Polls show that unemployment is the issue of greatest concern to the voters today, but most fail to notice how dramatically the institution of employment has changed in ways that contribute to the problem.
Many years ago, the hiring manager controlled the complete employee selection process, and then when he found someone he wanted to hire, he would give their name and rate of pay to the payroll department.
Around WWII, employers began offering tax-free health and retirement benefits, because of government wage and price controls that made it difficult for employers to compete for the best people. This ultimately destroyed the open market for health care and led to the high costs we have today. People no longer saw the costs of their health care, or could benefit from any inclination to economize. The “price signals” were removed from health care. It is as if you shopped for food or clothing with a food and clothing card with a $10 co-pay, no matter how expensive your purchases. You can see how in time the cost of food and clothing would have no pressure to be economical and costs would skyrocket. This is where we find ourselves today in healthcare, and more government control is not part of the solution, it is the principal source of the problem.
Then the civil rights movement led to a steady progression of legal steps first toward desegregation, then anti-discrimination, equal employment opportunity, and unequal affirmative action. “Movements” are often begun to address important issues, to right wrongs and remake society for the better. The trouble is that a movement gives power to its leaders, and humans are fallible and easily corrupted by power. It is rare for the leader of a movement to finally declare that their ends have been met, that the cause for which they were formed no longer exists, and that they will therefore disband their organization and put down the power they've gathered to themselves. Other than George Washington, I cannot think of a single example.
As labor law became more and more complex, it became very difficult for employers to be sure they were in compliance with the constantly increasing requirements. This led to a transfer of power within companies from functional management to whole new departments; Payroll morphed into “Personnel,” which then evolved into the department of "Human Resources." Out of self-defense, company leadership transferred more and more of the responsibility for hiring to this new organization. Companies learned that their functional managers outside of HR could get the company into expensive trouble with just the mere questions they asked in an interview. The more people they interviewed, the more risk of the wrong things being said. HR organizations in turn grew larger and more powerful, necessarily mirroring the growth in complexity of the legal environment they faced.
Along the way, an insidious thing began to happen. These Human Resources organizations are not trained in the other functional areas of their companies; they are not doctors, or engineers, or securities traders, or marketing managers. An HR professional is trained principally in compliance with labor and benefits law, which has become so complex as to constitute an entire career in itself. If an HR person is going to screen candidates for, say, computer engineering, they must get a list of objective criteria from the computer engineering functional manager. As the rate of unemployment becomes larger, the number of candidate applications increases, and the HR department grows this list of objective requirements for a prospective candidate, requiring more education, longer years of experience, more specific objective skills, etc. At the same time, the internet has allowed HR to set up online application processes and automated pre-screening whereby keyword searches can score applicant resumes without being read by a human.
The biggest trouble with this process is that if I am the owner of a company wanting to hire a key employee, I care far more about the intangible "human" factors than a candidate’s objective data. For example, I may want to find an employee who is a strong creative problem solver, who brings an entrepreneurial spirit to their work, and most of all who has a demonstrated integrity and character that will represent my company well. None of these things are easily reduced to objective measures. An HR person not skilled in a functional area cannot judge those human factors for that function as well as the hiring manager. Many of the detailed objective criteria upon which HR has become focused, are almost irrelevant and are actually learned on the job. Employers once depended much more on referrals and recommendations to find key employees, but many HR departments today specifically disallow any of this outside influence on their screening process, ostensibly to break up what was once viewed as the "good old boy network," or discriminatory preference systems. A moral judgment has been made that objective criteria are “more morally valid” grounds for selecting an employee, and intangible human factors are “suspect of being discriminatory on their face.” Employers once had to invest more in grooming and training their employees, and consequently cared more about earning their loyalty and keeping them around for long careers.
In today's employment market, the name "Human Resources" has become an “Orwellian” label. HR is not involved in measuring the "human factors" which make an employee a valuable resource, because these criteria are not easily reduced to objective measurement. Human factors are best judged through relationships. HR has reduced people virtually to the status of objectified "parts," where the resume has become a data sheet of the part specifications. It is only once the HR department has screened a large pool of candidates down to a relatively few applicants, that the functional manager is allowed to get into the process.
Any breeder knows that if you select almost exclusively for one set of criteria to the exclusion of others, over time you can do great harm. HR is literally "breeding" a work force that is viewed as objects and not human beings, and that will take a toll.
This vastly expanded legal framework surrounding labor has also had unintended consequences in another way. There is now much more liability attached to hiring an employee. If you make a mistake and need to let someone go, you will have the ongoing costs associated with unemployment benefits, and you might even get sued for wrongful discharge, or some violation of equal opportunity or affirmative action laws. While these laws were well-intended, they have led employers to be less willing to take a chance on an employee. Employers frequently hire temporary contractors or outsource many jobs as a result.
The monopoly on labor which the government has allowed unions to acquire has further harmed the employer-employee relationship, making it inevitably more adversarial and less competitive.
