The Mission of the Manhattan Institute is
to develop and disseminate new ideas that
foster greater economic choice and
individual responsibility.

Newsweek
July 21, 1997

The Limits Of The Law

By Robert J. Samuelson

One Of Americans' Enduring National Illusions is that we can correct every injustice or social imperfection by passing a law. What we don't like we'll just make illegal. The impulse has inspired some disastrous social experiments. Remember Prohibition. But the impulse survives, and it has now brought us employment law: all the laws, regulations and court decisions that tell companies how to hire, fire, promote and supervise their workers. The enterprise exudes good intentions—and absurdities.

In his new book ("The Excuse Factory: How Employment Law Is Paralyzing the American Workplace"), Walter Olson of the Manhattan Institute says companies are handcuffed. They can't hire sensibly, because tough job tests or probing questions might violate some anti-discrimination rule (on race, sex, age or disability). They can't fire incompetents for fear of "wrongful termination" suits. Honest job references are taboo, because any unfavorable comment may trigger a defamation suit. And if they don't police workers, the companies may invite charges of sexual harassment.

Gulp. The indictment is grim—a bit too grim. Although the absurdities are genuine, they haven't yet crippled American companies. Employers may have less freedom to fire isolated workers; but they still can engage in mass firings to improve competitiveness. Indeed, these firings (a. k. a. "downsizings") rose in the 1990s. Companies also cope with the new laws in other ways. One dubious method is to require workers, as a condition of employment, to submit disputes to arbitration.

We are dealing here with the aftershocks of an immense social upheaval. A generation ago, men dominated the labor market in numbers and status. Jobs were rigidly segregated by race and sex. In 1940, about 60 percent of black male workers were laborers or farmers. Even in the 1960s, unions—and the fear of unions—were the main noneconomic influence operating on employers. Unions pressed for pay scales based on seniority and more fringe benefits (health insurance, pensions); so nonunion firms emphasized seniority and fringe benefits, in part to avoid being unionized.

That era is gone. By 1980, only 15 percent of black male workers were laborers or farmers. Women's job gains were stunning. Legislators, judges and regulators displaced unions as the main constraint on employer behavior. (Between 1960 and 1995, the unionized share of the work force dropped from 24 percent to about 12 percent. ) The new employment laws addressed new concerns and constituencies. Here's what we got:

* Civil-rights laws (anchored by the Civil Rights Act of 1964) outlawing racial, sexual, ethnic or religious job discrimination.

* The Age Discrimination in Employment Act of 1967, barring age discrimination and (most) mandatory retirement.

* The Americans With Disabilities Act of 1990, requiring companies to make "reasonable accommodation" for workers with a "physical or mental impairment. "

We are regularly reminded that laws are needed. Recently, the Equal Employment Opportunity Commission (which administers these laws) settled a case with the Houston Astrodome in which a male supervisor allegedly pressured 25 cleaning women to perform sex acts in return for their jobs. Ugly things can happen in the workplace. The trouble with the new employment laws is that they often fail the standard of sensible law. They are unclear, subjective and contradictory. They don't tell people what they can and can't do.

Sexual harassment? Aside from extortion—sex for a job or promotion—no one can say what it is. The EEOC's guidelines define it as anything that creates a "hostile or offensive environment" and warns that "the victim does not have to be the person harassed but could be anyone affected. . . . " As Jonathan Rauch has argued in The New Republic, such loose definitions essentially authorize employers to ignore the First Amendment. In one case, Rauch reports, a graduate student had to remove a picture of a woman in a bikini from his desk; the woman was his wife.

Olson contends that ambiguity is no accident. It enables legislators, judges, regulators and advocacy groups to sustain their power. Clear laws promote compliance; vague laws expose companies to constant pressure. Worse, vague laws delude people about their rights and fan the very conflicts they're supposed to resolve. Consider: about 70 percent of the annual complaints filed with the EEOC—78,000 in 1996, covering the gamut from race to sex to disability—are rejected or lapse. All manner of job gripes and discontents are converted into discrimination charges.

"The federal courts are flooded with employment cases," fumed U. S. district Judge Stanley Sporkin after dismissing one case. "We are becoming personnel czars . . . " The suit he dismissed was filed by a 60-year-old man who alleged sex and age discrimination after losing a coveted job to a 42-year-old woman. Had she lost, she might also have sued. The employer was the Labor Department.

What's the alternative?asks Ellen Vargyas, legal counsel to the EEOC. It is not to abandon these laws but to admit their practical limits—and craft them with restraint.

Sexual-harassment claims should not cover mere upset (of which life always offers plenty). Damages in discrimination cases should be limited to economic loss. The Civil Rights Act of 1991 added punitive damages and pain and suffering. Between 1992 and 1996, the employment cases filed in federal court jumped from 10,771 to 23,152. Surprise: raise the rewards for suing, and people sue more. And the grounds for suits, as Sporkin notes, need narrowing. Now disgruntled job candidates need only show that (a) they were qualified for the job (but not necessarily the most qualified); (b) they belonged to a protected group (almost all workers except for white men under 40), and (c) someone outside their group (but possibly in another) got the job.

If these laws are ever fully exploited, they might seriously harm the economy. The damage they now inflict is on the respect for law and the social climate. The workplace isn't paralyzed, but it is increasingly poisoned.

©1997 Newsweek

Visit The Excuse Factory webpage

 

 


Home | About MI | Scholars | Publications | Books | Links | Contact MI
City Journal | CAU | CCI | CEPE | CLP | CMP | CRD | ECNY
Thank you for visiting us.
To receive a General Information Packet, please email support@manhattan-institute.org
and include your name and address in your e-mail message.
Copyright © 2009 Manhattan Institute for Policy Research, Inc. All rights reserved.
52 Vanderbilt Avenue, New York, N.Y. 10017
phone (212) 599-7000 / fax (212) 599-3494