Age Discrimination Laws Have Unintended Consequences

Too often, laws have unintended consequences. McCain-Feingold comes immediately to mind. A lot of good that law did about getting money out of politics. Other laws are just confusing. Good luck staying in compliance with the ever-morphing IRS code. A layman can’t do it. The laws against hiring discrimination fit both these criteria for bad laws. They have had unintended consequences and employers can easily be out of compliance.


Any sort of discrimination laws have unintended consequences. A supremely qualified candidate can be doubted based on race and gender quotas. But the trend in anti-discrimination lawsuits isn’t race and gender. Right now, you’re in the money if you’re old and want to keep your job no matter how unqualified, lazy, unethical, stupid, or antisocial you may be.

Many companies make stupid — and smart — decisions hiring and firing. Lots of times, even when it’s legal, it’s not right. And lots of times, it’s more than right. In fact, there are many firings that don’t happen because of discrimination laws — especially now with the baby boomers creaking into retirement age. These people don’t like being old (who does?) and don’t want to look at the younger, fresher, harder-working co-workers poaching their jobs. And they certainly don’t want to be fired — even if they deserve it.

John Stossel has a great article and talks about age discrimination. Guys like this are Exhibit A:

Discrimination lawsuits like theirs are common today. They create nasty, unintended consequences: Older workers find it more difficult to get hired since companies are reluctant to hire people who could become lawsuit age-discrimination bombs. I’m told some companies set aside $100,000 for legal fees and settlement money for every older worker who isn’t doing a good job. What a waste.

Lawyer Murray Schwartz has won millions suing companies for age discrimination. He told me, “A company shouldn’t be able to say, ‘A 36-year-old fellow would do it better than the 52-year-old fellow.'”

They just shouldn’t be allowed?

“Never. And that’s what the law says.”

The law does. But the law can be an ass, and American law contradicts itself. FBI agents must retire at 57, airline pilots by 65. But it’s illegal for ABC to fire me if my boss thinks I’m too old?


It irks me that some old guy makes money suing companies for hiring and then firing him. Pardon me, but he strikes me as a jerk and I don’t think it’s his age that got him fired. But that’s the problem.

These sorts of actions hurt worthy employees. Companies like GM offer elaborate buyouts for guys who have 25 or 30+ years in — they just want them off the payrolls. But here’s the problem: an employee might be great but everyone over a certain term of service has to receive the same offer. A stellar worker doesn’t really believe his boss when the boss says, “We really like you, stay.” Really? Does the boss really have the power to keep the good worker? Maybe, but the employee can’t be sure and might take the payout. So big companies end up losing good employees with marginal ones or just old and tired ones. You know what happens? The companies hire them back as consultants.

The whole thing just makes no sense. Companies should be able to hire and fire whomever they want for any reason. If a company wants to cut off its nose and hire only women or men or old people, fine. They, because of discrimination, will cut themselves off from good talent. It’s their right to be stupid.

If a football team can pick the best talent, any company should be able to create the most talented team for any reason. Imagine a football team being forced to hire petite women. It’s absurd. But is it any less arbitrary to say that an older, incompetent employee must be kept because to fire him would be discriminatory?


And reverse discrimination happens as well. For example, had Bill Gates been hired by IBM, would he have been put in the position of chief technology officer? No. He’d be discriminated against because of age and inexperience. Many, in fact most, entrepreneurial companies are started by someone who has been fired unfairly or not given a chance or was too young or too brash or too something. Author Harvey MacKay wrote the book We Got Fired! … and It’s the Best Thing That Ever Happened to Us. Guys like Michael Bloomberg and Muhammad Ali share their stories of being fired and how their lives are better for it. While being fired is no fun, it has been the catalyst for many people to find the career or job they were meant to do.

No one is owed a job and life is not fair. Age discrimination seems particularly unjust because the employee is less mobile and less able to develop skills, and also has a more difficult time finding a job. Ironically, though, the difficulty with job hunting is that other potential employers won’t take a risk for fear the person won’t work out. The employer then has to worry about being sued or giving a big fat payout to make the person go away. So, the law that is meant to help actually hurts. A guy who loses his job at 55 or 60 knows he’ll have a tougher time finding a job. He may have supreme qualifications and great experience that could really help a company, but he also presents a big financial risk. Every smart employer thinks about the risks of hiring anyone and the possibility of litigation if the employment doesn’t work out.


Anti-discrimination laws have unintended consequences. Good people are let go and not hired due to potential legal risks. Bad people stay in jobs for far longer than they should, demoralizing their team and impeding production because of those potential legal risks.

If discrimination laws ceased to exist, the right people would be confident and the wrong people would worry. Which is as it should be. Now, the good and bad face the same risk and reward and it’s simply not right. It makes companies less competitive and rewards the underperformer who feels entitled to a job.

Without discrimination laws, the smart, talented cream would rise to the top. In a truly free market the smart and talented always succeed.


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