Giving 60 days' notice on plant closing looks like good idea after all
REPUBLICANS often used to tweak their Democratic rivals by calling them ``knee-jerk liberals.'' Presumably these people automatically take a ``liberal'' position on social or economic issues without looking at the evidence. There are also ``knee-jerk conservatives.'' It could describe some opponents to the legislation requiring businessmen to provide employees with 60 days' notice before a layoff of 50 or more workers or a plant closing.
President Reagan last week reluctantly decided to allow the bill to become law without his signature. But along with Vice-President George Bush, he remains opposed to advance notification. Mr. Reagan called it a dangerous step ``down a road of European labor policy.''
Comments Harvard economist Richard Freeman: ``He doesn't know what he is talking about. Some of his people should look at the evidence.''
Professor Freeman was a member of a 20-member ``Panel on Technology and Employment'' set up by the National Academy of Sciences. In its year-old report, it recommended, among other things, advance notification. Only one member objected. The panel embraced corporate executives (including ones from Westinghouse Electric Corporation, Digital Equipment Corporation, and Deere & Co.), union officials, former Pennsylvania Gov. William Scranton, and academics. Considering the issue before it became politically hot, the panel looked at economic research into the impact of corporate voluntary advance notification on employers and employees.
The researchers, Dr. Freeman says, could find no evidence of any damage from advance notification. They only detected modest benefits to employees. It is unusual for an economic study to find no negative consequences at all from changes in social laws.
Some businessmen simply dislike the compulsory aspect of the legislation. They don't want the government telling them what to do.
They also fear that workers, after notification, may sabotage the operation or do little work.
But the evidence proves otherwise. ``Americans are not a sabotaging kind,'' Freeman says. ``We want to go out holding our heads high.''
Further, the study shows productivity going up with advance notification, not down. Perhaps some employees hope to get good job recommendations or change management's mind. Others are too proud to be lazy.
On the positive side, ``advance notice may well facilitate labor market adjustments by allowing displaced workers to find employment prior to their date of displacement,'' states a paper just published by the National Bureau of Economic Research. In other words, statistics show that these workers are more likely to go straight from their old jobs to new jobs, and less likely to become unemployed than those not given advance notice. Those employees who do become jobless remain out of work as long as those not given advance notice.
Nor did the study find that advance notice prompts a company's most productive workers to leave early, notes George Jakubson, who wrote the paper with Ronald Ehrenberg, a colleague at Cornell University. Some workers, of course, do quickly take new jobs. But there is no avalanche of departures.
None of the research indicates whether advance notice might encourage a company to locate a new plant abroad. But logic implies that advance notice must be one of the smallest considerations when a company makes an investment decision. If a company expects a new venture to go out of business soon, it's unlikely to launch that venture.
Aside from the purely economic issues, there is a question of justice. Executives have golden parachutes or other contract protection from being harmed if evicted from office. White-collar workers often get severance pay if laid off. Workers usually get unemployment insurance. If not, they may end up on welfare.
Under the new law, if workers don't get 60 days' notice, they must be paid for an extra 60 days - the equivalent of severance pay. That, figures Freeman, is ``fairer.''