[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]
HOW THE ADMINISTRATION'S REGULATORY
ONSLAUGHT IS AFFECTING WORKERS AND
JOB CREATORS
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON WORKFORCE PROTECTIONS
COMMITTEE ON EDUCATION
AND THE WORKFORCE
U.S. House of Representatives
ONE HUNDRED FOURTEENTH CONGRESS
FIRST SESSION
__________
HEARING HELD IN WASHINGTON, DC, DECEMBER 9, 2015
__________
Serial No. 114-36
__________
Printed for the use of the Committee on Education and the Workforce
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COMMITTEE ON EDUCATION AND THE WORKFORCE
JOHN KLINE, Minnesota, Chairman
Joe Wilson, South Carolina Robert C. ``Bobby'' Scott,
Virginia Foxx, North Carolina Virginia
Duncan Hunter, California Ranking Member
David P. Roe, Tennessee Ruben Hinojosa, Texas
Glenn Thompson, Pennsylvania Susan A. Davis, California
Tim Walberg, Michigan Raul M. Grijalva, Arizona
Matt Salmon, Arizona Joe Courtney, Connecticut
Brett Guthrie, Kentucky Marcia L. Fudge, Ohio
Todd Rokita, Indiana Jared Polis, Colorado
Lou Barletta, Pennsylvania Gregorio Kilili Camacho Sablan,
Joseph J. Heck, Nevada Northern Mariana Islands
Luke Messer, Indiana Frederica S. Wilson, Florida
Bradley Byrne, Alabama Suzanne Bonamici, Oregon
David Brat, Virginia Mark Pocan, Wisconsin
Buddy Carter, Georgia Mark Takano, California
Michael D. Bishop, Michigan Hakeem S. Jeffries, New York
Glenn Grothman, Wisconsin Katherine M. Clark, Massachusetts
Steve Russell, Oklahoma Alma S. Adams, North Carolina
Carlos Curbelo, Florida Mark DeSaulnier, California
Elise Stefanik, New York
Rick Allen, Georgia
Juliane Sullivan, Staff Director
Denise Forte, Minority Staff Director
------
SUBCOMMITTEE ON WORKFORCE PROTECTIONS
TIM WALBERG, Michigan, Chairman
Duncan Hunter, California Frederica S. Wilson, Florida,
Glenn Thompson, Pennsylvania Ranking Member
Todd Rokita, Indiana Mark Pocan, Wisconsin
Dave Brat, Virginia Katherine M. Clark, Massachusetts
Michael D. Bishop, Michigan Alma S. Adams, North Carolina
Steve Russell, Oklahoma Mark DeSaulnier, California
Elise Stefanik, New York Marcia L. Fudge, Ohio
C O N T E N T S
----------
Page
Hearing held on December 9, 2015................................. 1
Statement of Members:
Walberg, Hon. Tim, Chairman, Subcommittee on Workforce
Protections................................................ 1
Prepared statement of.................................... 3
Wilson, Hon. Frederica S., Ranking Member, Subcommittee on
Workforce Protections...................................... 4
Prepared statement of.................................... 7
Statement of Witnesses:
Batkins, Mr. Sam, Director of Regulatory Policy, American
Action Forum, Washington, D.C.............................. 11
Prepared statement of.................................... 13
Beebe, Mr. Ralph, President, Highland Engineering, Inc.,
Howell, MI................................................. 22
Prepared statement of.................................... 25
Hammock, Mr. Bradford, Shareholder and Co-Leader of the
Workplace Safety and Health Practice Group, Jackson Lewis,
P.C., Reston, VA........................................... 58
Prepared statement of.................................... 61
Owens, Ms. Christine, Executive Director, National Employment
Law Project, Washington, D.C............................... 31
Prepared statement of.................................... 33
Additional Submissions:
Chairman Walberg:
Report from Mercatus Center, George Mason University,
entitled "The Unintended Consequences of Federal
Regulatory Accumulation"............................... 83
Working paper from Mercatus Center, George Mason
University, entitled "Regulatory Overload: A Behavioral
Analysis of Regulatory Compliance"..................... 86
Article from Mercatus Center, George Mason University,
entitled "Do More Regulations Equal Less Safety"....... 118
HOW THE ADMINISTRATION'S REGULATORY
ONSLAUGHT IS AFFECTING WORKERS
AND JOB CREATORS
----------
Wednesday, December 9, 2015
House of Representatives
Committee on Education and the Workforce,
Subcommittee on Workforce Protections
Washington, D.C.
The subcommittee met, pursuant to call, at 10:03 a.m., in
Room 2175, Rayburn House Office Building. Hon. Tim Walberg
[Chairman of the subcommittee] presiding.
Present: Representatives Walberg, Thompson, Rokita, Brat,
Stefanik, Wilson, Pocan, Clark, and DeSaulnier.
Also Present: Representative Kline, Representative Courtney
and Representative Takano.
Staff Present: Andrew Banducci, Workforce Policy Counsel;
Ed Gilroy, Director of Workforce Policy; Jessica Goodman,
Legislative Assistant; Callie Harman, Legislative Assistant;
Tyler Hernandez, Press Secretary; Nancy Locke, Chief Clerk;
John Martin, Professional Staff Member; Dominique McKay, Deputy
Press Secretary, Krisann Pearce, General Counsel; Molly
McLaughlin Salmi, Deputy Director of Workforce Policy; Alissa
Strawcutter, Deputy Clerk; Loren Sweatt, Senior Policy Advisor;
Olivia Voslow, Staff Assistant; Joseph Wheeler, Professional
Staff Member; Tylease Alli, Minority Clerk/Intern and Fellow
Coordinator; Christine Godinez, Minority Staff Assistant;
Carolyn Hughes, Minority Senior Labor Policy Advisor; Brian
Kennedy, Minority General Counsel; Richard Miller, Minority
Senior Labor Policy Advisor; Amy Peake, Minority Labor Policy
Advisor; Saloni Sharma, Minority Press Assistant, and Elizabeth
Watson, Minority Director of Labor Policy.
Chairman Walberg. Good morning. It is sure quiet in the
room. After running up two flights of stairs, let me get my
wind back here.
A quorum being present, the subcommittee will come to
order. Good morning. I would like to thank you all for joining
us today, and thank our witnesses for being here with us to
share their experiences and perspectives.
The end of the year is an important time to reflect on what
has been accomplished and what work remains to be done. As
members of the Education and the Workforce Committee, this is
especially important as we consider the significant challenges
many workers continue to face.
Recent months have shown signs of economic improvement and
signs of continued concern, both. Roughly 8 million Americans
are still unemployed and searching for work, and an additional
6 million are working part-time hours when they really need and
want full-time jobs. That does not include the millions of
individuals who are so discouraged by meager job prospects that
they have simply dropped out of the workforce entirely.
Meanwhile, those with jobs are facing fewer opportunities
to advance and earn higher wages. Some will say the problems
facing workers and job creators can be solved with more
spending, more Government mandates, and more regulation.
Perhaps we will hear some of those claims today, but that is
the same failed approach that the Obama administration has
pursued over the last seven years.
The results have been an anemic economy, sluggish job
growth, and most importantly, less opportunity and prosperity
for millions of hard working men and women.
Time and again, we have called on the administration,
including those at OSHA and the Department of Labor more
broadly, to pursue a different, more responsible course, and
time and again, our calls have been rebuffed.
The most recent example was the release of the
administration's regulatory agenda, which doubles down on the
same extreme regulatory approach that has made the problems
plaguing the country worse at the expense of those struggling
the most.
Let me be clear. Federal policies do play an important role
in ensuring safe and healthy workplaces and protecting the
basic rights of hard working men and women. That is not what we
are here to discuss today.
The question is not whether there should be rules of the
road for workers and employers to follow. The question is how
we ensure those rules are implemented fairly, responsibly, and
in a way that promotes the best interests of both workers and
their employers.
Unfortunately, more often than not, what we have seen from
this administration is an overly punitive and unnecessarily
burdensome approach. Adding insult to injury, often these rules
and regulations are being developed and changed without any
public input. This regulatory approach is holding us back, and
that is the focus of today's hearing.
We know there are areas where we can make meaningful change
without creating costly consequences and unintended harm. For
example, Chairman Kline and I have said we are open to
modernizing current overtime rules to strengthen protections
for workers and help employers fulfill their legal
responsibilities.
