President Obama did not mention it in his speech last night, but his American Jobs Act contains one really bad idea that will probably destroy jobs in a misguided effort to save them. I refer to his call for a ban on what some are calling “unemployment discrimination”: the alleged practice by which some companies refuse to hire applicants because they are unemployed, or even announce in their job postings that they don’t hire applicants who aren’t currently working.
Obama’s idea – already distilled into legislation by Connecticut Democrats Rosa DeLauro in the House and Richard Blumenthal in the Senate – certainly has intuitive appeal. How indecent of some companies to hang out a “No Jobless Need Apply” sign at a time of record unemployment. And how contrary to their own self-interest: surely there are future employees of the month out there in the great pool of jobless Americans. “That makes absolutely no sense,” the president told a radio talk show audience the other day.
Actually, I can think of a couple of reasons why it would make sense. Companies may want people familiar with the latest trends and conditions in their industry, so that they don’t have to spend money training them up. Is it irrational for a hospital to prefer a nurse from their crosstown rival over a nurse who took five years off and is trying to get back into the field? Some firms may find that narrowing the field of potential hires in advance makes the hiring process more efficient.
This may or may not be a sensible calculation for any particular business. But I’m not prepared to second-guess them or assign malicious intent without a lot more specific information. In any case, if a firm that refuses to consider the unemployed is wrong about the costs and benefits of doing so, they’ll lose business to competitors that recruit differently. The market will punish them swiftly and effectively.
Be that as it may, the no-jobless-need-apply problem is probably not nearly as widespread, or as harmful to the unemployed, as Obama and other advocates of legislation suggest. The National Employment Law Project, which has made “unemployment discrimination” a cause celebre, found a total of 150 exclusionary ads in a four-week survey of four job-search sites -- Monster.com, Craigslist.com, CareerBuilder.com and Indeed.com. That’s 150 -- out of more than a million postings on the Web at any given time.
Monster.com conducted its own survey, and found that exclusionary ads on its site never exceeded one one-hundredth of one percent of the total. Even so, the company began actively discouraging them, even as it quite correctly noted that they are perfectly legal in almost every state. (Other job-search sites have taken a similar stance.) As of August 31, there were no such ads on Monster.com anymore.
No matter. Obama, DeLauro and Blumenthal want to roll out a legislative howitzer to blast this shrinking gnat. Their bill gives “affected individuals” – or groups of them -- the right to sue for money damages in state and federal court. Plaintiffs’ lawyers are no doubt dreaming up new ways to wield this new cause of action – make that class action -- every time a company turns someone down for a job.
To be sure, the bill would limit liability to cases in which a job-seeker got turned down “solely” because of his or her employment status. But that seemingly clear qualifier could, and would, be endlessly litigated before settled case law emerged.
The bill would permit employers to consider current job status “where an individual's employment in a similar or related job for a period of time reasonably proximate to the hiring of such individual is a bona fide occupational qualification reasonably necessary to successful performance of the job being filled.” But presumably that is what employers already think they are doing. In any case, practically every word of that clause could – and would – be hashed out among lawyers billing by the hour: Exactly what is “a similar or related job”? What is “successful performance?”
And remember, this would apply to every business in America with 15 or more employees — meaning each one would have to worry about staying on the right side of the new law, whether it ever published an exclusionary job listing in the past or not. The costs of compliance would take up resources that firms might otherwise use to expand their businesses and – you guessed it – hire workers. So this plan to help the unemployed would probably just create more of them.
Subjecting companies to the risk of job-discrimination litigation is justifiable in the case of pervasive, historically rooted evils such as race or gender bias. But burdening the private sector for this dubious new purpose, in these difficult times, would be a big mistake.
“I agree that there are some rules and regulations that put an unnecessary burden on businesses at a time when they can least afford it,” Obama told the Congress. So why the heck would he create another one?