What Would Happen If Labor Union Bosses Ran U.S. Businesses?

Gary Shapiro President and CEO, Consumer Technology Association
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Imagine if left-wing labor union leaders set the rules for American businesses – who works when, who earns what, how many ‘extras’ all of us must pay for. Actually, that doesn’t require much imagination at all, because that’s precisely what has happened the past seven years.

Perhaps the biggest change benefiting Big Labor has been President Obama’s appointments — to the Department of Labor and elsewhere in the federal bureaucracy — of influential personnel with ties, both direct and indirect, to the unions.

Some may argue that’s just political payoff – “To the winner go the spoils.” But consider the many new burdens imposed on businesses by this administration and how they are now spoiling things for buyers and sellers.

The Obama administration has sharply curtailed the ability to hire interns, thus disadvantaging college students as they seek to enter the workforce and the employers who wanted to test-drive the potential new full-time hires. Most interns, for example, must be paid and must have access to expensive health insurance. These rules make it harder for many job seekers to get their foot in the door. It’s a “lose-lose” for both would-be interns and prospective employers.

This administration also implemented something even a Democratic Congress rejected in Mr. Obama’s first term, a key part of the so-called “card-check” proposal allowing easier unionization through supplying union organizers with personal contact information for all workers. Businesses are denied sufficient time periods to deal with sudden unionization campaigns.

The Department of Labor (DOL) also has proposed doubling the income floor above which white-collar workers (executive, administrative, professional, outside sales and computer employees) would be exempt from being paid overtime. The new rules impose an unprecedented 113 percent increase in the minimum salary to qualify as an exempt employee, from $455 per week ($23,660 annually) to $970 weekly ($50,440 yearly). The change will make an estimated 4.6 million more employees eligible for overtime.

It’s true that this administration has consistently gone against the unions to support major trade agreements like the Trans-Pacific Partnership – even going so far as to getting involved in the West Coast ports settlement last year. But on balance, the administration’s new standards, however well-intentioned, will make it more difficult and expensive for Americans to start businesses, hire employees and create price-competitive goods and services.

With increasing rapidity and urgency the administration is trying its hardest to put new burdens on job-creating employers.

In January, the Equal Employment Opportunity Commission said it would require companies employing more than 99 employees to report compensation information based on gender, race and ethnicity. The purpose is to get administratively what they can’t get through Congress: laws to second guess employers who decide pay based on experience, contributions and market factors. (Despite this rhetoric, the law already requires equal pay for equal work.)

In another recent anti-jobs move, DOL issued new “guidance” for the thousands of companies that rely on temporary-help agencies for some of their staffing needs. The department made it clear it would read the law as broadly as possible, declaring that companies using temporary employees would be considered their “joint employer” and thus jointly liable, alongside the temp-help agency, for  violations of the Fair Labor Standards Act.

“This is just another example of regulatory fiat that raises even more questions for employers,” Matt Haller, senior vice president of the International Franchise Association, told The Washington Post. “The administration should consider going through formal rulemaking, instead of just issuing a ‘guidance’ without even an outreach to targeted industries who may be impacted.”

Businesses could withstand any one of these costly edicts individually, but taken together, they are nothing less than an assault on American employers – and, in turn, American job creation. The fact that many of our businesses are still doing well is a testament to the combination of sharply lower oil prices and American innovation, entrepreneurship and leadership in many technologies and creative endeavors.

More Americans would have full-time jobs if this Labor Department took a different approach. President Obama, in his final State of the Union address, boasted of “an unemployment rate cut in half” supposedly thanks to his economic policies. But the official Labor Department jobless rate of 5 percent is misleading. For one thing, it ignores the fact that it doesn’t count most of the record 94.6 million Americans out of the workforce, most of them not employed in the last two years nor actively seeking a job.

With the labor participation rate at a paltry 62.6 percent, according to the Bureau of Labor Statistics, the more accurate “U-6” jobless rate stands at 9.9 percent nearly double the official rate.  Today our labor-participation rate is at a 38-year low. It’s little wonder some have called the Obama presidency the second and third terms President Jimmy Carter never got.

Whatever happens in the presidential election this fall, the next president can get more Americans into jobs by changing the leadership of the Department of Labor – and supporting a truly pro-work, pro-business, pro-jobs agenda.

Gary Shapiro is president and CEO of the Consumer Technology Association (CTA)™, the U.S. trade association representing more than 2,200 consumer technology companies, and author of the New York Times best-selling booksNinja Innovation: The Ten Killer Strategies of the World’s Most Successful Businesses and The Comeback: How Innovation Will Restore the American Dream. His views are his own. Connect with him on Twitter: @GaryShapiro