This goes for employees in general, and subgroups ("protected classes") that public policy may be trying to help.
Housing anti-discrimination law can backfire in a similar way.
It's tough to find the right balance: at will employment can lead to unfair situations for the employee, and strong regulations can lead to people abusing the system (like that guy I worked with who had been there for so long that he was cheaper to pay than to fire).
Increasing the cost of new employees – compared to, say, overtime, outsourcing, automation, or other kinds of employees – decreases the hiring of the more-costly employees.