U.S. Congress: The key to jobs creation & uncontrolled unemployment

U.S. Congress: The key to jobs creation and uncontrolled unemployment

As we struggle to find solutions to our jobs and unemployment crises, most people don’t realize that there is a direct correlation between these problems and our complex set of employment/ labor laws and tax codes.  The reason that jobs creation is stymied and unemployment is growing out of control is because THE ENTIRE LEGAL FRAMEWORK UPON WHICH OUR EMPLOYMENT SYSTEM IS BASED IS BROKEN!! Attempts to stimulate employment and get millions of people back to work by doing what we’ve done for the last eighty years is like trying to force a square peg into a round circle.  It simply will not work!  All of the indicators are right before our very eyes, but no one seems to be connecting the dots.

Here are the facts:

1) The forces of globalization, technological advancements, foreign competition and corporate restructuring have all come together in such a way that they have permanently altered the supply/demand dynamics of our labor force. These forces have produced what is known as a 21st century labor force, a significant number of which cannot be accommodated within the narrow provisions of existing employment/labor law.  Nearly 50% of America’s available labor force functions outside of the employment system because they are either unemployed or they are struggling to work as contingent workers (freelancers, consultants, independent contractors, temps, part-timers and the self-employed).  At the same time that these contingent workers struggle to find work with employers who are willing to engage them on a contingent basis, there is a nationwide legislative trend going on in nearly every state in our nation that is designed to STOP employers from engaging contingent workers. This legislative trend is commonly known as “employee misclassification”, “independent contractor” legislation, “IC compliance”, etc.  By whatever name it is called, make no mistake about it…this is misguided legislation and IT KILLS JOB OPPORTUNITIES for millions of workers by keeping employers from engaging them under an alternative employment accommodation, e.g. on a contingency basis.  Governor Paul LePage of Maine seems to be one of the few leaders in this country who understands how harmful this legislation is to the economic stability of the state of Maine and even our nation.  He recently abolished the Maine task force focusing on employee misclassifications.  Click on the following link to see what Governor LePage says about this nationwide trend http://www.collabrus.com/collabrus_blog/2011/02/22/consolidating-an….

2) Contingent workers make up 30% of America’s workforce but they are not considered “employees” by legal standards of employment and labor law.  They are, therefore, excluded from receiving the rights, protection and benefits of employment/labor laws afforded “traditional employees”.  One does not have to be a mathematical genius or rocket scientist to realize that excluding 30% of the nation’s workforce from legally participating in the employment system is translates to a significant reduction in tax revenues for local, state and federal tax authorities. And President Obama and Congress can’t figure out how to reduce spending deficits and lower our debt ceiling?!?  Here’s an idea…GET RID OF THE AUDITORS THAT WERE HIRED TO ENFORCE  JOB KILLING IC COMPLIANCE LAWS AND MODIFY EMPLOYMENT/LABOR LAWS TO CREATE A CONTINGENCY EMPLOYMENT PLATFORM.  This alone would save $116.5 billion from the national budget that doesn’t need to be there and simultaneously generate billions of dollars in employment tax revenues. Most importantly, it would provide millions of jobs for those who are currently unemployed. Click on the following link to see Hilda Solis’ explanation for $116.5: http://www.dcemploymentlawupdate.com/2010/03/articles/agency-happenings/solis-discusses-plans-for-worker-misclassification-enforcement-initiatives-during-committee-hearing/#pings.

3) Because of the aforementioned forces that produced the 21st century workforce, it is no longer reasonable to expect corporations to promise workers the security of lifetime employment. Conversely, it is no longer reasonable for workers to expect to land that permanent, full-time job with a single employer that will take them straight through to retirement.  This is not to suggest that we are hopelessly doomed to endure the deplorable conditions of high unemployment and joblessness we now face; it simply means that it is time for us to do business differently, which requires a paradigm shift in our employment system.  Congress needs to authorize Universal Employment, which allows ALL workers including contingent workers to receive the same rights, benefits and protection of employment/labor law as “traditional employees”.  In addition, tax codes need to be amended to allow an alternative fiduciary known as “payroll processor of record”.  Currently, the only legally recognized fiduciary for collecting and paying employment taxes to the government is corporations that hire workers as employees under the current law.  This must be amended by law so that workers will be able to earn wages from multiple employers and receive the coverage and protection of employment & labor laws.

The legal framework (employment and labor laws) of our existing employment system is based on the centuries old feudal law system that flourished in Western Europe between the tenth and thirteenth centuries.  Following is an explanation of the inappropriateness of this system of employment relative to our 21st century labor force.  Pay very close attention to the following explanation of feudalism and the parenthetical inserts that show the relationship between feudalism and our current system of employment.  The underlying principle of feudalism was an agreement (employment agreement) between a lord (employer) and a vassal (employee). A person became a vassal (employee) by pledging loyalty and financial service to a lord (employer). A lord (employer) acted in the service (fiduciary) of another sovereign, usually a king (government). If a lord (employer) acted in the service of a king (government), the lord (employer) was considered a servant (fiduciary) of the king (government).  As part of the feudal agreement, the lord (employer) promised to protect the vassal (employee) and provided the vassal (employee) with a plot of land (job) which would provide the vassal (employee) and his heirs (family) with the economic necessities of life.  (Parentheses inserted for ease of comparison).  Under the feudal system, when the lord became financially insolvent and was no longer able to uphold his commitment to his vassals, his vassals lost their means of economic support and were thrust into a state of impoverishment. Does this scenario strike a chord of familiarity relative to corporate restructuring and downsizing?

Corporate America has spoken loud and clear as evidenced by the corporate restructurings that began as far back as the 1980s.  Companies are no longer able to carry the onerous burden that comes with being the sole fiduciary for collecting and reporting tax revenues forALLAmerican workers.  Fortunately, technological advancement has created the possibility for an alternative fiduciary for collecting and paying employment taxes for workers who are engaged under a universal employment platform.  This alternative fiduciary, i.e. “payroll processor of record” can share the responsibility for collecting and reporting tax revenues for workers if only Congress will amend employment and labor laws to legally recognize it and the workers who would work over this platform.

Congress cannot claim to be ignorant of the need for this alternative employment platform since it was recommended over seventeen years ago in a comprehensive study that was commissioned under President Bill Clinton in 1993 known as “The Dunlop Commission on the Future of Worker-Management Relations – Final Report” (attached).  I strongly suggest that you read the “general observations” and “recommendations” of Section V of the report on pages 62-71 regarding contingent workers and the emergence of a 21st century workforce and how best to accommodate it.

If you are really concerned about holding Congress accountable for passing legislation that will reduce unemployment and stimulate jobs, call or write your President Obama and your Congressional Representative and ask them to support a bill to modernize, simplify, and standardize the definitions of employee and employer so millions of workers can be engaged as “universal employees”.  Universal employee is a new legal term for workers who would work as employees outside of the existing lord/vassal feudal relationship and whose conditions of employment would be based on economic reality.

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