The Wrong Way to Help the Unemployed

The trouble with the American Jobs Act

In his dogged quest to boost employment, President Barack Obama has searched far and wide for new solutions. One provision in his American Jobs Act may very well have a positive impact on hiring. Just not in America.

The section consists of a ban on discrimination against the unemployed. Some companies have posted ads that say those who are out of work need not apply. It sounds like a cruel joke: You don't need a job if you have a job, but unless you have one, you can't get one.

But the real joke is thinking that the way to get companies excited about hiring is making them walk through a minefield to do it. Or that employers who shy away from the unemployed are irrational or evil. Or that the policy of a few companies has much to do with the plight of the jobless.

This proposal may be interpreted as one more sign that Democrats know little about the realities of running a business. Could be, but they aren't alone. New Jersey actually passed a ban that mandates fines of up to $10,000 for refusing the unemployed, and it was signed by Republican Gov. Chris Christie, a conservative darling.

The White House argues, "The exclusion of unemployed applicants is a troubling and arbitrary screen that is bad for the economy, bad for the unemployed, and ultimately bad for firms trying to find the best candidates."

Trust Obama and his aides to think they know better than employers how to find the best employees. If the policy is self-destructive, firms that practice it will pay a price for their stupidity: the loss of good workers.

That competitive disadvantage may eventually drive them out of business. The relentless pressures of the market are a powerful force in favor of rational hiring policies.

The forbidden policy appears to be the employment equivalent of a two-headed cow—not mythical, but a long way from being common. The National Employment Law Project trumpets that over four weeks, it found 150 ads excluding the unemployed on major job sites, such as Monster.com and Career Builder. It's a puny number, when you consider that Career Builder alone claims to list a million jobs.

The few companies that rely on this method may have good reason to steer clear of those with big gaps in their work history. In a fast-changing industry, last year's knowledge may be as useful as skill with an abacus.

A lot of people are unemployed through no fault of their own. But in a depressed economy, companies can afford to be ridiculously choosy. They may figure that anyone with a job in a sluggish sector must be an unusually able employee, since all the employees who weren't unusually able—along with many who were—got laid off long ago.

The change would expose employers to lawsuits from rejected applicants without appreciably improving the chances of those it is supposed to help. You can make something illegal without making it hard.

If the law is passed, a hiring manager who doesn't want to hire someone who is unemployed still won't want to hire someone who is unemployed—and probably won't have much trouble coming up with "reasons" to reject them. The manager just won't be allowed to tell these candidates they are wasting their time.

Companies would also get a new incentive not to post openings at all—relying instead on informal referrals to evade the prohibition. They would also get a nudge to bypass the entire U.S. system of employment law by moving abroad.

The supporters see this sort of "discrimination" as comparable to shunning people on the basis of race or sex. But the unemployed are not a group that has been victimized by age-old laws and customs based on false stereotypes and baseless fears. They have no history of hostility to overcome.

What they have to overcome is a dismal economy that generates no new jobs. In a boom period, impediments like this would be of no concern. The problem the unemployed face is not that they are excluded from some jobs, but that there is so little hiring going on.

When companies find their business growing, the unemployed will gain hope, and not before. Without a healthy economy, this measure won't be helpful. With a healthy economy, it won't be necessary.

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