Friday, September 23, 2011

If You Want Jobs, The Micro Environment Must Change

The regulatory and litigation environment virtually guarantees that job growth in the US will be anemic for years to come. No macro activities (or short term tax gimmicks) will change the employment picture.

The truth is: employers are scared to expand payrolls. They don't want to get sued; they don't want to take on future health care and retirement liabilities that are limitless; they don't want to deal with all of the extra costs that government has imposed on employers. The motives for all of this employee protection were no doubt noble.

The latest wrinkle is that Obama's "Job's Plan" permits the unemployed to sue a business that has the temerity to hire someone who already has a job elsewhere instead of hiring an unemployed person. Laws like that make employers leave the playing field. Who wants to hire anyone when the very act of taking on a new hire can trigger litigation that can put you out of business? Why can't the Obama folks get this?

Until the micro conditions of the labor market change (and no one is really discussing making these changes), the poor, the minorities, the less-educated have no real future in this economy other than collecting welfare checks and entitlement payments. Working for a living is increasingly not a likely possibility.

Obama and the liberal elite don't get this because they know nothing about hiring and why businesses hire people. None of the Obama people have any experience at all with business or with unemployment.

The Obama folks think that the solution is to have government build roads and patch up airports and transfer money to public employees. That is not the answer. The only people that benefit from stuff like that are highly paid union employees with rich retirement plans and generous health plans. They really don't need the government's help. They are riding high in this economy. Obama and his gang are riding high as well.

But, Americans that are least able to defend themselves -- lower middle income, minorities, the lower-skilled work force -- have no real chance in the economy that Obama and his crowd have created. Businesses are not going to hire employees that are "lawyered up" and ready to sue them. Why should they? The alternative is to outsource and to substitute capital for labor. That will continue.

We need micro changes. Even if the economy grows, the beneficiaries will not be the unemployed. Obama has seen to it that these folks have no real shot.