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Compliance Trumps Jobs as Governmental Priority

There is well reasoned analysis out there that the high unemployment numbers we are currently experiencing might be with us for some time:

The unemployment rate hit 10 percent in October, and there are good reasons to believe that by 2011, 2012, even 2014, it will have declined only a little. Late last year, the average duration of unemployment surpassed six months, the first time that has happened since 1948, when the Bureau of Labor Statistics began tracking that number. As of this writing, for every open job in the U.S., six people are actively looking for work.

All of these figures understate the magnitude of the jobs crisis. The broadest measure of unemployment and underemployment (which includes people who want to work but have stopped actively searching for a job, along with those who want full-time jobs but can find only part-time work) reached 17.4 percent in October, which appears to be the highest figure since the 1930s. And for large swaths of society—young adults, men, minorities—that figure was much higher (among teenagers, for instance, even the narrowest measure of unemployment stood at roughly 27 percent). One recent survey showed that 44 percent of families had experienced a job loss, a reduction in hours, or a pay cut in the past year.

So, it is kind of interesting that federal and some state governments are more interested in “catching” businesses in a worker misclassification game to fill government coffers than making sure that people can work and feed their families.

President Barack Obama‘s proposed 2011 budget suggests tough times ahead for employers who rely heavily on independent contractors in order to keep down labor costs.

If the budget is approved, the Internal Revenue Service will add 100 new enforcement personnel as part of a $25 million plan to crack down the misclassification of workers as independent contractors.

When you consider that 50 percent of jobs created during the economic recovery are contingent labor, you quickly see that a Catch-22 situation is unfolding.

Of course, many of the businesses that are able to survive the recession are also smart enough to quickly assess the forthcoming penalties and make employment decisions based on those pending government regulations.  Those decisions will be in the best interest of the business and its current employees, but will do nothing to put out of work Americans back to work:

And our associates voted to schedule 50-hour workweeks rather than hire new associates — even if it means working five 10-hour days or maybe even working on Saturdays when needed. We’re just not going to hire right now because we don’t know what’s coming next. We hope something will be made clearer in the next 90 days as our country focuses on what is necessary to create jobs in America. Then we can re-evaluate our decision.

Put yourselves in the shoes of the tens of millions of Americans struggling to keep their families fed and housed.  Now, think what this crackdown will mean to them.  Instead of earning a living, they will be forced to remain on the public dole or worse, so that tax collectors can go after those that are trying their hardest to survive.