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Why It’s Bad Business to Hire the Long-Term Unemployed

The Obama administration has overseen the utterly preventable destruction of human capital that is arguably unprecedented in human history — and it's their fault.

by
Tom Blumer

Bio

March 15, 2011 - 12:00 am

Those greedy employers are up to their nefarious tricks again. They’re even being overt about it.

If you’re unemployed, many of them won’t hire you. They won’t even talk to you. They don’t want you to waste your time, or theirs, filling out a job application, or submitting your resume. How absolutely awful of them.

Wrong. The “unemployed need not apply” phenomenon is an all too predictable and awful result of over two years of horribly misguided economic policy.

First, let’s acknowledge that employers are mostly acting rationally.

Especially in this economy, perhaps until recently — and that’s a big maybe — the main focus of many, if not most businesses, has been to figure out how to stay in business. In an environment where a serious hiring mistake may mean the difference between keeping the doors open or closing them, employers looking for help cannot afford to take unwarranted risks. Before they go into the hiring market, they ask themselves if the old reliables in their current crew can handle the increased workload caused by staff departures. They may also consider whether some or all of the tasks involved can be outsourced, automated, or even eliminated.

If they reluctantly conclude that they must hire someone new, company managers will go through their own internal networks of relatives, friends, and acquaintances to see if they can find someone — employed or unemployed, but largely prescreened — who is up to doing the work. They may also look at the possibility of proactively recruiting people who have impressed them in their business interactions while currently working at customers, suppliers, or competitors.

When the avenues just described come up empty, employers will let the general job market know that they are looking. It is there where the bias in favor of people who are currently employed comes out, and for several valid reasons.

If a person is already working somewhere else, they’re demonstrating that on a daily basis, not in the recent or sometimes distant past, their work habits and output are more than likely satisfactory to someone else. There’s at least a decent chance that this person has kept his or her skills sharp, and has kept up with technological and market developments in the industry. The effort involved in training such a person in their new job will often be fairly minimal. There will also be a lower likelihood that the person will flunk a background check, credit check, or their drug test.

With the unemployed, especially the long-term unemployed, the situation completely flips. Work habits and attitudes, even if once great, become suspect. Skills may have eroded. On the job training efforts are more likely to be substantial, take longer to stick, and are more likely to fail. The chances that the new person will steal because of financial hardship, has gotten into legal trouble while unemployed, or has fallen into substance abuse are all greater.

Employers who are avoiding the unemployed are merely saying, “We only have so much time and energy to put into a job search, and we can’t afford to make a business mistake. So we’re going to avoid considering the unemployed to reduce the chances of making such a mistake.” Contrary to the belief of those who apparently feel that it’s somehow an employer’s duty to hire the unemployed, and despite the fact that bad decisions to overwork current staff or to abandon necessary tasks are often made, there is nothing wrong with this. It’s about survival.

That this is not at all comforting to the unemployed who are aggressively looking for work is undeniable. Those who are in that position through no real fault of their own have every reason to be angry that they and millions of other Americans are in the same position. But they should not be mad at employers. They should be mad as hell at their government. It is their government, under the failed leadership of those who created what I have been calling the POR (Pelosi-Obama-Reid) economy for 2-1/2 years, which deliberately chose to create a high-unemployment economy.

In the 1980s, in the wake of a recession and economic conditions that were in many ways more severe than the 2008-2009 “Great Recession,” President Ronald Reagan chose the path of tax cuts and regulatory restraint. As a result, seasonally adjusted unemployment, which peaked at 10.8% in November 1982, the last month of that recession, fell almost continually during the following two years to 7.2%, and kept falling. Meanwhile, economic growth exploded. Employers, even those who would have preferred not to, hired the unemployed because there was no other way to meet the burgeoning demand for their companies’ goods and services.

By contrast, during the first 20 months after June 2009, the end of the most recent recession, unemployment rose from 9.5% to 10.1% several months later, and stayed virtually stuck at that level for a full year. In recent months, the unemployment rate has finally come down to 8.9%. But that’s largely because there are hordes of potential workers who are so discouraged that they’ve stopped even looking; thus, they aren’t included in the official unemployment statistics. As for economic growth, it’s been anemic compared to other post-recessionary periods, and through six quarters is less than half of that seen under Reagan.

I assert that the administration deliberately chose the high-unemployment option because its economists knew what happened the last time a president tried to bring about an economic recovery using “stimulus.” During the 1930s under Franklin Delano Roosevelt, unemployment never went below 12%. In spite of the known history, Democrats in Washington still chose Obamanomics.

The long-term consequences of that choice will likely be harder on the long-term unemployed than they were under FDR. Employers today are looking for specific, specialized skills. If you don’t have them, you won’t get hired. If you become unemployed and don’t use them, you can and often do lose them. Getting them back, or building new ones, can be arduously difficult, and prohibitively costly.

Sadly, there are early signs that the government is trying to figure out how to pin the blame for the “unemployed need not apply” phenomenon on employers instead of themselves. Sorry guys. You have overseen the utterly preventable destruction of human capital that is arguably unprecedented in human history — and it’s your fault.

Along with having a decades-long career in accounting, finance, training and development, Tom Blumer has written for several national online publications primarily on business, economics, politics and media bias. He has had his own blog, BizzyBlog.com, since 2005, and has been a PJM contributor since 2008.
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