Instead, we have had to confront a proposal that will limit
workplace flexibility, make it harder for workers to advance up
the economic ladder, and impose a significant burden on small
businesses.
Earlier this year, Nicole Berberich, director of human
resources at the Cincinnati Animal Referral and Emergency
Center, testified in front of this subcommittee about the
challenges employers are already facing because of complicated
federal wage and hour regulations. She also explained that
small businesses like the one she works for are likely to
experience the burdens of these regulations disproportionately.
She added that those burdens will continue to worsen with the
expected overtime changes.
At a separate hearing before this same subcommittee, Eric
Williams, who worked his way up from crew member at a fast food
restaurant to become a franchise and chief operating officer at
CKE Restaurants, shared his fears that the administration's
overtime proposal, and I quote, ``will severely limit hard
working, talented Americans from realizing their dreams,'' as
he dreamed and realized. He worries that because of the
proposal, some employees, and I quote, ``may never reach their
full potential.'' That is a shame.
The overtime proposal is just one example of this
administration's misguided approach to regulating. At another
hearing, Drew Greenblatt, a steel wire manufacturer from
Baltimore, spoke to us about how Government policies are
hindering growth and how he and others in his industry find
themselves stuck between a rock and a hard place.
He explained the situation as between, and I quote, ``A
rock of harsh and unforgiving global economic competition and a
hard place of inflexible and ever proliferating regulations.''
It should be clear to anyone who is listening that the
current regulatory onslaught is making life harder for working
families and small business owners, not better.
According to a study commissioned by the National
Association of Manufacturers, federal regulations cost more
than $2 trillion in lost economic growth annually, and the
American Action Forum estimates that the administration imposed
more than $181 billion in new regulatory costs during 2014
alone. These are staggering statistics that in many ways
represent lost wages and fewer jobs for American workers.
Today, we will hear from our witnesses how this
unprecedented regulatory approach has created troubling
concerns for workers and small businesses during the past year.
My hope is that by demanding more responsible regulatory
policies we can ensure a prosperous 21st century workplace.
With that, I will now recognize my Ranking Member, Ms.
Wilson, for her opening remarks.
[The information follows:]
Prepared Statement of Hon. Tim Walberg, Subcommittee on Workforce
Protections
Good morning. I'd like to thank you all for joining us today and
thank our witnesses for being here to share their experiences and
perspectives.
The end of the year is an important time to reflect on what has
been accomplished and what work remains to be done. As members of the
Education and the Workforce Committee, this is especially important as
we consider the significant challenges many workers continue to face.
Recent months have shown signs of economic improvement and signs of
continued concern. Roughly eight million Americans are still unemployed
and searching for work, and an additional six million are working part-
time hours when they really need and want full-time jobs. And that
doesn't include the millions of individuals who are so discouraged by
meager job prospects that they have dropped out of the workforce
entirely. Meanwhile, those with jobs are facing fewer opportunities to
advance and earn higher wages.
Some will say the problems facing workers and job creators can be
solved with more spending, more government mandates, and more
regulation. Perhaps we will hear some of those claims today, but that's
the same failed approach the Obama administration has pursued over the
last seven years. The results have been an anemic economy, sluggish job
growth, and most importantly, less opportunity and prosperity for
millions of hardworking men and women.
Time and again we have called on the administration - including
those at OSHA and the Department of Labor more broadly - to pursue a
different, more responsible course, and time and again our calls have
been rebuffed. The most recent example was the release of the
administration's regulatory agenda, which doubles-down on the same
extreme regulatory approach that has made the problems plaguing the
country worse at the expense of those struggling the most.
Let me be clear: Federal policies do play an important role in
ensuring safe and healthy workplaces and protecting the basic rights of
hardworking men and women. That's not what we are here to discuss
today. The question isn't whether there should be rules of the road for
workers and employers to follow. The question is how we ensure those
rules are implemented fairly, responsibly, and in a way that promotes
the best interests of both workers and their employers.
Unfortunately, more often than not, what we've seen from this
administration is an overly punitive and unnecessarily burdensome
approach. Adding insult to injury, often these rules and regulations
are being developed and changed without any public input. This
regulatory approach is holding us back, and that is the focus of
today's hearing.
We know there are areas where we can make meaningful change without
creating costly consequences and unintended harm. For example, Chairman
Kline and I have said we are open to modernizing current overtime rules
to strengthen protections for workers and help employers fulfill their
legal responsibilities. Instead, we have to confront a proposal that
will limit workplace flexibility, make it harder for workers to advance
up the economic ladder, and impose a significant burden on small
businesses.
Earlier this year, Nicole Berberich, director of Human Resources at
the Cincinnati Animal Referral and Emergency Center, testified about
the challenges employers are already facing because of complicated
federal wage and hour regulations. She also explained that small
businesses like the one she works for are likely to experience the
burdens of these regulations disproportionately. And she added that
those burdens will continue to worsen with the expected overtime
changes.
At a separate hearing, Eric Williams - who worked his way up from a
crew member at a fast-food restaurant to become a franchisee and chief
operating officer of CKE Restaurants - shared his fears that the
administration's overtime proposal ``will severely limit hardworking,
talented Americans from realizing their dreams.'' He worries that,
because of the proposal, some employees ``may never reach their
potential.''
The overtime proposal is just one example of this administration's
misguided approach to regulating. At another hearing, Drew Greenblatt,
a steel wire manufacturer from Baltimore, spoke to us about how
government policies are hindering growth and how he and others in his
industry find themselves stuck between a rock and a hard place. He
explained his situation as between, ``A rock of harsh and unforgiving
global economic competition and a hard place of inflexible and ever-
proliferating regulations.''
It should be clear to anyone who is listening that the current
regulatory onslaught is making life harder for working families and
small businesses owners, not better. According to a study commissioned
by the National Association of Manufacturers, federal regulations cost
more than $2 trillion in lost economic growth annually. And the
American Action Forum estimates that the administration imposed more
than $181 billion in new regulatory costs during 2014 alone. These are
staggering statistics that, in many ways, represent lost wages and
fewer jobs for American workers.
Today we will hear from our witnesses how this unprecedented
regulatory approach has created troubling concerns for workers and
small businesses during the past year. My hope is that by demanding
more responsible regulatory policies, we can ensure a prosperous 21st
century workforce.
With that, I will now recognize Ranking Member Wilson for her
opening remarks.
______
Ms. WILSON. Mr. Chairman, I want to thank you for holding
this hearing and giving us an opportunity to discuss the
Department of Labor's work to ensure more American workers have
the protections they need to build a better life for themselves
and their families.
The legislation establishing the Department of Labor
memorialized the agency's honored purpose, to foster, promote,
and develop the welfare of working people, to improve their
working conditions, and to advance their opportunities for
profitable employment.
Since its inception in 1913 and throughout America's ever
changing economic and social landscape, DOL has held steadfast
to this original purpose. Using its court affirmed statutory
authority, the department has proposed rules to promote fair
wages, safe workplaces, and equal employment opportunities.
For instance, I was pleased to hear that DOL released the
persuader rule for OMB review this week, and will soon finalize
the rule. Four years in the making, this rule will level the
playing field for workers wishing to organize by strengthening
disclosure requirements for employers that hire pricey outside
consultants to bust union organizing efforts.
It is my hope that our subcommittee, also tasked with
promoting the welfare of working people, will join DOL in its
efforts by passing legislation that supports working families.
Instead, it seems we are stuck in a perpetual state of inaction
or flat out obstruction. Efforts to derail DOL's regulations do
not help workers struggling to get by, create safer workplaces,
or promote equal opportunity in employment.
The men and women teetering on the brink of poverty, people
making $23,660 a year, who are asked to work 50, 60, or 70
hours a week with no promise of extra pay, are not helped by
efforts to block DOL's rule to extend overtime protection to 5
million working Americans.
The nearly 2.1 million workers exposed to silica and at
risk of contracting potentially lethal silicosis are not made
safer by efforts to block full implementation of DOL's
crystalline silica dust rule.
Expectant mothers who want nothing more than the ability to
work and save for their new additions are not comforted by
efforts to impede EEOC's work to address pregnancy
discrimination in the workplace.
Americans are no longer persuaded by some of the offered
justifications for attempts to block regulations designed to
protect workers. It is hard to argue the Department of Labor's
regulatory agenda is causing historic job loss when we are in
fact in the midst of the longest streak of job growth on
record. Our economy has added over 13.7 million jobs over 69
straight months, and we are seeing the lowest unemployment rate
since April 2008.
