the program so it creates an incentive for recipients to get a job, rather than an incentive for them to remain unemployed.
While many people on unemployment are frantically looking for jobs, there are many who are not really looking that hard. His suggestions include giving lump sums to people who want capital to start a business, or instead of giving money to individuals, give it to businesses as a voucher to hire.

Walter Olson, who blogs at the fabulous Overlawyered.com, suggests doing away with age discrimination laws. His reasons:
Its beneficiaries are among those needing least assistance. The main cash-and-carry effect of age-bias law is to confer legal leverage on older male holders of desirable jobs, such as managers, pilots, and college professors, who by threatening to raise the issue can extract ampler severance packets than might otherwise be offered them. Much legal talent is wasted in the resulting exit negotiations, which seldom seem to rouse the ire of critics of gaudy executive pay, golden parachutes and so forth.
Frequently, the end result of anti-discrimination laws is that the "protected" person has more difficulty finding a job. Employers don't want to have to worry about lawsuits, and failure to hire suits are rare and difficult to prove, while unlawful termination suits are more frequent and more expensive. Companies can easily find a legal reason not to hire someone, and so they do.

Peter Schiff, CEO of Euro Pacific Capital, suggests an even more radical approach of allowing the free market to take over completely. He writes:
Just as employees are allowed to leave jobs for whatever reason, employers should be allowed to hire and fire based on any criteria without fear of litigation. In other words, liability cost for hiring employees should be minimized. Employees become easier to hire once employers know that their downside risks are minimized. In addition, all labor laws protecting employees from employers, including minimum wage laws, should be repealed.
Talk about a radical departure from the norm, but very much worth looking into. Minimum wage protections and rules regarding overtime and the racial make up of your organization (and yes, if you're subject to Affirmative Action reporting you're required to work to remedy the problem of having too few of some protected class in any particular job) make employers more nervous about hiring. They want to wait until they are sure they cannot survive without an additional employee before they take on all the risks involved in hiring.

Employment lawyer, Jon Hyman, didn't participate in the reason article, but he calls for an elimination of the Fair Labor Standards Act. This is the law that governs things such as overtime pay. Hyman writes:
In the 70+ years that have passed, [FLSA] has evolved, via a complex web of regulations and interpretations, into an anachronistic maze of rules that even the best-intentioned employer cannot hope to comply with. I would bet any employer in this country a free wage and hour audit that I can find an FLSA violation in your pay practices. A regulatory scheme that is impossible to meet does not make sense to keep alive. Instead, what employers and employees need is a more streamlined system to ensure that workers are paid a fair wage.
The reality is, that many employers try to avoid getting caught up in rules and regulations and lawsuits by outsourcing and using contractors. For instance, if a company hires you as an employee, they must pay you at a minimum rate regardless of how productive you are. If you are non-exempt and it takes you 60 hours to do a task, they must pay you for all 60 hours, including 20 hours of overtime pay. This is regardless of whether you worked efficiently. Additionally, if you are exempt and are a complete slacker all week, your pay must be the same as last week's. They can fire you, but can't withhold pay.

On the other hand, if you're a contractor, you can be paid based on the end product. For instance, my relationship with BNET is one of a contractor, not an employee. If it takes me 120 hours to write an article and it garners only a few hits, my wage is way below a legal minimum wage. If I spend 30 minutes writing something that attracts a huge number of hits, my pay reflects that. The end result is that I have control over my paycheck and behave accordingly.

If you could waive your magic wand, what government law or regulation would you eliminate in order to increase jobs?

And check back on Friday for suggestions from the other side of the political spectrum.

For further reading:
Photo by KeithBurtis, Flickr cc 2.0

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