My prescription for these ills is terribly politically incorrect, and unlikely, but here it is:
I would strip away all of this government intrusion into the workplace. If an employer wants to discriminate, even based on race, let him. He will hurt himself by artificially limiting the pool of good labor he draws from. Ultimately anti-discrimination laws do not eliminate discrimination. Discrimination ends when people have a change of heart; not something that has ever happened by force of law. Most people today have no appetite for racial discrimination, but this took time and activists are impatient.
Employment should be a voluntary contract in all respects between the person hiring and person being hired. If conditions in an industry are too objectionable, voluntary collective bargaining would still have the corrective power to change things, but workers would not subject themselves to union dues and strikes unless the working conditions truly merit it.
Employers would be more willing to take chances on an applicant that seemed to have some interesting quality or potential, knowing they could easily let them go if they were wrong, and HR would disappear as an organization saving vast amounts of company resources. Hiring and firing would be returned to the hands of the functional managers who are in the best position to judge what constitutes the best employee. The best managers would be rewarded for their excellent selection of employees, and for how well their people were treated. Poor managers and company owners likewise would reap what they sow.
All of this has become an even more acute problem today because we are facing such severe long term unemployment. Many people do not realize how difficult it has become to find work today, and we are in national denial about how high the true rate of unemployment is. Many economists agree that if we estimated unemployment today the way we did in the past, we would say we are facing 18-20% unemployment or more. If we simply take the percentage of the population who would be part of the work force during good economic times, and compare that to the percentage of people who are part of the work force today, you arrive at numbers like this. In recent years the government has created a system for estimating unemployment through the census bureau, under the administrative control of the White House. This system excludes some categories of unemployed individuals from their estimate, people which in the past we would have counted. The White House has a strong incentive to under-estimate unemployment when it is at these high rates, especially to keep it under the rhetorically-charged “double digit unemployment.” So, unsurprisingly, we’ve seen the officially reported unemployment rate bump along at 9+% with no end in sight. While many experts routinely agree that the true rate is about twice that number.
To put this in some historical context, this “true” number is well within the range of unemployment in the 1930s when we saw widespread public scenes of the desperately unemployed. When a business posted a “Help Wanted” sign, there would be lines of applicants out into the street. Often those lines would persist all day and night for days or weeks at a time even on the rumor of available jobs. Scenes of soup lines for the unemployed were commonplace. We don’t see these scenes today because the employment application process has transferred almost entirely to the internet and become invisible to those who are not intimately involved. Most companies today will not even accept a printed resume handed in at their offices, but insist that you apply online. Those who are employed frequently have no idea of how difficult it has become for some to find work. It is not just workers displaced without enough training either. There are many with college educations, and years of experience who have applied for many hundreds of jobs, often looking for a year or two, without a single interview because their resume could not get through the HR screen; because they are overqualified, underqualified, or just not perfectly matched.
Friends often send emails saying “I hear that “XYZ” company is hiring; not realizing how little help this is today. One can easily find many job openings with excellent online tools. “XYZ” may have six jobs listed on their web site, but they probably receive hundreds of applicants for each of these positions. Unless one can honestly draft a resume that is a near mirror-image of the objective criteria specified by HR for one of these jobs, there is no possible chance of even getting an interview. HR managers often say they have trouble finding “qualified candidates.” Conventional wisdom in the recruitment and career counseling industry has become that employees must “specialize,” and indeed narrow specialization is what the current HR screening process inevitably seeks. But many senior workers have a few decades of experience that has not followed a narrow linear career path, and their education may not exactly match much of their career history. The hard truth is that today’s HR will never list a job which will fit that person’s resume. In the past, when employment was a more personal process, a senior worker with breadth of experience was often viewed much more positively, and their broad network of references was a large asset. It is not that narrowly-focused workers are truly more valuable today, but merely that the common HR applicant screening process is structured for narrow specialization, and often precludes any consideration of personal relationships until the very final stages of applicant screening. In truth, personal references have become one of the least important considerations to an HR screening process when they used to be one of the most important, and senior workers often struggle to get interviews.
The single direct cause that links all of these issues is a government which has become addicted to interference in the free market capitalism which made our nation the freest and most prosperous in the world. It is intrusion into the voluntary economic choices of a free people. This intrusion, literally with the “liberty” our founding fathers fought so dearly for, is almost always intended for some good cause, but invariably has unintended consequences that are more far-reaching, and often more devastating than the evil they originally sought to cure. We clearly need to roll back this cancerous growth in the size and scope of government, and yet this is very difficult for any elected official to accomplish. Around every new bend in the political path of our nation comes some new “cause du jour” which quickly becomes the next government mandate, which in turn leads to new entitlement spending to entice voter support, which ultimately consolidates someone’s political power. It ever has been thus, and will only change if “We the People” can learn to become more self-reliant and stop looking to the government for solutions to our problems. An expanding government can never make us better people, only less free, and less prosperous.