These questionable arguments for blocking DOL's rules must
make us question the purpose of our pursuits.
If there is genuine concern for workers, as well as
businesses, then support a working families agenda that boosts
wages, so more Americans are economically secure and have the
increased spending power that supports job creating consumer
demand. Take up a vote on a working families agenda that
promotes the strong work/family balance needed for productive
workers. Pass a working families agenda that promotes the equal
employment opportunity that is linked to increased
profitability and ensures all workers have a fair shot at
success.
I must remind my colleagues that the department's purpose
as well as our own is singular and clearly defined, the welfare
of working people. It is this purpose that we must look to when
judging DOL's actions as well as our own. We are the Workforce
Protections Subcommittee. We must protect the workforce.
I look forward to hearing from the witnesses and what we
can do to support DOL's efforts to promote the welfare of
working people.
To the witnesses, I have read your statements. I want to
work with you and do what we can to support DOL's efforts to
promote the welfare of working people.
Very shortly, in Emancipation Hall at 11:00 a.m., members
of the Congressional Black Caucus and House and Senate
leadership will commemorate the 150th anniversary of the
ratification of the 13th Amendment to the United States
Constitution, which abolished slavery in the United States. The
very slaves who built the United States Capitol.
Thousands fell to their death trying to erect the dome.
They slept outside in the snow while laying the marble floors
and columns. The ultimate workforce on whose shoulders we
stand. They never had or received any protection. There was no
Department of Labor, no Workforce Protections Subcommittee.
We cannot turn back. We have made so much progress. Let us
vow to protect our present workers. After all, we are the
Workforce Protections Committee, and I want to be proud of our
work as we protect our workers.
I want to thank Representative Pocan for substituting for
me. I have to attend the ceremony, and I yield back my time.
[The information follows:]
[GRAPHIC] [TIFF OMITTED] T7778.086
[GRAPHIC] [TIFF OMITTED] T7778.087
[GRAPHIC] [TIFF OMITTED] T7778.088
Chairman Walberg. I thank the gentlelady and I thank you
for reminding us of this celebration today and the 13th
Amendment and the impact.
Pursuant to Committee Rule 7(c), all subcommittee members
will be permitted to submit written statements to be included
in the permanent hearing record, and without objection, the
hearing record will remain open for 14 days to allow
statements, questions for the record, and other extraneous
material referenced during the hearing to be submitted in the
official hearing record.
It is now my pleasure to introduce today's witnesses. Mr.
Sam Batkins is director of regulatory policy at the American
Action Forum here in Washington, D.C.
Prior to joining AAF, Mr. Batkins worked at the U.S.
Chamber of Commerce, Institute for Legal Reform, and the
National Taxpayers Union. His work has focused on lawsuit
abuse, tort reform, federal regulation, and state and federal
spending.
Mr. Ralph Beebe is president of Highland Engineering, Inc.
in Howell, Michigan. It is good to see a Michiganian here. That
is just kind of a personal side line between us, right?
He is testifying on behalf of the National Federation of
Independent Business. Highland Engineering manufactures troop
support equipment and contracts with all branches of the
Department of Defense, as well as the Federal Emergency
Management Agency, and foreign militaries.
In addition to its DOD work, HEI works with commercial
customers in automation and water treatment areas.
Ms. Christine Owens is executive director of the National
Employment Law Project in Washington, D.C. Prior to working
with the National Employment Law Project, she worked at the
AFL-CIO as a senior policy analyst specializing in workplace
equity issues. Much of her work has focused on minimum wage and
living wage hikes, pay equity, and state unemployment insurance
coverage expansions.
Mr. Bradford Hammock is a shareholder and co-leader of the
Workplace Safety and Health Practice Group for Jackson Lewis in
Reston, Virginia. Prior to this, Mr. Hammock served as an
attorney at OSHA, working on regulatory initiatives, compliance
assistance, and enforcement policies.
I welcome you all, and as is the policy in this Committee,
we would ask you now to rise and raise your right hand.
[Witnesses sworn.]
Chairman Walberg. Thank you. You may take your seats. Let
the record reflect the witnesses answered in the affirmative.
Before I recognize you to provide your testimony, let me
briefly explain the lighting system, which is probably not
unfamiliar to most of you. It is like traffic lights. Green,
keep on going, you have five minutes for your testimony. Yellow
hits, you have a final minute to wrap up. When red hits, you do
not have to screech to a stop but come to a conclusion. You
will have an opportunity to answer further questions during our
questioning. The same will be true for the members of this
subcommittee.
Now, let me recognize for five minutes of testimony, Mr.
Batkins. Welcome.
TESTIMONY OF SAM BATKINS, DIRECTOR OF REGULATORY POLICY,
AMERICAN ACTION FORUM, WASHINGTON, D.C.
Mr. Batkins. Thank you, Chairman Walberg, members of the
Committee. Thank you for the opportunity to appear today.
In this testimony, I wish to highlight the following
points: first, by virtually any metric, regulatory activity has
increased across the federal government, from the 100 major
rules issues in 2010 to the more than $100 billion in new
annual regulatory costs. These new measures will affect
employment.
Second, there is a general consensus that regulations have
statistically significant but small effects on industry
employment. The American Action Forum's work has found that $1
billion in new annual regulatory costs could cut industry
employment by 3.6 percent, and third, even federal agencies
routinely acknowledge the impact of regulations on employment.
From 2012 to present, 22 rules have conceded they could
negatively impact employment, resulting in nearly 86,000 lost
jobs.
Regulatory activity has undoubtedly increased in recent
years. The paperwork burden, the number of major rules, and
monetized regulatory costs, have all trended upward. What does
this mean for employment?
We know there are more regulatory compliance officers now
than ever before, approximately 246,000. As the regulatory
burden grows, so, too, does demand on businesses, to shift
employees from profit making endeavors to compliance.
A 2013 Minneapolis Fed study emphasized paperwork burdens
and what being forced to hire additional compliance staff means
for small banks. The study found that hiring two additional
compliance officers reduced profitability by roughly half a
percent, and that one-third of the banks studied would become
unprofitable if forced to hire additional compliance officers.
For regulatory costs, EPA and the Department of Energy
alone have added $39 billion in new annual burdens since 2009.
For employees in fossil fuel power plants, these costs are one
leading factor to a 28 percent decline in industry employment
since 2008.
There are other factors in play but regulation has
definitely made its mark. According to the most recent
literature, regulation has a modest but significant impact on
industry employment.
In one seminal study, Professor Michael Greenstone examined
how employment in pollution intensive industries in non-
attainment ozone counties differed from attainment counties.
The results were dramatic. Non-attainment counties, those with
more stringent EPA controls, lost 590,000 jobs, $37 billion in
capital, and $75 billion in output.
Dr. Richard Morgenstern, whose work is often cited in
regulatory impact analyses, summarizes the intersection of
regulation and employment writing, ``there is only limited
evidence that environmental regulation leads to significant job
loss.'' Note, he did not say there is evidence environmental
regulation leads to major job gains.
The American Action Forum's work found that for every $1
billion increase in regulations, industry employment declines
by 3.6 percent.
More important than a top line number, however, is the
human element to regulation. Even if a rule leads to a net zero
impact on aggregate employment but results in thousands of job
transfers, there still might be individual job losses and
stagnant wages.
For instance, research has found job displacement can lead
to a 15 to 20 percent increase in death rates in the 20 years
following displacement. This should not be discounted by
regulators or policymakers.
Finally, regulatory agencies need to perform more
employment impact analyses. Rutgers University Professor Stuart
Shapiro examined a regulatory impact analysis of 56 major rules
and found that just 11 quantified the rules' impact on
employment. On rules since 2012 that had discussed the impact
on employment, the American Action Forum found 22 admitted some
job losses were possible, including 11 to date in 2015.
As the Department of Energy once conceded, ``it is possible
small manufacturers will choose to leave the industry or choose
to be purchased by or merged with larger market players.''
Likewise, a Department of Labor rule admitted its
implications would result in a dead weight loss and dis-employ
roughly 1,000 workers annually. The combined employment loss
from the 22 rules, according to agency estimates, could top
85,000 workers.
Based on the research from Professors Eric Posner and
Jonathan Masur, the cost of an individual job displacement is
$100,000. If we take this 85,000 jobs figure at face value, it
means $8.5 billion in costs, human costs, a human toll from
regulation.
