Wednesday, December 2, 2009

Employment Law Backlash

Christina Romer, chair of President Obama's Council of Economic Advisers, wrote an op-ed in today's Wall Street Journal titled Putting Americans Back to Work. Tonight's entry will not focus on the article itself (though you may find it interesting) but rather a series of comments from WSJ readers. The commenters appear to object to employment law generally.

It begins with Paul Thiel writing:
"Here is what I need to do to hire a US worker:

Interview a variety of people to make sure I am in compliance with EEOC regulations. After I find someone, I need to get them to fill out I-9 and W-4 forms. I need to file these forms with the government and have them on hand in case I get audited. Now, I need to pay the employee. In addition to their pay, I need to collect FICA, FUTA, SUTA, Workers Comp. . . . Each quarter, I need to file form 941 and annually, form 945 with the IRS. The IRS can then audit me and tell me that I've done something wrong in this and demand penalties and interest. To be safe, I'm probably going to need to retain the services of a CPA and/or attorney to make sure I am doing all this right. Now I've got the person hired, if they don't work out and I need to let them go, my SUTA and FUTA taxes will go up. Soon, I'll also have to worry about providing health insurance for employees as well.

If I hire an Indian worker, I cut them a check each month."
I confess that I am ignorant of India's employment laws though I suspect cutting Indian workers a check entails covering employment law costs of their own. That doesn't really address his criticism - just a sidenote. The next commenter, Justin Murray, seemed just as down on employment law:
"[Y]ou'll need to hire and maintain a human resources department, which needs to be staffed above and beyond what's necessary for basic hiring and firing to include such things like a Diversity Officer to avoid lawsuits. And for those lawsuits that would come, all becuase of your own ambition to provide more jobs for more people, you'll need to keep a lawyer on retainer. God help you if card check gets passed and your workforce decides to unionize, then you'll have to add a whole new layer of costs like managing a pension and adding yet another witholding to keep track of, among other things."
Underlying these comments is the inescapable truth: employment law imposes costs on employers. These comments, however, do not attempt to assess any benefits of employment law. I'm not up for performing a cost-benefit analysis of all local, state, and federal labor and employment laws in a blog entry tonight... but I think it's helpful to recognize how some people view employment law.

A third comment on WSJ, from Michael Heidrick, had perhaps the most concise statement of their view:
"It is extremely expensive to put someone to work in this country!"

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