Chickens Coming Home to Roost: The Progressive Destruction of Employment Opportunities

By Mario Rizzo

There comes a point where the continual mandating of benefits and restrictions on hiring has big consequences. We can see the handwriting on the wall in Europe as well as in the US. In Europe the young are more and more being left out of the traditional forms of hiring .

A recent article in the Financial Times (August 5, 2015) has a very interesting analysis of the issue. “In a continent known for strong employee protections, more than half of the eurozone’s young workers are in temporary jobs, churning from one short-lived contract to the next.”  And this is in countries with high unemployment rates among the young.

Temporary jobs among the 15 to 24 year-olds (of those who are employed)

Spain: 69.1%

France: 57.0%

Italy: 56.0%

Germany: 53.4%

OECD: 24.1%

UK: 15.2%

Japan: 14.4%

“…[I]n Italy, France, and Spain…fewer than 30 per cent of temporary employees have moved on to permanent jobs three years later.”

These temporary workers are not good candidates for on-the-job training and other employer investments in human capital. In the United States we see an increase in “gig hiring” in those areas of entry restrictions (taxis) and in areas of technological expertise. Some of this in both the US and Europe is, no doubt, desirable to workers from the point of view of freedom to decide one’s hours and so forth.

However, it is one thing to make a decision in an undistorted labor market and another thing to make a decision for this type of employment because mandates have significantly increased the costs of traditional employment. Furthermore, among the groups who have done the most to create this state of affairs – labor unions and so-called progressives – the reaction is quite interesting.  They bemoan the decline of the middle class and the security of the good ole days. And they worry about more and more workers avoiding the “protections” and “benefits” of union and state.

The simplistic line that much of the public has accepted is that we can pile mandate upon mandate, condition upon condition without much effect on labor markets. We can mandate the good things people want. On the other hand, I am not so sure that labor unions really buy this line. After all, their interests lie with incumbent workers, not those who are struggling to get ahead. But ignorance abounds in all quarters.

6 thoughts on “Chickens Coming Home to Roost: The Progressive Destruction of Employment Opportunities

  1. I have been running a small tech business for over twenty years. I have no plans to hire any American full time workers. In fact I am looking to outsource the few that I have. It is just too risky. One idle bureaucrat with an attitude can put me out of business on a whim.

  2. the age range 15-24 is usually the age range of students in many different countries. It allows students to be able to contribute to their family income, paying for school or for even having a temporary job to help pay for themselves during school. The article claims that ” fewer than 30 per cent of temporary employees have moved on to permanent jobs three years later” if you are 15 and three years later turn 18 it does not necessarily affect that you do not have a permanent position and a sable job. In the younger age group there is a large population that does not keep stable jobs because of the lack of work experience and the lack of education. It does not always mean the younger worker would be worse at a permanent job but it may be because of experience or time. The large temporary job market is important to younger workers to be able to have time to try new things and experience what types of jobs are out in the open.

  3. It’s very interesting to see different countries with their employment rates’ for young adults outside the United States. Such as Spain with 69.1%. Many young adults especially college students, do find it difficult when the employer does not have a high demand for labor. One of the reasons why could be that employers are seeking for people who would work for them long-term. In my opinion, I think that many countries, if not all should increase the demand for labor in order to give young workers more experience and it is unfortunate that some employers decided whether to hire a young adult based off of their past experiences.

  4. I mean with the youth of today demanding for higher minimum wages, there is no doubt that more of the youth is facing more unemployment – as the minimum wage is more likely to create unemployment amongst youth workers. Like minimum wages, the desires of unions would no doubt create a decrease in quantity demanded for labor. However, the impact of minimum wage, unions, and mandates will seem to have a longer lasting, serious impact on the demand for labor. In addition all of this seems to have an impact on hiring and firing costs of labor, as firms with higher wages could be potentially harmed if they are left with having to pay higher wages for labor that produces less.

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