The proposed overtime expansions, the fiduciary rulemaking,
and redefining the joint employer rule could add to these
significant totals.
In conclusion, the general consensus is regulation does
have an effect on employment, at least at the industry level.
More research is needed in this field, and agencies, OIRA, and
independent parties should work to perform more rigorous
analysis on the intersection of regulation and employment.
Thank you for your time, and I look forward to answering
your questions.
[The statement of Mr. Batkins follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Chairman Walberg. Thank you. Now, I recognize Mr. Beebe,
and thank you for being here, taking time away from your
business to join us and give us your experience.
TESTIMONY OF RALPH BEEBE, PRESIDENT, HIGHLAND ENGINEERING,
INC., HOWELL, MI, TESTIFYING ON BEHALF OF THE NATIONAL
FEDERATION OF INDEPENDENT BUSINESS
Mr. Beebe. My pleasure. Good morning, Chairman Walberg,
Ranking Member Pocan, and members of the Committee. I am
pleased to be here on behalf of the National Federation of
Independent Business. I am one of the owners of Highland
Engineering, and have been a member of NFIB since 1993. I also
currently serve on the NFIB Michigan Leadership Council.
Thank you for holding today's hearing on how the
administration's regulatory onslaught is affecting workers and
job creators.
The current regulatory framework negatively impacts small
and closely held businesses in several important ways, so I
appreciate the invitation to be here today to discuss these
important issues.
The NFIB is the nation's leading small business advocacy
organization. As part of representing small business owners,
NFIB frequently conducts surveys of both the NFIB membership
and the small business population as a whole.
Government regulation consistently ranks as one of the
greatest concerns. In fact, since January 2009, government
requirements and red tape have been a top three problem for
small business owners on NFIB's monthly small business surveys.
In the administration's fall 2015 regulatory agenda
released on November 18, there are 3,297 federal regulations in
the pipeline waiting to be proposed, finalized, or implemented.
About 10 new regulations are finalized every day, according to
data on Regulations.gov, adding to the volumes of rules with
which small business owners must comply. This constant
onslaught of government regulation makes it incredibly
difficult for me to operate my day-to-day business.
I would like to spend the rest of my time telling you about
my personal experience dealing with government regulations.
Highland Engineering was founded in 1986 and we moved to Howell
in 1987. We specialize primarily in troop support equipment for
the U.S. Department of Defense, as well as some other agencies.
With 45 full-time employees, we are a contractor for all
branches of the DOD, FEMA, and foreign militaries.
In addition to our government work, we also serve
commercial customers in the automation and water treatment
areas.
Through our company's nearly 30 year history, I have seen
the impact of the direct costs of excessive regulations,
particularly in the past four years. For example, the number of
clauses in our contracts have increased nearly 50 percent since
2011. Additionally, reporting requirements have increased to
the point that they have become overbearing.
Keeping up with these ever changing regulations is such a
task that I have had to hire a professional compliance officer,
who also happens to be my wife, Sally, to work 10 to 20 hours
per week solely to make sure we are abiding by complex,
uncertain, and ever changing regulations.
Each time a new regulation comes out, she has to research
it, decide if it pertains to us, and if it does pertain to us,
figure out what we need to do about it.
The pace of changes in regulations is astounding. In
October of 2011, the Federal Acquisition Regulation or FAR, was
on Revision 44. By October 2015, it is now on Revision 84. With
this current pace of excessive regulation by the
administration, more and more small businesses will either have
to divert their monies to hiring compliance personnel, as we
did, or will simply decide the burden is too great and get away
from the over regulation by dissolving their businesses.
Further, the companies still doing business with the
government are passing on these increased costs to the
taxpayers instead of being able to use this money to invest in
the company's development or to hire new employees. We have had
to focus on understanding and complying with new regulations.
Further, in my experience with the Department of Labor, I
have found the agency to be more interested in trying to find
what we did wrong instead of providing assistance and education
in understanding new rules.
My company set up an employee stock ownership plan as a way
to take care of our employees and provide for their
retirements. We hired lawyers to make sure we understood the
process and that we did it right. After the plan was filed with
DOL, DOL determined that they needed to audit us. After 17
months of what we thought was nothing more than a phishing
expedition, they determined that we did everything 100 percent
correct. Those 17 months cost us a lot of time and money.
Highland Engineering's business is primarily with
government agencies, and we have seen firsthand the detrimental
effects of ever changing and excessive regulations, especially
as a small business with limited resources, resources that we
could be using to more fully support our core mission, which is
supporting the warfighters.
The current state of government regulation has become a
confusing and unpredictable challenge for the vast majority of
small business owners. Government regulations should not hinder
the ability of small business owners to create or expand their
business. The current pace of new regulations combined with the
existing regulatory burden can dictate the business decisions
an owner must make, whether it means using a compliance
officer, attempting to expand its business, or hiring new
employees.
As Congress examines the current regulatory burden faced by
small business owners, I would encourage you to keep the
following goals in mind: number one, agencies should take into
account a proposed regulation's indirect economic impact on
small business. Two, agencies should increase compliance
assistance so small businesses acting in good faith can
continue to operate without fear of undue penalties, and three,
DOL and all agencies should be required to conduct SBIR panels
when considering any new regulation.
Working toward these goals would create a more stable pro-
growth environment for small businesses.
Thanks again for having me today, and I will be happy to
answer any questions.
[The statement of Mr. Beebe follows:]
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Chairman Walberg. Thank you. Ms. Owens, we welcome you,
thank you for being here. We now recognize you for five
minutes.
TESTIMONY OF CHRISTINE OWENS, EXECUTIVE DIRECTOR, NATIONAL
EMPLOYMENT LAW PROJECT, WASHINGTON, D.C.
Ms. Owens. Thank you very much, Chairman Walberg, Mr.
Pocan, and members of the subcommittee. I appreciate the
opportunity to testify today on behalf of my organization, the
National Employment Law Project, which engages in a number of
activities designed to promote the interests and rights of low
wage and unemployed workers.
The Obama administration has proposed or taken several
executive regulatory and other agency actions essential to
workers' ability to earn decent wages, meet responsibilities on
the job and at home, and work in safe, healthy, and non-
discriminatory workplaces. These actions have been thoughtful,
informed, fair and balanced, and consistent with legal
authority and legal responsibilities to further underlying
workforce policy goals.
Far from causing harm, they make it more likely that we
will rebuild the economy on a foundation of good jobs and safe
and healthy workplaces.
Regulatory and related action by the Obama administration
is extremely important. Wages for most workers have fallen over
most of the last four decades, even as worker productivity
grew, and the average age and education of the workforce rose.
The Great Recession exacerbated these trends, particularly for
low wage workers.
During the period of limited congressional action on
workforce policy, administration action is a vital response to
the wage crisis. It also better aligns workforce policy with
today's economy and its evolving business and employment
practices and family needs.
Several actions update old standards that because they have
not been adjusted regularly neither meet the needs of today's
workers nor serve employers effectively.
Contrary to arguments that workforce regulations are
burdensome and costly job killers, analyses of regulations over
a multi-year period find their benefits vastly exceed costs,
while cost estimates typically fail to consider mitigating
savings, and actual costs often turn out to be significantly
lower than estimated.
Less than three-tenths of 1 percent of employers initiating
mass layoffs in 2012 said government regulation was their
layoff reason, affecting only five of every 2,000 laid-off
employees.
A 2014 analysis of 10 proposed or final public health and
safety rules, including OSHA's proposed silica rule, concluded
they would save 10,000 lives, prevent 300,000 cases of
occupational illness or injury, and yield a net overall benefit
of as much as $122 billion. Frankly, 69 months of record
uninterrupted job growth along with cutting the unemployment
rate in half is wholly inconsistent with the notion that a
regulatory onslaught has damaged the economy or cost us jobs.
In the face of extreme inequality, stagnant and declining
wages, and inadequate labor markets, the Obama administration
has acted judiciously and lawfully to help ensure that
Americans who work for a living will make a decent living from
work in safe, healthy, and non-discriminatory workplaces.
I will now briefly describe a couple of these initiatives.
The Labor Department moved to revitalize the Fair Labor
Standards Act and strengthen the middle class this July, when
after a period of substantial outreach and sustained
deliberation it proposed a rule updating the so-called ``white
collar exemption'' to the overtime pay requirement.
