This summer, faced with a persistent unemployment rate of around 9 percent, labor-force participation lower than at any time since 1983, and a pessimistic public deeply dissatisfied with its elected leaders, President Barack Obama “pivoted” away from a divisive debt ceiling debate toward the subject of jobs. “I…won’t stop,” the president vowed in his weekly radio address of Aug. 13, “until every American who wants a job can find one.” In Michigan, where the unemployment rate is 10.5 percent, Obama proclaimed, “We know that there are things that we can do right now that will support job growth.” Things like building roads, extending unemployment benefits, cutting payroll taxes, and investing in clean energy.
The press and Obama’s fellow Democrats echoed the president’s concern. “A political system that responded rationally to the country’s problems would be concentrating on creating jobs,” The New Yorker’s John Cassidy complained. Rep. Nancy Pelosi (D-Calif.) accused Republicans of having “passed bills that would destroy up to 2 million jobs—nearly 10,000 jobs per day” since she was booted from her role as House speaker. But Pelosi, like Obama, has been talking about what she has serially referred to as “jobs, jobs, jobs, and jobs” since January 2009. All that talk—and multiple pieces of related legislation—have yet to increase the net number of Americans at work.
Republicans have their own jobs agenda, but they mostly prefer to talk trash about the Democrats. “Spurring jobs and the economy is always next on the Obama administration’s to-do list,” sniped current House Speaker John Boehner (R-Ohio) in an August 3 blog post, ”right after more spending, more taxing, and more regulating.”
Meanwhile, voters are raising a collective eyebrow at both parties on the employment front. A July Pew Research poll showed an even 39–39 split on which party Americans trust more on jobs. A CNN/ORC poll released in August found that only 29 percent of respondents think there will be more jobs in their communities a year from now, and 26 percent think there will be fewer jobs.
What are some free market ideas for boosting employment? reason asked some of our favorite economists, writers, professors, and entrepreneurs to name one concrete policy change they would recommend to increase job growth. —Lucy Steigerwald
To make the greatest impact on persistent unemployment, the government should pursue policies that allow the free market to set wages, benefits, and all issues related to employment. 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 protective labor laws, including minimum wage laws, should be repealed.
Employment is a voluntary relationship between two parties. Our laws should reflect and support that concept to the highest extent possible. Employees do not qualify for special privileges (inappropriately labeled worker’s rights) simply because they accept a job, and employers do not lose their rights and become subjected to special obligations just because they hire. The playing field should be level.
Peter Schiff is the CEO of Euro Pacific Capital and the author of How an Economy Grows and Why It Crashes (Wiley).
Repeal of ObamaCare would probably do wonders to spur hiring, especially for permanent positions. Compensation for such jobs usually includes a benefits package with health care insurance, as well as a money wage or salary. Health care insurance often constitutes a major part of the employer’s cost of keeping a permanent worker on the payroll, and anything that makes this cost difficult to forecast makes employers leery to take on new workers.
ObamaCare—the Patient Protection and Affordable Care Act—is a gigantic statute, and it would be a big bite for employers to digest in any event. But as it stands, it serves mainly as an announcement that a large number of legal black boxes must be filled with new regulations that various administrative agencies will eventually promulgate. As Gary Lawson of the Boston University School of Law has written, “Implementation of the Act will require many years and literally thousands of administrative regulations that will determine its substantive content and coverage.”
This situation creates tremendous uncertainty that affects virtually all firms. After all, no matter how firms may differ in other regards, they all hire employees, and in most cases employee compensation amounts to a major part of their total cost of operation. In the face of this uncertainty, few firms have been, or will be, willing to assume the risk associated with increasing their permanent, full-time workforce.
Robert Higgs is a senior fellow in political economy at the Independent Institute. He is the author of Crisis and Leviathan (Oxford) and several other books.
Reform the Fed