President-elect Donald Trump says economic growth and job creation are top priorities of his administration, and with good reason. For much of the past eight years, the Obama administration issued new burdensome regulations that created real problems for job creators.
More than 150,000 American workers lost their jobs due to Obama labor decrees, according to a National Association of Manufacturers (NAM) estimate. And the aggregate costs of labor regulations implemented in just the past year by the Obama administration’s primary labor agencies cost $80 billion and added over 400 million paperwork hours to employers, according to NAM.
Clearly, overreaching regulation has drained immense time and resources from businesses, which means they have fewer resources to hire workers, give raises and offer the goods and services consumers want.
That’s why the next administration should promptly repeal the many misguided rules, executive orders and guidance documents of the past administration.
Since President Obama resorted to using a “pen-and-phone” strategy to get around Congress, so can the next president set about undoing its worst parts.
Fortunately, some of these regulations could be repealed quite easily. Since President Obama resorted to using a “pen-and-phone” strategy to get around Congress, so can the next president set about undoing its worst parts.
For instance, the next president can withdraw Executive Orders, starting with those that do more harm than good. President Trump should rescind President Obama’s “blacklisting” order and accompanying rules, which require federal contractors to report alleged and actual labor violations over the last three years. That may sound fine on the surface, but in practice, it means unions trying to pressure a company can use bogus reported violations to unjustly block its federal contract bids.
Adding insult to injury, government analysts could not find any benefits deriving from the blacklisting rules, but they did find that, altogether, those rules would cost contractors $458.35 million in compliance costs and cost taxpayers $15.77 million due to costlier federal contracts.
Next, the Trump administration should take a hard look at regulations already being implemented. That will take a little more work, but there are three primary options to stop the most harmful ones:
1. Defund the enforcement of the rules through the annual appropriations process.
2. Issue new regulations, which take time to go through a formal public notice and comment period.
3. Work with Congress to pass legislation repealing the harmful regulations.
Start with the Labor Department’s overtime rule, which raises the salary threshold for overtime-eligible employees. The overtime rule goes into effect this December and is expected to impose costs of about $600 million in the first year and an estimated paperwork burden of 1.2 million hours. Instead of getting a raise, many workers will be reduced to hourly employees or simply forbidden to work overtime, as employers scramble to avoid budget-busting payroll costs.
Congress should pass and the president should sign legislation to stop such harmful regulations early on. Force regulators to calculate the number of jobs lost as part of a rigorous cost-benefit analysis. And don’t let regulators assume that people who lose jobs can quickly obtain new jobs at equal wages. Most workers who are displaced earn less than non-displaced counterparts for years to come, perhaps 10 to 18 percent less, according to multiple estimates, such as one by Jonathan Masur and Eric Posner of the University of Chicago.
Congress should also require regulators to consider the likely health impact of job displacement, due to a loss of health benefits and other factors. The health impact can be quite dire. A 2009 study by Daniel Sullivan of the Federal Reserve Bank of Chicago and Till Von Wachter of Columbia University found that senior male workers have mortality rates 50-100 percent higher within a year after job displacement.
Another big reform the new administration and Congress should implement is requiring regulators to assess the impact of their rules, especially outcomes related to job loss resulting from regulatory action. This is not currently done. Congress needs to know whether regulations are harming workers and reevaluate the merit of rules that cause job loss.
When considering the implementation of regulation, it’s time for our lawmakers to start paying more attention to what actually happens to the people and businesses at the receiving end of government. Labor regulations are a good place to start.
Trey Kovacs is a policy analyst specializing in labor policy for the Competitive Enterprise Institute.