Let’s Make It Harder to Fire People??

(The road to) “Hell isn’t merely paved with good intentions; it’s walled and roofed with them. Yes, and furnished too.” – Aldous Huxley

In a November 13, 2009, article in the New York Times written by Nobel Prize winner in Economics and noted economist Paul Krugman suggested that making it harder to fire people would go a long way to reducing unemployment.

It’s amazing to me how this individual achieved a teaching position at the university level with this kind of flawed thinking.

Virtually every position he’s taken on recessions, depressions, inflation, national debt, finance, deficits, and the economy has either failed or been debunked.

For this guy to have a Nobel Prize show’s how low they’ve set the bar.

Just a quick side note before going further:

“Let’s debunk a myth. There is no “Nobel Prize in Economics”.

"On Nov 27, 1895, when Alfred Nobel signed his will, he left five prizes in alphabetical order to: chemistry, literature, peace, physics, and physiology or medicine. The Nobel Prize in Economics is declared after the Panchapandavas above.

It’s the most anticipated one. And yet it doesn’t exist.” (Source)

Would Tougher Firing Laws Reduce Unemployment?

It would reduce the unemployment rate of the current workforce since even bad employees would be staying.

Employers would be forced to retain poor employees or face government penalties.

Knowing they couldn’t be fired would just compound the situation.

But what about those few million good employees that want to work?

What’s the upside for them?

Here’s where Krugman’s proposition loses ground.

If I’m an employer, and I need workers, I have a real challenge before me.

I must make sure I hire the right people because under Krugman's employment laws it would it be very difficult to fire them if for some reason they don't work out.

I was a personnel manager for a 10-store retail chain in San Diego at one time in my working life, and if that were my mandate, I would be hiring as few people as possible.

And that would keep the unemployment rate where it is or cause it to rise as more new workers trying to enter the workforce would find reduced chances of finding employment.

I’d be taking a major risk by loading the company with unproductive workers.

Unless you’re a psychiatrist or psychologist hiring is a crapshoot at best.

No one can accurately predict the future performance of any individual.

I would be bringing out the carrots and sticks and trying to get as much as possible out of existing employees.

Krugman’s position would make hiring a last resort.

Employment Laws Protect Workers

There are laws on the books to protect potential employees. There are many questions that you can’t ask a prospective hire.

That protection makes hiring even more challenging.

All employers are looking for the best possible candidates. And you can’t refuse to hire someone simply because they give you a bad vibe.

It makes no sense to hire low-level workers that no one else wants just to save a couple of bucks of payroll.

The long-term problems with such an employee will be far more costly than any payroll savings that might be realized.

Absenteeism, mistakes on the job, co-worker relationships, being part of a team, the possibility of advancement, — these are just a few factors employers must consider during the hiring process.

It makes much more economic sense to hire the best and brightest and pay them what their value to the company is worth.

But separating the wheat from the chaff is not always that easy.

Some Final Thoughts

There are millions of people who genuinely want to work. So why make that situation more difficult?

The government doesn’t help when it’s easier to get on welfare with little to no incentive to get off it.

If any emphasis is placed on employment, it should be ease of hiring and training — not prevention of firing.

As I said above, this is typical Krugman thinking. If my kid was in his economics class, I’d be asking the dean for a big refund.

What are your thoughts?

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