Recognizing that the existing poverty level threshold of
$23,660 is far too low, the Department proposed to lift it to a
far more realistic level of $50,440. This change will benefit
as many as 11 million workers and restore overtime protections
to 44 percent of the white collar workforce. This is still
below the historic standard, but definitely an improvement.
The Department also acted importantly and appropriately in
2013 when 16 years after first listing revision of the silica
standard on its regulatory agenda, OSHA proposed a new
protective regulation.
Disease and deaths from silica exposure are preventable,
yet more workers died from silicosis and silica related
diseases in 2013 than from explosions or from being caught in
or crushed by collapsing materials, running equipment, or
machinery.
These as well as other regulations and actions we discussed
in our written testimony, including extension of minimum wage
and overtime protections to the home care workforce, are
important actions within the constitutional and statutory
authorities of the President, the Labor Department, and the
EEOC, in response to some of today's workforce challenges and
crises.
By improving wages and working conditions for tens of
millions of workers, the administration's actions will
strengthen American working families and help achieve a
healthier and more robust economy in which all who contribute
to its success have a shot at sharing fairly in its prosperity.
Thank you. I would welcome any questions.
[The statement of Ms. Owens follows:]
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Chairman Walberg. Thank you. Mr. Hammock, welcome, and we
recognize you now for your five minutes of testimony.
TESTIMONY OF BRADFORD HAMMOCK, SHAREHOLDER AND CO-LEADER OF THE
WORKPLACE SAFETY AND HEALTH PRACTICE GROUP, JACKSON LEWIS P.C.,
RESTON, VA
Mr. Hammock. Thank you, Mr. Chairman, Congressman Pocan,
members of the subcommittee. Good morning. I am Brad Hammock. I
manage the Workplace Safety and Health Practice Group at the
law firm of Jackson Lewis.
Before joining Jackson Lewis, I spent 10 years at the
Department of Labor working on various matters on behalf of
OSHA. I worked specifically on OSHA's regulatory program,
including serving as counsel for safety standards for the last
few years of my tenure there. I am very familiar with OSHA's
regulatory program having been and worked there and lived
there.
Since leaving the Department, I have had the privilege of
working with countless employers in a variety of industries in
a compliance assistance capacity, as well as helping them
navigate OSHA enforcement actions.
I am pleased to offer my perspective on regulatory burdens
on employers from my experience of working for OSHA as well as
representing employers across the country.
Many employers I work with are feeling the full weight of
OSHA and fear several new regulatory initiatives set to become
final rules in 2016. In addition, now more than ever employers
are facing compliance challenges resulting from the ambiguous
OSHA guidance in such areas as ergonomics, workplace violence,
and process safety management.
The combination of new regulatory requirements and
aggressive enforcement places significant pressure on
employers. That is why it is critical that agencies be mindful
of the cumulative impact of regulations on employers and be
judicious with promulgating new rules.
From a regulatory perspective, OSHA is extremely active.
One of the regulatory actions that my clients raise with me
with great concern is OSHA's proposed electronic recordkeeping
rule. As proposed, this rule would amend the agency's
recordkeeping regulations to add new electronic reporting
obligations.
OSHA would require employers with over 250 employees per
establishment to submit their OSHA 300 Logs to the agency on a
quarterly basis, and OSHA would in turn post those OSHA 300
Logs on its website to make the information publicly available.
There are several problems with this rule, starting with
the fact that OSHA has not justified any safety and health
benefits from the proposal. OSHA seems to believe that benefits
will flow once injury and illness information is made public,
and customers, employees, and others can make determinations
about how safe a particular worksite is. This in turn would
lead employers to make improvements in workplace safety.
This is wrong at several levels. OSHA should know that the
occurrence of an injury in and of itself is not a complete or
fair indication of an employer's safety and health program and
its effectiveness. To suggest that individuals, whether it be
researchers, workers, other employers, customers, or unions
should make conclusions about the safety and health of a
workplace based on just the public report of an OSHA 300 Log, a
lagging as opposed to a leading indicator, is misguided.
As you can imagine, employers are very concerned with this
proposal, that may unfairly tarnish a worksite as unsafe,
having a negative impact on the employer of the site,
regardless of the true effectiveness of the employer's safety
and health program.
Another significant regulatory initiative that will have
major impacts on many employers is OSHA's proposed rule
regulating crystalline silica. OSHA has been working on a
respirable crystalline silica rule for decades.
To be clear, crystalline silica at certain exposure levels
has been shown to cause silicosis, a potentially fatal lung
disease. Over the course of the last several decades, however,
the incidences of silicosis have been steadily and rapidly
declining, according to the Centers for Disease Control.
It is with this backdrop that OSHA's proposal was issued.
For many employers, particularly small employers, the rule will
be highly burdensome. Take the construction industry, for
example. Not only is OSHA proposing to significantly reduce the
permissible exposure limit for silica in construction, it is
proposing other extensive requirements, including prohibitions
in certain instances on work practices such as the use of
compressed air, dry sweeping, and dry brushing.
Some stakeholders have estimated that the cost of the rule
for construction alone will be approximately $4.9 billion a
year.
There are other rules as well in the most recent regulatory
agenda, over 30 regulatory initiatives are proposed by OSHA.
This comprises almost 45 percent of the regulatory burden of
the Department of Labor.
Aside from the new regulatory requirements discussed, in
the last several years many employers have been challenged by
OSHA enforcement initiatives in areas where the agency has
provided little compliance clarity.
I just want to highlight one here today, ergonomics. Over
the last few years, OSHA has been active in attempting to
utilize the general duty clause to cite employers for failing
to take certain actions to protect employees from
musculoskeletal disorders.
The problem with this for many employers is that OSHA has
provided little guidance on what its expectations are for
compliance with respect to ergonomics. Thus, many employers are
following OSHA's own ergonomics guidelines for a particular
industry, but they still get cited because OSHA wants them to
actually do more undefined with respect to ergonomics.
In conclusion, I want to leave one final thought with the
Committee. All these burdens placed on employers may actually
take resources away from workplace safety and health. While
compliance is important to employers, so is the day to day job
of working to prevent injuries.
When OSHA proposes a rule or embarks on an enforcement
initiative, it must truly analyze how necessary the rule is,
the benefits of the rule, and the adverse consequences of it.
Thank you, Mr. Chairman.
[The statement of Mr. Hammock follows:]
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Chairman Walberg. Thank you. Appreciate the testimony of
the witnesses. Now, we turn to the panel for questions. I
recognize the gentleman from Pennsylvania, Mr. Thompson.
Mr. Thompson. Mr. Chairman, thank you so much. Thank you to
the witnesses for being here, lending your experience and
expertise to a very important issue.
Mr. Batkins, I work hard every day to try to boost earnings
of low income workers as co-chair of the Career and Technical
Education Caucus. I believe that is the best way, most
effective way to truly do that, through the provisions of
opportunities for job training to get the skills/competencies.
This Committee, this whole Committee, Education and the
Workforce Committee, has done an outstanding job with
legislation. We have one that has crossed the finish line a
year ago or so, the Workforce Innovation Opportunity Act, which
is about job training. I think within the days to come, the
ESSA, which really clears for the secondary levels a pathway
for career and technical education training to have a better
role within our schools.
The administration, on the other hand, has kind of a
different opinion. As you know, in March 2014, the President
issued an Executive Order directing Secretary of Labor Perez to
update the so-called ``white collar regulations'' that
establish overtime requirements for executive, administrative,
and professional employees.
This proposed rule seeks to extend overtime pay in a broad
fashion, and according to the administration, will boost the
wages of millions of workers that are exempt from current
regulations.
The Department of Labor estimates that average annualized
direct employer costs will total up to $253 million per year,
depending on the updating methodology.
Is this an effective tool to boost the earnings of low
income workers? In other words, will this regulation have its
intended effect?
Mr. Batkins. Well, again, the effect of regulation on
employment is complicated, but one thing it will definitely do,
and this is something Mr. Beebe mentioned, is it will impose
millions of dollars in costs, and hundreds of thousands of
paperwork hours.
Now, someone, whether it is someone's wife or compliance
officer, has to eventually comply with those regulatory
compliance. Those hours mean something. They translate into
compliance officer's time from profit making tasks devoted
instead to regulatory compliance.
The overtime rule in conjunction with some other Department
of Labor rules, I think if you add up the regulatory agenda,
would be something close to $7 billion in aggregate costs.
It is difficult to say that kind of imposition will not
have at least some effect on employment. It might take the form
of lower labor force participation rates or it may take the
form of lower wages. I certainly think you will see some
impact.
