The 'Regulation Impedes Job Growth' Story Has No Evidence

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Written by Dean Baker   
Wednesday, 12 October 2011 11:45

Suppose the Republican presidential candidates blamed an invasion by space aliens for the failure of the economy to generate jobs. Would the media dutifully repeat it without comment? Given the media's response to Republican complaints about regulation preventing job growth, we should assume that they would view the space alien invasion explanation as perfectly reasonable.

If the story that regulation was impeding job growth were true, then there should be evidence to support it. For example, we should see firms increasing average hours as a way to avoid hiring workers. We don't: Average weekly hours are still below their pre-recession level. We should be seeing firms hiring temps as a way to avoid hiring more permanent workers. We don't see this, either. Temp employment is still down by almost 20 percent from its pre-recession level.

We should also see some differences in hiring patterns across industry: Industries in which jobs tend to be longer-lasting should be doing less hiring than industries in which the length of employment tends to be very short. We don't see this, either. Job growth has been relatively good in sectors such as engineering and law offices; it has been comparatively weak in sectors such as retail and restaurants, which tend to have high turnover.

We might also expect that businesses would blame regulation for limited growth when they are asked. They don't. The National Federation of Independent Businesses' survey of its members show little change in the percent of businesses that list regulation as a major obstacle from the Bush or Reagan years.

In short, the "regulation is impeding job growth" story has no evidence to support it. This story is a pure invention of the right wing. Presidential candidates who repeat it should be ridiculed by the media – just as if they were talking about space aliens.

This post originally appeared in The Guardian.

Tags: jobs | presidential election | recession | regulation | republicans