Do “Already Employed” Job Ads Hurt the Economy?

Ironically, as the economy continues its recovery, the long-term unemployed are further alienated from the improving job market. Even in a political landscape where the creation of jobs has taken center stage and the health of the economy is largely dependent upon a low unemployment rate, many of the jobs created during the economic recovery are only available to those who are already employed.  A random search by the National Employment Law Project found more than 150 job ads which required applicants to be currently employed. While these hiring practices have an overall devastating effect on the economy, their impact is magnified in certain groups. College graduates, military personnel, and women returning to the workforce are disparately disadvantaged. The economic impact has been significant enough that New Jersey passed a law banning the hiring requirement and California is considering passing similar legislation.

As more states consider addressing the problem through legislation, many will have to prepare for a conflict between those seeking to protect the freedom of businesses to hire at their discretion and those looking to stimulate the slow economic recovery with new jobs. Those supporting the hiring practices argue that the stipulation aids employers looking for qualified individuals with recent and extensive experience in a certain field of work. Those opposing the practice urge that the economy will suffer from it because it fails to create jobs for the unemployed.

In essence, the hiring practices force the unemployed to remain outside of the labor market. Furthermore, these practices almost guarantee that the income disparity between wealthy and poor Americans will continue to grow. Those who are already employed will gain more lucrative employment opportunities, while those without jobs will continue to struggle. This is compounded for certain demographics, as the Department of Labor’s January Jobs Report indicates that minorities such as African Americans and Latinos have higher unemployment rates than whites. Minorities already have higher poverty and unemployment rates, and because “already employed” hiring practices essentially reinforce this downward economic spiral, the impact of such practices is extremely disparate. The practices create a self- perpetuating cycle of disparate economic stagnation.

Additionally, the statistical reality of the unemployed population indicates that employers who choose to enact such hiring practices are holding themselves out to great liability. This fact can be a persuasive argument against businesses that use “already employed” hiring practices while facing employment discrimination suits. While it is important to note that the disparity caused by “already employed” hiring practices would not alone prove a plaintiff’s employment discrimination case, the statistics could harm the employer’s case. As the year unfolds it will be interesting see how state like California will address “already employed” hiring practices as they try to balance employer preferences and uniform economic recovery.

You can access the Kansas City Star article here.