Every year companies should fire the bottom 5 percent of their workforce. Both the company and the employee will benefit from this policy. The company benefits because it replaces the least productive employees with more productive employees. The employees benefit because they are in a position where they are the runt of the litter and suffer psychologically from having low self-esteem as a result of being the least productive. Most of these employees would benefit from being in new jobs that can take advantage of their strengths. In the new jobs they will eventually make more money and have higher self-esteem, which leads to better productivity.

Unfortunately, government regulations make this process difficult. Under common law, employees could be hired or fired for any reason or no reason. Letting go of an employee in a protected class requires a higher standard of termination than an employee not in a protected class, such as homosexuals, minorities, the disabled and senior citizens. These factors, among others, add to the cost of increasing efficiency and income to our economy. In a union environment, employees generally must be laid off in the order of seniority regardless of productivity. These costs make our economy much less efficient and less competitive in the global economy.