Study: Recent Labor Regulations Slowly Coming Into Focus, And It Doesn’t Look Good For Small Business

Robert Donachie | Capitol Hill and Health Care Reporter

Government regulators are “imposing rules that make modern forms of work and business – like contracting, franchising, and freelancing – more difficult,” Iain Murray, CEI vice president for strategy at Competitive Enterprise Institute, concludes a new report.

Recent regulations have the effect of stemming the tide of small businesses managing small groups of employees. Instead, the regulations are forcing a return to a 1950s employment structure where large industry and corporations employ the overwhelming majority of Americans, according to the report.

Murray explains that regulators, as well as labor unions, want to see an employment landscape of large corporate operations because it makes it “easier to regulate and impose wage and benefit mandates.”

On the side of the regulators, it is easy to see why they prefer a large corporate model. If a dispute comes up with Nike, for instance, regulators can settle the dispute with that single entity rather than dealing with a slew of smaller operations.

The new regulations described in the study aim to discourage a flexible workplace environment, entrepreneurship, and business ownership. The attempts to improve both work conditions and compensation have actually hindered small business entrepreneurs.

Take, for example, a few regulations by the National Labor Relations Board (NLRB). The NLRB expanded joint employer liability over labor conditions and business terms, and as a result drastically increased transactions costs to the point that businesses cannot hire the number of employees they otherwise would.

The NLRB has another rule, the ambush election rule, that makes it easier for employees to unionize. A union essentially functions as a labor cartel, the Heritage Foundation concludes.  A union restricts the number of workers in the economy and drives “up the remaining workers’ wages.” Companies pass on the higher wages to consumers by increasing prices.

Research finds that “unions benefit their members but hurt consumers generally, and especially workers who are denied job opportunities,” Heritage reports.

Couple these rulings by the NLRB with the U.S. Department of Labor mandate that expands federal overtime compensation, and one can what Mr. Murray is saying.

CEI report says it would behoove Congress to take a long, hard look at the reforms they have enacted and their effects on business, the American worker, and our economy as a whole.

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Tags : business finance free enterprise government regulations
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