Few classes of people are more sympathetic than pregnant women.  Pregnant women are physically vulnerable and need the support of their families and the larger community.  While gestating and giving birth to a child is among the most personal processes that can be experienced, it is also the foundation of mankind.  Indeed, it is in society’s interest to protect those who are creating the next generation.  Yet recognizing the unique vulnerability and importance of pregnant women to society doesn’t answer the question of what role the government ought to take in supporting this class of individuals beyond the basic protections that are afforded all Americans.

ABC’s 20/20 explored this taboo subject on Friday night and considered specifically government’s role in protecting pregnant women in the workplace.  I was interviewed and argued that laws intended to protect women can backfire on them, by raising the cost of employment, particularly the cost of hiring women. Since that time I’ve received scores of emails from those who disagree (to put it mildly) with my contention that the government should have little role in regulating employer-employee relationships, including in the arena of pregnancy discrimination.  Most equate such a position with a lack of concern or empathy for pregnant women (and women more broadly).  This is a gross misunderstanding of such a position, but one that it is sadly common when the public is faced with an advocate of limited government. 

The first question that I ask when assessing a public policy is if this is a proper use of federal power. 

On the most basic level, I don’t believe that the federal government ought to have a role in dictating the terms of an employment contract between any adult and a legal private entity.  Just as I cannot be compelled to accept a job, no employer should be compelled to offer or to continue my employment.  So long as private individuals consent to the relationship and follow the rules of the agreement, it should be their business alone.

Yet beyond this question of the limits of government’s authority, those evaluating a public policy need to consider the full impact of a law, both its intended and unintended consequences.   Indeed one of the great mistaken assumptions in public policy is that government programs are successful in their intended aims.  Has federal spending on K-12 education, for example, really improved the educational quality received by students across the country?  Particularly low-income or at-risk student populations?  The answer is far from clear, and most of the evidence suggests that government intervention has been a dismal failure.  The same is true with many workplace regulations.  Minimum wage laws, for example, may be intended to make sure that even the lowest income workers make enough to sustain themselves, but they also make low-wage jobs more scarce and price the least skilled workers out of the job market. 

Discrimination laws have a similar dynamic.  They are intended to prevent businesses from unfairly treating workers of a certain class (based on sex, race, age, sexual orientation, etc).  Yet it is obvious that these laws do not rid the workplace of discrimination.  Indeed we regularly hear stories of people who are mistreated by their employer.  The very fact that I have received so many emails from women who feel they have been victims of discrimination shows that the limits of the laws’ effectiveness.  Some may be compensated through the court system, but many are not.  Thus we know that while discrimination laws raise the costs of discriminating against an individual or certain groups, they do not eradicate discrimination.

For those who are trying to make the workplace as fair as possible, the benefits of such laws-raising the costs of discriminating and allowing some of those wrongly discriminated against to recoup some of their losses-must be weighed against its drawbacks.  And there are many drawbacks. 

First, there is the potential for abuse of the system. Aggrieved employees who have lost their jobs for legitimate reasons may try to use the court system to exact wrongful gains or revenge against their former employer.  The money that is spent by companies and the public in these court proceedings is money that would have been better spent elsewhere.  And indeed as companies face a growing number of lawsuits across the board, the costs of litigation are a drag on productivity and prevent job creation.  An employee doesn’t have to be looking to abuse the court system for the litigation that occurs to be a loss in the macroeconomic sense.  There are real costs to litigation, and these are felt not just by shareholders, but also potential workers and customers.

Secondly, the specter of litigation will affect employer hiring practices.    Just as mandated benefits raise the cost of hiring workers (and the costs of hiring some workers more than others), the increased potential for litigation raises the costs of hiring workers and particularly of members of a particular class of workers.   While companies may be legally prohibited from taking such information into account, it is impossible for employers not to be aware of the potential costs associated with one candidate over another.  An employer considering hiring me, for example, when I was a 30 year old newlywed, surely would have suspected that I was likely to have a child in the not-too distant future and would thus be exercising greater health and family leave benefits.  And indeed there has been research suggesting that mandated family leave benefits, which are disproportionately used by women, are associated with slower wage growth for women than in areas without such mandates.  This is not surprising:  employers factor in the total expected costs of hiring a worker (including things like benefits and taxes) and pay the worker what remains after those other costs. 

Litigation is another potential cost that employers may take into consideration.  An employer considering hiring a woman who is likely to become pregnant may well factor in the possibility that,  if they have to let that woman go, for whatever reason, she may end up suing and creating substantial costs for the company. That’s a deterrent for hiring that woman. 

By recognizing these factors, I am not condoning discrimination against pregnant women.  It’s terrible to think of any woman being fired as a result of becoming pregnant.  Without government prohibition on the firing of pregnant women, there would be several mechanisms that would discourage such behavior.  A company that regularly discriminated against any class could be publicly exposed and subject to voluntary sanction (would you patronize a store that you knew mistreated workers?).  And companies that discriminated against women, for example, would be at a competitive disadvantage because they would recruit from a smaller pool of talented workers. 

Would these factors actually prevent all employers from firing pregnant women?  Would a truly free employment market be also free of discrimination?  Of course not.  There would continue to be employers who are unfair to a variety of classes of individuals and are not punished by the marketplace.  Yet it’s important to remember that our current system of government regulation isn’t perfectly preventing discrimination either.  The legal system fails too, and creates a variety of high costs in the process. 

One may still argue that this system is better than a free employment market-that it reduces discrimination enough that it is worth the dead-weight loss that it creates.  But it’s intellectually sloppy to dismiss anyone who argues otherwise as indifferent to the fate of women (or any other protected class of workers) or to assume that the existence of something like discrimination is sufficient justification for any government intervention and that government action will necessarily make things better.

I firmly believe that the best way to protect women, and all individuals for that matter, is to have a robust growing economy that offers a multitude of employment opportunities so that anyone faced with a bad boss can find a better situation elsewhere.  Government regulation is the enemy of such dynamism and therefore hurts those it is supposed to help.