Employment Effects of the NLRB’s Joint-Employer Cases

Following the script of the U.S. Department of Labor Wage and Hour Administrator David Weil in his book The Fissured Workplace, the National Labor Relations Board is pushing big businesses to hire people in-house rather than utilize small, specialized businesses, which would suffer. Weil’s theory is that bigger businesses are more sensitive about brand reputation and thus more susceptible to pressure from unions and trial lawyers. Using a line of cases concerning joint employment, the NLRB has specifically targeted such industries as franchising, trucking, contracting, temping, and outsourcing.

If the NLRB were to get its way, job creation would falter for several reasons. First, franchising itself could be imperiled, and franchising creates jobs faster than other businesses do. Second, small business efficiency and innovation tailored to consumer tastes would be curtailed. Third, the NLRB states that it wants to make the “economic weapons” of pickets and strikes more available to unions—certain to impair commerce. And finally, trial lawyers would be able to sue an additional group of businesses, foisting more risk and cost on job creation. Job opportunities would surely suffer.

One observed aspect of the loss of job opportunity is at the beginning of a career. In their new book Disinherited, Diana Furchgott-Roth and Jared Meyer point out, “[Y]oung people often use minimum-wage jobs as stepping stones to better careers. … If people cannot get their first job, they cannot get their second or their third.” The International Monetary Fund explains the scarring effect of early unemployment, “The earnings penalty can be as high as 20 percent compared with their peers who find employment early, and the earnings deficit can persist as long as 20 years.” For the young, obtaining that essential first job has huge financial ramifications for careers.

The National Bureau of Economic Research expounds that the effect is toughest for the lowest rungs on the employment ladder: “[T]he bottom of the wage-and-ability distribution experience larger and more persistent losses.” The low-skilled and most needful are at greatest risk.

Who else could be hurt by the NLRB? New American immigrants who are pursuing their first job in their new country.

Less discussed but also vital is the benefit of a job during hard times later in life.

Also, as people pursue opportunity in educational advancement or job training and retraining, obtaining lower-level jobs to fit around class and training schedules can help make ends meet.

The United Nations emphasizes “the global challenge to create 470 million jobs between 2015 and 2030 just to keep up with the growth of the world’s working age population.” In a celebrated encyclical Laborem Exercens, Pope John Paul II extolled the value and benefits of work for personal dignity and human fulfillment. Finding the best ways to foster work opportunities is a moral imperative, especially for the most needful and vulnerable, the new immigrants, those trying to educate themselves, the low-skilled, the young, and the older people whose careers face hard times.

Clearly well-read, James Franco waxes spiritual when he says, “All I know is that when I needed McDonald’s, McDonald’s was there for me. When no one else was.” Franco wakes echoes of the Bible, “And, just like their food, the job was more available there than anywhere else. When I was hungry for work, they fed the need.” One harkens to the Gospel of Matthew, “For I was hungry and you gave me food … I was a stranger and you welcomed me.” One thinks too of the proverb, “Give a man a fish and you feed him for a day; teach a man to fish and you feed him for a lifetime.”

In A Better Way To Help Our Fellow Man, the founder of the Competitive Enterprise Institute Fred L. Smith, Jr., discusses these themes. In fact, Smith’s current focus and legacy highlights the moral legitimacy of free markets.

In the labor and employment world, the NLRB’s joint-employment initiative is one of the hottest topics. The job destruction inevitably associated with this NLRB initiative is discussed in the Competitive Enterprise Institute’s new issue analysis, The NLRB’s Joint-Employer Cases: An Attack on American Business.