The U.S. economy added just 69,000 jobs in May, less than half the expected number, and the Bureau of Labor Statistics revised down jobs figures for the two previous months as the unemployment rate rose to 8.2 percent.
Amidst all the bad news, politicians are debating what the federal government can do to make things better. One suggestion is to stop making things worse.
Two things slowing our economic recovery are uncertainty and regulatory overload.
When employers are unsure of what will happen next or are overwhelmed by the complexity and cost of new regulations, they don’t expand, innovate or hire. They simply hunker down and wait.
Writing in the Investor’s Business Daily, Home Depot founder Bernie Marcus points out that, over the past three years, the feds have passed more than 10,000 new rules with an estimated $16 billion in additional compliance costs.
Marcus notes that small businesses, which create the lion’s share of jobs in the U.S., don’t have teams of lawyers and compliance officers to sort through all the new rules and requirements.
Founded in 1978, Home Depot is now the world’s largest home improvement retailer, with 300,000 employees. Had he faced today’s regulatory environment back in 1978, Marcus says he couldn’t have started his company.
Another example of both uncertainty and regulatory overload was illustrated in a Washington Times report on the explosive growth of disability lawsuits against employers under the Americans with Disabilities Act (ADA).
The increase follows changes to the law in 2008 that expanded the definition of “disabled.” For example, in December, the Equal Employment Opportunities Commission (EEOC) warned that some employers could be violating the ADA by requiring a high school diploma, explaining that in some cases the requirement “screens out a person who is unable to graduate because of a learning disability.”
The ADA requires employers with more than 15 employees to make “reasonable” accommodations for disabled workers. But the definition of “reasonable” is also expanding.
Attorney Joseph Kaplan cites the example of an employee who takes medication for epilepsy. “Let’s say because of the effects of the medication, it takes them longer to get ready than others, and because of that, they want their schedule adjusted.” So, rather than start earlier so they’re ready on time, the employee demands that the employer change their work schedule.
When the ADA was signed into law by President H.W. Bush in 1990, it was meant to help employers and building owners make reasonable provisions for people with physical and mental disabilities. The law was meant to accommodate, not litigate.
But last year, disability-related complaints rose to a record 26,000 and costs to employers nearly doubled to $103 million compared with 2007, not including money paid out in court cases. Over the past five years, disability claim lawsuits have risen 90 percent.
Expanding the definition of “disability” may also cost taxpayers more as people losing their long-term unemployment benefits apply for disability benefits.
In December, The Wall Street Journal reported on two studies showing a correlation between when people exhaust their unemployment benefits and apply for disability benefits.
The shift has huge consequences for our federal deficit because, unlike unemployment benefits, disability benefits don’t expire.
The number of Americans collecting disability benefits has increased more than 30 percent since 2002. Feds paid out $130 billion in disability benefits in 2011, but the program is already broke, running a $4 billion monthly deficit.
We don’t need the federal government to “fix” our economy, only to stop making it worse. They should take a page from doctors’ Hippocratic Oath: First, do no harm.
Don Brunell is the president of the Association of Washington Business. Formed in 1904, the Association of Washington Business is Washington’s oldest and largest statewide business association, and includes more than 7,800 members representing 700,000 employees. AWB serves as both the state’s chamber of commerce and the manufacturing and technology association. While its membership includes major employers like Boeing, Microsoft and Weyerhaeuser, 90 percent of AWB members employ fewer than 100 people. More than half of AWB’s members employ fewer than 10. For more about AWB, visit www.awb.org.