Mike Kueber's Blog

September 29, 2011

Job discrimination against the unemployed

Filed under: Economics,Issues,Politics — Mike Kueber @ 12:56 pm
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President Obama is taking a lot of flak from conservatives for generating too many regulations and for protecting plaintiffs’ lawyers who file frivolous lawsuits.  Both of these things, according to the conservatives, are a serious drag on the economy.

Unfortunately, President Obama appears to have concluded that he will not be able to work with conservatives until the 2012 election adjusts their attitude.  So instead of trying to find common ground, he is making proposals that have no chance of success, but will help rally his base.  An example of this is his recent proposal to make it illegal for employers to discriminate against the unemployed.

According to an article in the NY Times, Obama’s proposal would make it an unlawful employment practice for a business to consider an applicant’s current employment status when deciding who to hire.  The proposed law would authorize unsuccessful job applicants to sue “just like when an employer discriminates on the basis of a person’s race, color, religion, sex or national origin.”

This dispute reminds me of my days as an auto-insurance lawyer, when we had to fight regulators who didn’t want us to make underwriting decisions based on an applicant’s credit score.  The regulators initially argued that there was no statistical connection between a low credit score and the likelihood of getting into an car accident, but eventually we were able to decisively win that argument.  Facts are stubborn things.  Then the regulators shifted to a fairness argument – i.e., people with bad credit scores were already punished enough; extending the punishment to their insurance rates was not fair.

Proponents of Obama’s proposal argue that that people who are unemployed through no fault of their own are just as likely to be a good employee as someone continually employed.  Furthermore, the unemployed have already been punished enough; making it harder to get a job just isn’t fair.

Conservatives respond that the proposal would establish the unemployed as a new “protected class” and would encourage frivolous lawsuits from unemployed people whose job application is rejected.

President Obama is correct in worrying about the growing number of long-term unemployed people, who are reaching record levels.  According to the Times article, “Skills often atrophy when a person is out of work, and White House officials said that discrimination could worsen the problem, creating a class of people who could be left behind as the economy recovers.”

But the problem can’t be solved by requiring businesses to hire less qualified persons just because they are unemployed.  The problem needs to be
solved by an economy that has more jobs for everyone.