Mr. Thompson. Thank you. Mr. Beebe, I spent a lot of time
visiting small businesses, the backbone of our economy, and
talking with them. I have had numerous instances where I have
gone and visited them at their request because of regulation
concerns they have had, specifically where they have had an
anonymous complaint placed by OSHA. They come in, they clear
the complaint, but once they are in the door, they just nitpick
and tear things apart.
That was not the disturbing part for me. It was the
intimidation that OSHA did. These are businesses--one specific
example, the employer said okay, what suggestion do you have,
how do I correct this, so I can appeal it, and was told by
OSHA, or the OSHA individual, well, you do not want to do that
because if you do, the consequences could be greater.
It really was intimidation or fear of retribution.
A recent survey from the National Association of
Manufacturers notes, ``small manufacturers pay more than three
times as much as the average U.S. business.'' Can you explain
how small business employment is negatively affected by
regulation, and how do regulations impact larger companies
differently?
Mr. Beebe. Well, I think it all comes down to when you talk
about impacts, it is the percentage. If I only have 40 people
and I have to hire a compliance officer, that is obviously a
large percentage of my wages versus a company that has 5,000
employees and two compliance officers.
I think the burden on small businesses by definition is
much more impactful than on the large businesses.
Mr. Thompson. Very good. Thank you, Mr. Chairman. Let me
just say in those situations where I found that, I found it
helpful to call the local OSHA office and ask for a face to
face meeting with somebody from that department to explain
their actions. That has been somewhat effective, providing some
good oversight, but it is unfortunate those actions are
necessary where these businesses, small businesses in
particular, feel intimidated and fear retribution.
Chairman Walberg. I thank the gentleman. The gentleman's
time has expired. I recognize the Ranking Member instead, I
guess I would say, at this point in time, Mr. Pocan.
Mr. Pocan. Thank you, Mr. Chairman. I know everyone says it
is a new day here in Congress. Sometimes I feel like it is
Groundhog Day. I feel like every month we have one of these
hearings or sometimes two of these hearings. I was in line at
the White House for a holiday party behind someone from the
Department of Labor, I am like hey, I have not seen you in
about a month.
It is good to be back because I think it allows us to offer
maybe some of the facts that are out there. I think, Ms. Owens,
you mentioned specifically, according to the Bureau of Labor
Statistics, a study on the percent of layoffs from regulation
is something like 0.1 to 0.4 percent over about a seven year
period. It is extremely low. Yet, the percentage of jobs lost
due to lack of demand is really the significant barrier.
I am a small business person for 28 years. I know this from
practical experience as well. That is the reality. That is the
facts that are out there.
I know we talk about the costs that are involved. Again, as
much as I think sometimes we inflate the costs, when I read
some of these reports about what something is going to cost.
When you actually look back at it, according to the Office of
Management and Budget, they said in fiscal year 2014, for
example, executive agency major rules delivered the benefits of
$22.8 billion annually while the costs were 3 to $4 billion
annually. The benefit is definitely exceeding any costs.
In fact, I would argue it is kind of like that credit card
commercial, the cost of this, the cost of this, the cost of
coming home to your child at the end of the day without an
injury, priceless.
Again, your statistics showed that is what happens with
these regulations. Since this is the Education and Workforce
Protections Committee as opposed to Chamber protections, let me
ask you a question, Ms. Owens, specifically regarding something
I just did.
I recently followed a worker who works as a caregiver. They
have been doing this for 23 years, and are making now $11.50 a
hour, after 23 years of working as a caregiver. We helped
physically move the body of someone, we did cooking and
cleaning, we did all this stuff, non-stop busy, taking care of
the pills very precisely, cutting what the person has to have.
Look at the work involved, and all too often we find these
folks are not getting the proper pay, the proper overtime,
especially when they do overnight shifts, et cetera.
Can you just talk a little bit about that, just one rule,
for example, since I just did that Thanksgiving week, it is
fresh in my mind. This is someone who is fighting for $15
minimum wage in an union. Can you just talk about that?
Ms. Owens. Sure. I have had a similar experience, although
I seem too old for this to be true, the reality is I am one of
the sandwich generation, and I had a child I was raising. At
the same time, my mother had advanced dementia. We had home
care workers. She always wanted to be in the home, and we
wanted her to be, so we had home care workers.
We paid good wages, and we reported their earnings and
complied with the law. I would never have done anything
differently for my mother. I have to say caring for my mother
was much harder than caring for my daughter, because my
daughter grew up, and my mother just got worse.
The reality is this is a vital job. None of us, I dare say,
could do it very well. It requires patience. It requires
compassion. It requires a certain level of skill. It requires a
certain level of strength. It is a job that has changed
dramatically since the 1970s when the Labor Department first
exempted the job from minimum wage and overtime protections.
It now is a profession. It is one of the fastest growing
jobs in our economy, and one of the two jobs that will add the
most net jobs over the next 10 jobs.
Here is an irony. If these people, most of whom are women
and women of color and many are immigrant women, if these women
were working in nursing homes or public institutions, they
would get minimum wage and overtime pay. Because they have
worked in the home, which actually is better care and less
costly care, and what all of us want for our loved ones, they
have not been entitled to minimum wage and overtime pay. That
is just wrong.
The Labor Department's extension of these protections,
which the D.C. Circuit has upheld, is not only fully consistent
with the Department's statutory authority, it is good public
policy that we all ought to applaud.
Mr. Pocan. It is interesting. One of the things a person
mentioned is, you know, people who make $174,000 a year trying
to tell them they are making too much at $11.50 an hour after
23 years of being in that profession.
I think the only thing I would say in closing, Mr.
Chairman, is I know as a small business owner I often get
private sector businesses I deal with that make me jump through
hoops to do various things, and if I want to do business with
that company, I do that.
To say that somehow if you have the privilege of being able
to do business with the Federal Government but you do not want
to follow any of the regulations, I did the exact thing with
private sector businesses, it is part of what is called doing
business, and if people do not like that, there are other
businesses out there, but I love the business that I have been
in for 28 years, and that is something I try to comply with.
Thank you, Mr. Chairman.
Chairman Walberg. I thank the gentleman. I recognize now
the gentlelady from New York, Ms. Stefanik.
Ms. Stefanik. Thank you, Mr. Chairman. I wanted to start
off with a broad question to Mr. Batkins. Do you believe there
is a connection between the $100 billion in additional annual
regulatory costs imposed by this administration and the
stagnation facing this nation's wages?
Mr. Batkins. There certainly is a connection. Again, I
think when you look at sort of the aggregates, regulations are
often hidden. They are not on our tax bill like FICA, we do not
see that in terms of sales tax.
There is a lot of evidence looking at the impact of
regulation on employment. There was a study done looking at the
Clean Air Act. It found sort of marginal impacts on employment,
but close to $9 billion in foregone wage earnings as a result
of the regulations. A lot of that was through a lower labor
force participation rate and lower wages down the line.
I do not think you can see $100 billion and say that will
not have an impact somewhere down the line. I think a lot of
this sort of operates under a false premise. We say well, the
unemployment rate is low, regulations cannot possibly be having
an effect.
No one has ever said that a single regulation would cause
the unemployment rate to go up to 10 percent. These are mostly
industry specific examples. If you look at certain heavily
regulated industries, there certainly are impacts on employment
and wages.
To discount it and say the unemployment rate is low is sort
of disingenuous.
Ms. Stefanik. My follow up question is last month I chaired
a hearing hosted by the Republican Policy Committee on
Millennials in the Workforce. I am chairing the Millennial Task
Force.
One of the themes is the importance of this empowerment
economy, so companies like Uber, Lyft, Airbnb, that provide
greater flexibility.
When I visit college campuses in my district, one of the
professions that I hear most often from students is they want
to be entrepreneurs, but witness after witness at these
millennial hearings raised the challenges of regulatory
overreach as to starting their business or growing their
careers.
Can you identify certain pending DOL regulations that you
believe pose the greatest threat to this empowerment economy?
Mr. Batkins. Some of the regulations that I have mentioned
just from DOL specifically, the joint employer rule is one, the
overtime rule, fiduciary rule. Those are sort of the big DOL
regulations coming down the road.
I think when you look at regulatory costs generally,
especially with small start up's, these costs fall
disproportionately on small firms.
