WWW the state of US employment is not caused by problems in FAA regulation. In fact it may be caused by the excess of pilots available from a reasonably possible GA. This is not hte case over here, the relative lack of pilots around is caused by the CAA's and national and local governments' obstruction of GA. This is only getting worse under JAA, with the exception of the NPPL.
It is true that the CAA is completely isolated and unaware. I have a friend who is a self-employed instructor/examiner, fully qualified (formerly a CAA examiner). Now the highly-placed CAA desk-jockey was astounded to be told in general conversation that my friend would have to spend over £2,000 each year keeping his licences and ratings current. This man assumed he would have a company aeroplane for free - i.e. that someone else would pay. It does not cross these peoples' minds when they set up charging structures that some of us actually have to pay those charges plus for aircraft hire at up to £300 per hour.
Needless to say the CAA bureaucrat had learnt to fly in the military, moved straight over to the CAA and had government pay his way to the civilian ratings. He had never had to pay anything to keep current in his life, and was completely unaware of the desperate feeling as the industry takes a downturn beneath you as you finish training, and suddenly you're in a low-paid job, scrabbling spending 20% of your gross income just to keep bare competence and currency so the airlines will consider employing you when the recovery starts.