According to Thomas Black and Caelainn Barr writing at Bloomberg.com this morning, 2014’s surging hiring pace indicates broad economic recovery. Whether this is driven by stronger fundamentals or the illusions of easy money is yet to be seen.
But my reason for highlighting this article is for one particular phrase near the end:
Positions for software developers, computer systems analysts and financial compliance officers are getting hard to fill, said Paul McDonald, senior executive director at Robert Half International, Inc., the Menlo Park, California-based professional employment service company.
The boom in technology has driven the unemployment rate below 1 percent in the industry. New financial regulations and requirements for the Affordable Care Act are also boosting demand for professionals, he said.
I added the emphasis in the second paragraph. Even the slightest bit of thinking about this comment should lead you to understand that these new jobs aren’t actually a positive development. That’s because, I’ll remind you, more employment itself is not necessarily a good thing. More employment only indicates economic growth if the new jobs create real value–something ACA compliance officers probably don’t do. Of course, executives wouldn’t hire such compliance officers if they weren’t convinced such officers add value to their companies (even if, at the very least, by keeping them out of trouble with the IRS/HHS). But compliance officers don’t necessarily add value to the real economy.
For example, consider the hypothetical ABC Company. Since the beginning of 2014, ABC Company has spent $50,000 on ACA compliance initiatives. This was money that could have been invested elsewhere, like R&D or towards hiring another salesperson. Instead, it was “invested” toward ensuring compliance with an overbearing state regulation that itself impedes economic growth, and that the ABC ‘s owners are more than likely to believe either doesn’t help or harms their company’s long-term prospects. In effect, this is hardly different than simply giving $50,000 to some stranger on the street.
I’m reminded of the famous Milton Friedman/William Aberhart quote regarding government program jobs:
At one of our dinners, Milton recalled traveling to an Asian country in the 1960s and visiting a worksite where a new canal was being built. He was shocked to see that, instead of modern tractors and earth movers, the workers had shovels. He asked why there were so few machines. The government bureaucrat explained, “You don’t understand. This is a jobs program.” Milton replied, “Oh, I thought you were trying to build a canal. If it’s the jobs you want, then you should give these workers spoons, not shovels.”
While this story is not about regulatory compliance, it might as well be. Creating jobs by requiring spoons instead of shovels is hardly different than creating jobs by requiring companies to hire more people to ensure compliance with new, confusing, overbearing and unwanted regulation. In both cases, business owners are hiring people they wouldn’t have otherwise hired for the sole purpose of complying with rules they don’t believe will help their businesses.