“If I could press a button and instantly vaporize one sector of employment law…”

by Walter Olson on August 12, 2011

In a new Reason symposium on how to revitalize the American job market, I explain my answer to that question.

More: This set off a round of discussion on employment blogs including Jon Hyman (nominating FLSA for vaporization), Suzanne Boy (concur), Daniel Schwartz (leave laws), Suzanne Lucas (citing “the fabulous Overlawyered.com”), the ABA Journal, Tim Eavenson, Jon Hyman again, HR Daily Report, and Russell Cawyer. Also relevant on age discrimination laws: a June symposium in the NYT’s “Room for Debate” feature; ComputerWorld on age bias and IT.

{ 6 trackbacks }

Southwest Florida HR Law & Solutions
08.15.11 at 11:01 am
Vaporize One Area of Employment Law? Perhaps Leave Laws
08.15.11 at 11:33 am
Labor & Employment Commentary Blog
08.15.11 at 4:33 pm
Interesting Discussion: Which Employment Law Would You Vaporize? : Southwest Florida HR Law & Solutions
08.16.11 at 11:59 am
The FMLA Minefield: How a Failure to Document Can Spell Big Trouble
08.17.11 at 11:18 am
Texas Employment Law Update
08.24.11 at 8:12 am

{ 10 comments }

1 Jesse Spurway 08.12.11 at 12:03 pm

or maybe, like the 3 engineers I know who were pink slipped 2 years ago, in their late 50s, they are competing with younger, and visa, workers who will work for MUCH less.
right now cheap counts for more than experience.

2 Chris Hoey 08.12.11 at 12:16 pm

Experience is not a predictor of on the job performance. Frequently the older hand actually has one year’s experience (at best) repeated 25 times, or whatever their length of service.

3 John Burgess 08.12.11 at 1:53 pm

I won’t go along with ‘frequently’, but will accept ‘sometimes’. Most people are not dolts and do aspire toward greater responsibility in their work, in my experience.

4 Jim Collins 08.12.11 at 2:54 pm

I have to disagree with you Chris. I know of several companies who let their older enginers go and then found that their documentation wasn’t what they thought it was. There is a thing called “Institutional Knowledge” and by letting your senior people go, you end up losing much of that knowledge and have to go through the expense of learning it again, or rehiring the people you let go, usually as a consultant at greater cost.

There is a joke that goes like this. Tom had 30 years as an Engineer with a company that made complex industrial machinery, before he was forced into early retirement. A few months after his retirement an extremely complex machine stopped working and halted all production. The company’s engineers tried everything that they could think of and still couldn’t find the problem. Finally after several days, somebody got the idea of contacting Tom and asking for his help. Tom said that he would do it, but, only if he could be a consultant. The company agreed and Tom came in to work on the machine. He looked things over, took some measurements, tested some components and finally took a piece of chalk and made an “X” on a component. Change that part and the machine will work. The part was changed and the company was back in production. When they asked Tom for his bill, he wrote $50,000 on a piece of paper and signed his name to it. The company’s controller said that he had to have an itemized bill, so Tom asked for another sheet of paper and typed the following on it.

One chalk mark. $5
Knowing where to put the chalk mark. $49,995

5 Melvin H. 08.12.11 at 7:16 pm

…I would choose to “vaporize” the entire Americans with Disabilties Act, along with any and all court decisions that extend it, the subsequent changes in the law to “override” Supreme Court decisions to narrow the ADA, and any other things that the ADA and ADA-AA have screwed up over the last 20+ years….

6 William Nuesslein 08.13.11 at 6:14 am

There is one very important factor that Mr. Olsen did not include in his comment in Reason, the funding of defined benefit plans. The legal equity an employee has in his defined benefit plan is the value of his accrued benefit. The incremental addition to the accrued benefit costs roughly 10 times as much as age 60 than it does at age 25. That is because there is much less time for interest to work at age 60 than at age 25. The difference between a proper reserve of Present Value of Future Benefits less present value of Future Normal Costs over the value of accrued benefits is a juicy apple for the CFO. Firms can share a bite of that apple through early retirement sweeteners. Defined Benefit Plans are wonderful in many ways, but this aspect of their regulation has the deleterious effect of losing productivity from older workers.

Similarly for health insurance. Older workers are, except for child birth, 5 to 10 times as costly as younger workers.

Age discrimination laws are needed to spread the high costs for older workers over an equitable base. Such laws in turn will be abused by workers and the plaintiff’s bar.

7 Jack Wilson 08.15.11 at 8:22 am

I would get rid of sexual harassment laws, which are completely subjective and provide opportunity for extortion.

8 David Schwartz 08.16.11 at 3:16 pm

How is equity improved by making younger workers pay for the higher costs associated with hiring older workers? Isn’t it much more equitable if higher-cost workers pay their own costs out of their own salaries?

9 Paul 08.18.11 at 7:59 pm

I’m in favor of age-discrimination laws. I’ve seen what happens without them, or without them being enforced at all (I have many friends in the Philippines).

10 William Nuesslein 08.23.11 at 6:59 am

David Schwartz has an excellent point. 401k’s eliminate the socialization of costs with respect to retirement funding, and the benefit is fully portable as a worker moves from job to job. Since 401ks are voluntary, society will be on the hook to bail out, through welfare, those who did not save, so that absent sufficient ice flows for retirees, some socialization of costs will happen.

Health insurance is a trickier matter. Its purpose is to protect hospitals and doctors by insuring payment to them. It is hard for a hospital to collect from the dead in bed patient. To the extent that doctor practices and hospitals are community assets, a community rating makes a lot of sense to me. When we tried in recent times to make health insurance a competitive business, we got companies competing with respect to their efficiency of underwriting. But sick people will get some care no matter what, and socialization of costs to some extent is unavoidable.

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