The final months of President Obama’s second term will bring an onslaught of new rules and regulations that will have a direct and harmful impact on Americans’ lives. These rules span sectors of the economy, particularly in manufacturing industries. While controversial rules related to carbon emissions have grabbed headlines, the Obama administration has been quietly hard at work finding new ways to wrap red tape around the nation’s workers and employers.
The Department of Labor recently finalized two cases in point: the fiduciary rule and the overtime rule. The former will empower unelected, unaccountable bureaucrats to take control over Americans’ retirement choices by imposing significant new disclosure requirements and compliance burdens on the nation’s financial advisors — and at a significant cost to ordinary workers. American Action Forum estimates that the final rule will created nearly 57,000 paperwork hours and will cost Americans over $75 billion in duplicative fees, making it the most expensive proposed or finalized rule of 2016.
For average Americans, the fiduciary rule means that they will face restricted access to financial advice and have a harder time opening and maintaining an Individual Retirement Account (IRA). Small businesses may be less likely to offer 401(k)s to their employees. Experts predict many brokers will stop serving households with less than $50,000 in assets — small investors who need guidance on their investment decisions the most.
The second concerning regulation to come out of the Labor Department, the so-called overtime rule, will have similarly harmful effects on the economy. This rule will dramatically increase the salary threshold exemption for overtime pay from $23,660 to about $47,500, requiring employers to pay time-and-a-half for hours worked exceeding 40 hours per week for employees below the arbitrary new limit.
Like the fiduciary rule, this overtime rule will make it significantly more difficult for many Americans to move up the economic ladder — particularly those who are just starting their careers. Moreover, recent research from the Mercatus Center at George Mason University shows that employers will face a high cost of compliance and workers will face cut hours, lower overall compensation, and less flexibility.
Congress should protect American workers and employers from the harmful impacts of these overreaching labor rules. Thankfully there is early interest to do so. Congress passed a resolution expressing disapproval over the fiduciary rule that passed the House with a party-line 234-183 vote and the Senate with a 56-41 vote.
Congressional leadership should consider attempting similar action to overturn the overtime rule before members leave for August recess. Passing the Protecting Workplace Advancement and Opportunity Act sponsored by Senator Tim Scott (R-S.C.) and Congressman Tim Walberg (R-Mich.) (S. 2707 and H.R. 4773) would be a meaningful step toward retiring this misguided, job-killing rule.
While President Obama is sure to veto these resolutions, Congress is right to act. Efforts to defund, block, and otherwise nullify these rules will send a strong message that elected officials on Capitol Hill are willing to stand up to the White House’s regulatory overreach. Inaction will send a message of compliance with it.
Christine Harbin is director of federal affairs and strategic initiatives for Americans for Prosperity