If you are just one or two people starting up a business
and you have sort of these fixed regulatory costs, as they tend
to be, you have to spread those regulatory costs over a much
smaller pool of assets, and in some cases, just your own money,
and you do not have a team of compliance officers or a team of
lawyers that larger competitors might have.
If you are just starting out in this new economy and you
sort of have a fixed base of regulatory costs, it is going to
be tremendously difficult without a lot of capital to get
things moving.
Ms. Stefanik. Thank you. Mr. Beebe, I grew up in my
family's small business, which is a plywood wholesale company.
We have less than 20 employees. One of our greatest challenges
is dealing with regulations.
Since you are a small business owner yourself, I wanted to
ask you if there are specific instances where regulations have
either forced you to delay important projects or have not
allowed you to hire additional employees.
Mr. Beebe. A number of times. The regulatory burden, it has
directly affected our supplier base. That is one key issue to
us. For most of our regulations, we are required as a federal
contractor to slow those down.
A business like yours, plywood supplier, all of a sudden is
faced with all these DOL regulations, and lots of times they
will say I am not going to supply you with plywood, it is not
worth it. That is a direct and obvious thing.
The wages for my wife. I would much rather hire a welder.
That is just the costs we have to face.
Ms. Stefanik. Thank you very much. I yield back.
Chairman Walberg. I thank the gentlelady. Now, I recognize
the gentleman from California, Mr. DeSaulnier.
Mr. Desaulnier. Thank you, Mr. Chairman. I want to thank
all the witnesses, and like Mr. Pocan, I think sometimes as
somebody who opened my first business--I am going to date
myself--in the 1970s, and I did it with my wife, Mr. Beebe.
Although we are still very good friends and we are former's, I
am not sure I would ever suggest that I would prefer a welder
or another cook as opposed to having her on the payroll, but
there were moments.
I wanted to direct a question to you because you brought
something up which I often think as a former small business
person is an appropriate approach. You mentioned a small
business acting in good faith should have some consideration
for that.
The opposite of that always bothered me as well, where I
knew I was competing against companies that were not complying
with OSHA requirements or were not paying their employees what
they were supposed to pay or wage theft.
I wonder if you have some comment on that. I understand we
all want the right kind of regulatory oversight to allow you to
thrive, but on the other hand, in the absence of it in my
estimation, being effective, you get frustrated when you do
comply that you are competing against companies that flout
those rules mostly because, in my experience, there were not
enough resources for government agencies actually to enforce
the regulations, or your competitor just did not have a very
ethical business model.
Mr. Beebe. I guess I cannot speak for my competitors. I can
speak for the business--
Mr. Desaulnier. I asked you speaking for yourself.
Mr. Beebe. I personally feel that most small business
owners are very ethical and try their best to do it. I guess I
do not agree that I have competition from others that are not
following the rules. That is not an issue.
Mr. Desaulnier. Maybe it was more frequent in the
restaurant business. I do not disagree with you. Most of them
are, but the problem is the ones that do not comply--I am
showing my age--seem to be growing. Their inability for
whatever reason always bothered me.
Ms. Owens, in an environment, and we have talked a little
bit about this, where 66 percent of the American workforce
lives paycheck to paycheck, and while I think it is important
we talk about unemployment rates, to have the ability to
actually live a life where you can afford to pay your housing
costs and actually have disposable income.
In that context, two questions. I wonder if you will just
respond in terms of regulatory, and also in the same spirit as
I mentioned to Mr. Beebe, the cost/benefit of the lack of
regulations, do we analyze that when we do have sort of a drive
to the bottom in some instances.
Those two things, sort of the macro, in this environment,
of all things, you would think you would be working to make
sure that workers are protected and their wages are actually
increased given that they--of all the benefits in the last 30
years, in the economy, including recovery, most of that has
gone to people who are heavily invested as opposed to people
who are living on wages.
Ms. Owens. I think that is absolutely right. I guess I
would like to start by also picking up on Ms. Stefanik's
question. The reality is wages have been declining for the last
40 years. There was some exacerbation of that during the
recession and recovery particularly for workers at the bottom,
but that was not because of regulation, it was because it was
the worse economy we have had since the 1930s.
Even employers that were doing well were taking advantage
of that economy to bargain hard for concessions from their
employees in unionized places. We had many more college
students who could only get jobs that were low wage jobs.
There really was a race to the bottom in terms of driving
down wages. Certainly, our experience is that in the low wage
sector, the phenomenon you referenced is very real, that
companies and contractors put wages in competition, and the way
they compete for contracts is by driving down the wages of
their workers.
These are not workers who have much bargaining power, they
are not usually Union members. The only protection they have is
from law or regulation. That is precisely why in this
environment it is so important that the administration has
acted appropriately with respect to regulation because frankly,
nothing else was cutting it for workers, and they needed
administrative action to raise their wages, to be able to step
out of the working class into the middle class, and for middle
class families to feel secure that through their work, they
would have economic security and economic opportunity.
Mr. Desaulnier. I appreciate it. We have an environment
where American workers are more productive than ever,
particularly because of the entrance of women in the workforce,
like Mr. Beebe's wife, but at the same time they have not
shared in the wealth created by that productivity.
Ms. Owens. That is absolutely right.
Mr. Desaulnier. Thank you, Mr. Chairman.
Chairman Walberg. I thank the gentleman. I recognize myself
now for my five minutes of questioning.
Mr. Beebe, the President's ``Fair Pay and Safe Workplaces''
Executive Order 13673 creates a new costly paperwork burden on
the existing federal procurement system by placing extensive
new reporting requirements on Federal contractors.
More appropriately, this Executive Order is referred to as
``blacklisting,'' an administrative compliance nightmare that
this will potentially put in place. It will place thousands of
federal contracts in jeopardy, drastically reduce the number of
small businesses competing for federal contracts, like yours,
and make procurement of goods and services more expensive for
the government and the taxpayer.
In her statement, Ms. Owens stated that the Executive Order
would only apply to, and I quote, ``to a scant 5 percent of
federal contracts,'' and ``The semi-annual compliance process
will be quite simple.''
Can you explain from your experience and your perspective
the flaw behind that logic?
Mr. Beebe. Yes. Currently, under our defense contracts, we
are required to certify that we are not suspended or debarred
or have tax liens. There is a current shopping list of about
eight or 10 items we have to certify that we are not on to even
be eligible to bid for jobs.
The way I understand it, the blacklist drastically expands
that, and again, more than doubles the number of things that
are looked at.
Chairman Walberg. I would assume it would be very
burdensome and cumbersome in the process, especially if you are
working with any subcontractors as well?
Mr. Beebe. Very much so.
Chairman Walberg. Would you agree that this regulation
protects all American workers?
Mr. Beebe. No, I would not agree with that. I believe that
it would just do nothing more than expand the reporting
requirements and actually hurt in the end because like you were
pointing out, a number of businesses would just not be eligible
all of a sudden.
Chairman Walberg. Who are trying to be honest and
upstanding.
Mr. Beebe. Yes.
Chairman Walberg. Thank you. Mr. Hammock, OSHA's economic
estimate for a silica standard is dramatically different, to
say the least, than the estimates of almost every industry
providing economic data to the regulations docket.
Is there any way in your mind to explain how the agency
arrived at such different cost estimates?
Mr. Hammock. Thank you, Mr. Chairman. It is hard to say
specifically why the estimates are so different except I think
on a number of different levels, OSHA has not considered all
the different inputs that go into what a business has to do to
comply with a rule.
OSHA in good faith, and I know the people do their best,
try to quantify how much a regulation is going to cost, but in
the end, they have to make certain assumptions. Ultimately, I
think they do not quite understand how a business, a small
business, large business, actually internalizes it and has to
comply with a particular regulation.
As a result, when you look at all the different assumptions
that OSHA makes in coming up with an economic analysis, each of
those assumptions are on the conservative side, and when they
actually get implemented, you do find that the costs are
significantly higher when you consult with people like Mr.
Beebe who have to ultimately implement a particular regulation.
Chairman Walberg. I appreciate that. Mr. Batkins, in my 47
seconds remaining here, some statements have been made
specifically in reference to the regulations dealing with home
care workers. Talk to us about the impact of these regulations.
Michigan has requirements that labor is attempting to put
in. We are losing home care workers because of it. Talk to us
why.
