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I see the discontinuities and the trend-bucking, but I must say that the effect seems slighter than I would have expected. Without the effect of the law, it looks (roughly – just to make the curves smooth) like about 10,000 companies of 9 employees would turn into 9,000 companies of 10 employees. So, the distortion is there, but how big a deal is it really? Hard to tell.
Also, maybe there are social policy advantages to having more smaller companies (a larger propriétaire petit bourgeois class, for one), and things like this are a crude way to achieve that. Regulation exemption is just another form of small-business subsidy.
Something to bear in mind: a threshold at x employees doesn’t just increase the number of (x – 1)-employee firms – it increases the number of firms at each employee count below x. To appreciate the full impact of these regulations you need to compare the number of firms with an employee count in some range below x with the number of firms with an employee count in some range above x. For example, look at the number of firms with 40-49 employees versus the number of firms with 50 employees. It’s telling that there is a buildup (and reversal of the decreasing trend) from 40 to 49 rather than a sudden spike at 49.
well, you know what will happen….
companies will start hiring “contractors.”
or, they’ll use temp agencies for “surges” and keep a skeleton crew year round…
I wouldn’t be surprised if these numbers hide alot of smaller firms that have the same ultimate owner but are kept fragmented to stay below the thresholds – ie owning two pizzerias with 7 employees, each as seperate businesses as opposed to merging them into a single consolidated operation.
While this does increasing accounting and paperwork costs somewhat, it wouldn’t be as big a discouragement to hiring as Sunderman is implying.