Editor's note: Byron Schlomach, Ph.D. coauthored this piece.
The labor force participation rate—the share of employed Americans or Americans seeking employment—stands at 62.8 percent, which ties a 36-year low. This takes the air out of recent unemployment statistics showing the jobless rate hovering around 6.1 percent, a figure that would otherwise be considered an improvement over last year’s 7.2 percent. More people are simply giving up looking for work.
Lawmakers’ attempts to fix the anemic job market—everything from lowering interest rates to increasing government spending—have largely failed. So, instead of learning from their mistakes, lawmakers are going even further and preparing to control who businesses hire.
Take, for example, recent efforts to force employers not to discriminate against job candidates who are currently unemployed—people who have gaps in their resume. The Pew Center reports that 3.2 million people have been out of work for 27 weeks or longer, and these “long-term unemployed” account for “about a third of those who are jobless.” Another 2.2 million are only “marginally looking for work.”
Some policymakers have tried to help the long-term unemployed by enacting laws that would levy fines on employers who do not hire candidates just because they have employment gaps. Measures like this have already passed in the District of Columbia, New York City, Wisconsin, and New Jersey, while the National Conference of State Legislatures reports nine states considered such legislation last year.
It would be difficult for regulators to determine whether an employment gap was the reason a job candidate wasn’t hired. Short of attending every job interview for every business, how could state regulators make sure employers are ignoring the employment dates on an applicant’s resume?
Moreover, such tactics appear to be completely unnecessary. Applicants’ complaints that they have been discriminated against are few and far between. Washington, D.C.’s Office of Human Rights has not received a single complaint since the law was passed, according to the Pew Center. The Washington Post reports that only one New Jersey company has been cited in the law’s three-year existence.
“It’s unclear whether [unemployment discrimination bills] would have much impact,” wrote Brad Plumer for the Post in 2013.
Instead of adopting Soviet-style employment rules, lawmakers should let labor markets repair themselves. Among steps like reforming regulations and removing wage controls, healing the job market will require improving educationespecially post-secondary education.
According to the Bureau of Labor Statistics, unemployment rates steadily decrease as one climbs the ladder of educational attainment. For individuals without a high school diploma, the unemployment rate is 11 percent, but for those with even some college experience, the unemployment rate is 7 percent. The unemployment rate is only 4 percent for those with a bachelor’s degree.
Private businesses recognize the value of specific training programs to help develop human capital. For example, AT&T and Georgia Tech have partnered with Udacity, a free online course provider (also called “MOOC”), to offer a masters-level computer science course for under $7,000.
Some MOOCs charge employers for access to their highest-performing students, creating a pipeline to the workforce. Long-term unemployed individuals could also benefit from these courses as they try to add to their skillset. These arrangements don’t need government tinkering – if online courses like these fail to help job-seekers and the bottom line, businesses can simply end the agreements.
The late Sen. Barry Goldwater warned 50 years ago that, left to their own devices, politicians will overstep their bounds: “The State is…limited in what it actually does only by the will of those who control the State. It is clear that this view is in direct conflict with the Constitution which is an instrument, above all, for limiting the functions of government.”
Instead of micromanaging hiring practices in a misguided attempt to help the unemployed, lawmakers should step aside so that innovative programs like MOOCs can help job seekers and businesses together.