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Good news for a change about job creation

By Mencken’s Ghost

Some readers have said that they want good news from me and are tired of hearing about the country being broke and stealing money from the frugal and productive in a futile attempt to stop the fiscal bleeding.  Okay, here are two items of good news:

The Federal Register is now averaging about 80,000 pages per year, or approximately four times as many as the 20,036 pages in 1970.  Each annual edition now encompasses about 32,000 new rules, proposed rules, and presidential documents and notices.
The Code of Federal Regulations set a record in 2009, encompassing 163,333 pages in 226 separate books.

Why is this good news?  Well, not only are paper plants being kept busy, but the regulations, rules, proposed rules, and presidential documents and notices are creating jobs.  Each one produces legions of lawyers, lobbyists, special interests, consultants, government bureaucrats, and private-sector administrators. 

The Department of Labor doesn’t total these jobs as a separate category in its employment reports.  But there are tens of millions of such jobs, according to detailed analyses that I have done--and as I warned in my 1992 book on bureaucracy and in subsequent commentaries in major newspapers and scholarly journals. 

Let’s skip the detailed analyses and do a quick, back-of-the-envelope calculation.  We’ll start with a very lowball assumption that 200 administrative jobs are created across the nation by each of the 163,333 pages of in the Code of Federal Regulations.  That would be a total over 32 million jobs.

Keep in mind that government rules and regulations are almost always additive and not subtractive.  Generally, new ones are added but old ones aren’t removed.  That’s because the people (of both political parties) whose livelihood depends on red tape are not going to vote to have their rice bowl taken away.  They have families to raise and house and car payments to make.  They’ll do anything to keep their pet rule or regulation in effect, including saying that babies will die, the earth will become hotter than a skillet, and a plague of locusts will devour the corn crop and end the subsidized production of ethanol, thus getting Republican farmers in a tizzy right before the Iowa presidential caucus.  And the American media and academia, brilliant as always, will treat the hyperbole as fact, not seeing the bigger picture of what this self-interest is doing to the nation’s prosperity and per-capita income.

Case in point:  You are no doubt aware that college tuition has increased at least twice a fast as inflation over the last 20 years (so has per-pupil spending in public schools), resulting in college students going deeply into debt, oftentimes to acquire degrees of questionable value.  You may not be aware, however, that from 2001 to 2011, colleges and universities hired 50% more administrators than instructors. 

To its credit, the Wall Street Journal, in a rare instance of the media not being comatose, recently analyzed the growth in overhead at the University of Minnesota, which is a typical state university.  Among other findings, it found that the school has 272 employees with “personnel” or “human resources” in their title, a 33% increase since the 2004-2005 school year, a period that saw only an 8% increase in students.  Likewise, in the school’s Office of Equity and Diversity, there are 10 employees with the title of “director,” versus only four directors five years earlier.

These numbers have a special meaning to me.  Human resources was one of the functions that I managed as a corporate executive before I quit that career in disgust over how government regulations were harming companies and employees.  I also saw how the thoughtful idea of diversity started by Roosevelt Thomas in his landmark Harvard Business Review article was being corrupted and turned into something ugly, ridiculous and divisive.

Of the seven commentaries of mine that the Wall Street Journal has published, one was a 21 column-inch piece that detailed how the human resources function, with few exceptions, had grown into a bureaucratic blob of self-serving apparatchiks, due primarily to counterproductive regulations.  An excerpt:

The human resources department has become a de facto agent of the federal government in enforcing these notions [notions of consistency, fairness and central control].  Attend any human resources association meeting, and the typical topic is how to stay out of legal trouble--not how to grow a business and provide jobs to the community.  The most popular topics are federal laws and agencies known by their initials:  ADA, OSHA, FMLA, OFCCP, COBRA, ERISA, EPA, NLRA, ADEA, USERRA, and EEOC.  Other topics do not have the honor yet of being institutionalized to the point where they are known by initials:  the glass ceiling, diversity, multiculturalism, sexual harassment, workplace violence, repetitive stress, ergonomics, second-hand smoke, and sick building syndrome.

Needless to say, the president of the Society for Human Resource Management was not pleased.  He telephoned to express his displeasure to me.  At the time, SHRM had about 130,000 members, reflecting a high growth rate over the years.  It has no doubt grown even more since then.  Like so many other “professional” associations, it has developed accreditation schemes in which members can acquire professional designations as a sign of their supposed expertise.  Tellingly, the real professionals who are experts in organizational and human behavior do not need or want the designations. 

It’s the same story in scores of other professions and in virtually every organization, whether the organization is for-profit or nonprofit.  An example is your doctor’s office.  Chances are, there are more administrators in a back room then there are doctors, a reversal of how it was 50 years ago.  It’s also likely that one or more of the administrators is an official Medical Records Technician, a degree that is offered by technical schools and advertised on TV.  These jobs have nothing to do with your medical care and are the result of the government meddling in healthcare for over a half-century.

Of course not all government regulations and associated jobs are a waste of money.  Those that pertain to essential government oversight and services are not.  But in my experience most are not only a waste of money but also serve to hobble productive people and enterprises in useless red tape.

When the government reports job growth, it does not differentiate between jobs that produce valuable goods and services, and jobs that produce paperwork of no value.  For example, when the government tallies the number of manufacturing jobs in the nation, a lathe operator on a factory floor is counted the same as an administrator of government paperwork in the factory’s office. 

It’s a similar situation with the reporting of gross domestic product.  Based on the way that GDP is calculated, GDP would appear healthy if every American worker were paid a handsome wage to produce stacks of meaningless paperwork and to trade the stacks at a high price per stack with other Americans.  There would be mass starvation, widespread poverty and social unrest; but GDP would look great. 

The unbridled growth in government paperwork and paper pushers is a major cause of income stagnation, the growing gap between rich and poor, and the nation’s decline in competitiveness.  But don’t expect the government and its camp followers in the media and academia to sound the alarm.

In any event, I hope you liked the good news and will now stop calling me negative and pessimistic.



Mencken’s Ghost is the nom de plume of an Arizona writer who can be reached at ccan2@aol.com.