Working backwards: how employment regulation hurts unemployed millennials.

• Author: Heriot, Gail
• Position: The Federalist Society National Lawyer's Convention: 2014

Think back, if you will, to Paris about eight years ago when the French government proposed reforms to its labor code that would have made it easier for employers to dismiss young employees. Millions hit the streets in protest. (1) Cars were torched. About 3,500 people were brought into custody, (2) most of them young, many of them unemployed. When the youth unemployment rate is officially at 21.6 percent, as it was in France at the time, (3) that is obviously a big problem. Just as obviously, the riots did not help.

By contrast, the proposed reforms just might have. Granted, they would have made first jobs less secure. An employer would have been able to hire an inexperienced employee, knowing that if it did not work out, he could end the relationship in the first two years, no questions asked--something that would not otherwise have been possible in France. (4) But the protesters were wrong to believe that a secure job was somehow being snatched away from them. Most did not have any job yet, and if they wanted to change that, they needed to recognize that laws making it hard for employers to terminate unsatisfactory employees or hire employees they want can discourage employers from hiring employees, particularly untested job applicants. (5)

In the end, the French government backed down. (6) As a result, some of those protesters are probably still unemployed. But while the employment outlook for young people here in the United States is not quite so grim, the further we move toward the famously protective French model, the worse we can expect it to be.

Our unemployment rate for those aged 20 to 24 was 11.5 percent in September--down from a year ago, but still almost three times the rate for those over the age of 35. Just to be clear, those figures both understate and overstate the problem. It overstates the problem in the sense that it includes only those in the job market. If you're in school, you're neither in the numerator nor the denominator. It understates it in the sense that it excludes, among other things, those working part-time because part-time employment is all they are able to find, and those reluctantly pursuing additional educational credentials, only because they could not otherwise get a job. (7)

One hears a lot of overwrought talk these days about a so-called "war on women," but if there's a demographic out there that we ought to be worrying about, it is young people, the perennial newcomers to the economy. Well-meaning employment laws primarily benefit those who already have jobs, often at the expense of those who do not. In that respect, they are like so many progressive policies. They help those on the second to last rung of the ladder, often at the expense of those on the bottom rung.

Many of these laws and policies may be attractive or even justifiable when viewed individually, but when piled one on top of the other, they can become a difficult-to-surmount obstacle to youth employment. For low-skilled young people trying to get their first jobs, the most immediate threat may be the steep minimum wage hikes adopted recently in various cities. In Seattle, the minimum wage increase will be over 60 percent; in San Francisco, 39 percent; in Oakland, 36 percent. (8)

In the past, one of the only things that economists used to agree on was that minimum wage hikes kill jobs. These days, however, there are...