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New bill will force businesses in hospitality industry to rehire laid-off workers

Friedrich Hayek, one of society’s biggest opponents to socialism, explained that the biggest obstacle to central planning is the knowledge problem. According to Hayek, in society, no single human has knowledge of the needs and wants of all people. Furthermore, no single person can possibly foresee changes in individuals’ needs and wants in society. This is why the market, provides the best mechanism to allocate resources. Proft and loss in the market signal to producers whether consumers value particular products or not. And though price changes, any changes in people’s needs and wants are communicated to producers.

In 2019, if we had asked, not many people would have guessed that a pandemic would be the dominant event of 2020. But that would not be at all strange. Life is, after all, uncertain and unpredictable. That is why freedom is very necessary. It ensures acting individuals adjust their choices and actions to changing environments and conditions. The same is true for businesses. Stringent rules in the face of a changing environment do not allow individuals or businesses to make adjustments. And this can be costly.

Unfortunately, this is is something that Minnesota lawmakers do not seem to get. Lawmakers just recently introduced a bill that would require businesses in the hospitality industry to rehire laid-off workers.

The Job Security Bill

Yesterday, Fox9 News reported the following,

Unite Here Local 17 President Crista Mello said the hospitality union she represents lost more than half of its members to the pandemic.

“Pre COVID-19, there was over 6,000 people and now there’s only several hundred,” said Mello.

As businesses begin to reopen, she wants hospitality workers to get their jobs back.

“I think that there are some employers that will absolutely bring the workers back and put them back on the same pay and same benefits,” she stated. “But we do think that there will be some employers that will use this to their advantage and get rid of workers or ask them to start all over.”

Mello said there should be some enforcement in place to prevent employers from firing workers who would otherwise still be employed if it wasn’t for the pandemic.

“We have members who have been in their positions for 40 or more years, and we don’t think that they should have to reapply for a position that they’ve held for 40 years,” said Mello. “With the aging population especially, we don’t want employers to find somebody younger that they feel can do the job faster or longer.”

And as reported by Star Tribune,  lawmakers are indeed taking action to ensure job security for laid-off workers.

House Democrats, including Majority Leader Ryan Winkler, of Golden Valley, held a news conference to highlight a separate bill that would require hospitality and airport employers to put laid-off workers at the front of the line for rehiring, based on qualifications and seniority. The state would enforce reinstatement rights.

Businesses need flexibility

Looking at how businesses have adjusted their operations to fit new rules, it is quite possible that the labor needs of some businesses have changed during the pandemic. This means that they would require different sets of skills that some other laid-off workers do not possess. Requiring those businesses to rehire workers that may not fit their current needs would potentially hamper their recovery.

No one is denying that lockdowns have devastated Minnesota’s hospitality industry. This, however, is no good reason to force more rules onto businesses. In fact, businesses would benefit from more flexibility as they try to navigate a new and changing operating environment.

Legislators should focus on lifting restrictions

It is not hard to figure out why job losses have been specifically concentrated in the hospitality industry. Lockdowns were heavily focused on the hospitality industry. Hence, so many establishments were forced to close and others to scale down their operations contributing to massive job losses. So, if legislators really want to help workers, businesses, and the Minnesota economy, they should focus on lifting COVID-19 restrictions.

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