Mr. Batkins. Well, the Department of Labor--actually, this
is one of the few instances where they did forecast potential
job losses as a result of the regulation, and it is one of the
few regulations we have come across, and we have come across
thousands since 2006, where they admitted there would be a dead
weight loss as a result of the regulation, and over the course
of roughly 10 years could dis-employ 1,000 workers annually.
There are very few regulations that admit that impact. It
would be interesting to go back five to 10 years from now and
actually see the retrospective impact of the rule, but up
front, if you are projecting 1,000 workers annually being dis-
employed, that is sort of the other side of the coin when we
compare it to higher wages.
Chairman Walberg. Thank you. I know that was our impact
with care for my mother, similar, Ms. Owens. It is a challenge.
I applaud you for doing what you did. It is the right thing to
do, but a difficult process. To find the caregivers that were
consistent, because of what Michigan has in place with the
overtime rules, made it difficult for mom to have someone she
recognized to some degree every day.
I now recognize for five minutes of questioning, Mr.
Courtney.
Mr. Courtney. Thank you, Mr. Chairman. I appreciate getting
waived in today, and it is good to be back on the subcommittee.
Thank you to the witnesses for your testimony.
Mr. Batkins, you sort of raised this sort of morbidity
issue of the effect of unemployment caused by regulations that
result in people's early life passing away. It is an
interesting concept.
Normally, in this Committee, we have talked about morbidity
in terms of the lack of regulation. Again, as someone who is in
year nine - Upper Branch, where 29 coal miners lost their
lives. We obviously just had a jury verdict in West Virginia
holding the employer responsible. There is no question in my
mind that the failure of Congress to update MSHA's regulations
could have prevented that horrendous tragedy.
Deepwater Horizon, where 11 workers lost their lives
because of just incredibly shoddy oversight and regulation of
the deep water drilling.
I represent New London, Connecticut, home of the Coast
Guard Academy, seeing the assets of the Coast Guard having to
get pulled out of Homeland Security and repositioned down at
the Gulf of Mexico to deal with the mess that was created there
by poor regulation.
In Middletown, Connecticut, we had a power plant explosion
where again the failure to update our regulations in terms of
cleaning the piping at the plant there, which even private
sector folks like Siemens had already said was woefully out of
date. We had seven workers who lost their lives, one of them
was a very good friend of mine. I still talk to his widow on a
frequent basis.
There is no question that we live in a democracy and it is
important to raise any issue here, but frankly there needs to
be a balance.
If we are going to talk about morbidity and the effect of
regulations, we have to recognize that workplace fatalities is
a reality of life, and we are not doing a very good job right
now in terms of bolstering really common sense updates that
even in the private sector we have been warned is going to
cause problems.
Ms. Owens, I do not know if you want to comment on that.
Ms. Owens. I would. Thank you very much. You know, it is
pretty stunning that still today 13 American workers are killed
on the job every single day. That is amazing. I thought the
jury verdict in the Massey case was great, but the maximum
penalty he will get is one year in prison, if he gets that.
There is no way to replace the lives lost through dirty,
dangerous, unsafe working conditions. My written testimony
cites a study that was done by researchers at Berkeley and
Harvard that actually looked at what the injury rate was and
what employer costs were following OSHA inspections that found
that employers were following standards, and that study found
that injury rates were lower, employer costs were lower when
employers were following standards.
There is no question that there is a beneficial impact in
terms of lives saved. The silica rule is estimated, if it is
finalized in its proposed form, to save 700 lives a year. We
cannot put a price tag on that. That is of incomparable value,
and that is why we need to update these regulations.
Mr. Courtney. Thank you. Mr. Beebe, again, I represent
Eastern Connecticut, which is the home of Electric Boat. We
build the Virginia-class submarines there and deal with
thousands of suppliers all across the country. Thank you for
the work you do to protect the warfighters who are out there.
Again, when we talk about that critical work, protecting
lives is also part of it. A supplier who sent elbow piping to
the Virginia-class program did bad welds, so right now the Navy
is in the process of pulling out piping, which delays
deployment of attack subs that we need, particularly in South
China Sea right now.
We are talking about vessels that operate in an environment
that does not sustain human life. There is no margin for error
for sailors out there in terms of doing that.
Frankly, it is important for our military branches to
really screen and watch what is coming into the depots, what is
coming into the shipyards, what is coming into the airfields,
because as I said, there is no margin for error.
Cyber is the other burgeoning area for small suppliers. It
is a very difficult problem, I think you would acknowledge
that, because we have the bad guys out there that are not just
looking at the prime contractors, they are going down deeper
into the supply chain to try to penetrate our national defense
by trying to probe weaknesses with the small guys, who again
are doing everything right.
We need new regulations, frankly, in terms of creating
hardening defenses for our national defense on all these
platforms that we depend on for our national defense.
I think people really have to get balanced here in terms of
the discussion, both in terms of workplace fatalities but also
the fact that there is a real public interest in terms of
making sure the stuff that the government is buying from people
is actually of high quality.
With that, I will yield back. Thank you, Mr. Chairman.
Chairman Walberg. Thank you, Mr. Courtney. I now recognize
the gentleman from California, Mr. Takano.
Mr. Takano. Thank you, Mr. Chairman. I am glad to join the
subcommittee this morning as we review the Department of
Labor's regulatory agenda to promote shared prosperity and help
hard working Americans.
It is past time for the Department to update the Fair Labor
Standards Act's exemption for overtime pay. When enacted, the
intent of the white collar exemption was to exempt those with
sufficient power in the labor market who are able to advocate
for better wages and hours for themselves. That is clearly not
the case today.
In 1975, more than 60 percent of salaried workers were
eligible for overtime. Now, only 8 percent of workers are
eligible.
The $23,000 threshold is outdated and below the poverty
level for a family of four. Americans are working longer hours
and are more productive, yet their wages are largely flat.
Updating the overtime exemption will help millions of workers
make ends meet and give an added boost to our economy.
My first question is for Ms. Owens. Ms. Owens, there has
been a lot of discussion about the proposed overtime
regulation's impact on job creation. I have been able to come
and hear some of that from your fellow panelists.
The Department has updated the salary level seven times
since the Fair Labor Standards Act became law in 1938. Can you
talk generally about how industry has complied with these
adjustments? Is there a history of significant job loss
attendant to these regulations?
You mentioned a National Retail Federation report--I will
stop there. Go ahead.
Ms. Owens. Thank you, Mr. Takano. I have been doing work in
this field for 30 some odd years, and the reality is every
single time a piece of legislation is introduced or a
regulation is proposed, the response from industry is that it
is going to kill jobs, it is going to lead to exorbitant costs,
it is going to depress wages. That was the response in 1964
when--I was not around then--when the Civil Rights Act
employment protections were extended to women and people of
color. The 1963 Equal Pay Act. The Pregnancy Discrimination Act
of 1978.
The reality is these doomsday prophecies just have not come
true. It is true that when other things are going on in the
economy that are depressing consumption, that has an impact on
jobs, and that is what happened during the great recession and
the slow recovery.
The reality is we have not seen significant job loss
associated with updating basic standards like the overtime
standards. I am glad you pointed out how infrequently that has
happened over the past 70 some odd years. It is one of the
reasons that overtime protections used to cover more than 60
percent of the white collar workforce, and today, only cover 8
percent. That just makes no sense at all.
Mr. Takano. You mentioned a National Retail Federation
report about job creation in your written testimony. Can you
just elaborate on that a little?
Ms. Owens. Sure. They did a report that was certainly not
supportive of the overtime regulations, but I do not remember
the specific data right now, they analyzed what they thought
some of the impacts would be. Some of the impacts--they said it
is not true that everyone will get higher wages because the
overtime threshold is increased.
That means a lot of people who are being forced to work
overtime hours for less than $24,000 a year will no longer be
required to work unpaid overtime. They will have more time with
their families, more time to take a second job if that is what
they want, more time to go back to school, whatever.
It is not the case that everybody affected will necessarily
get a pay increase, but fewer people will be working longer
hours for no pay at all, and one of the things the National
Retail Federation estimated is that something north of 100,000
jobs are likely to be created because employers will find that
it is more cost effective to hire some additional workers than
to pay overtime to existing workers. That is also okay.
That is the purpose of the overtime law, one of the
fundamental purposes, to spread work around. If it works that
way, that is what it is supposed to do.
Mr. Takano. It is really a matter of fairness to the worker
who is earning a low income who may be classified to the
advantage of the employer as a manager, a manager who is
earning a relatively low salary, and because of that
classification, they are having to work extra hours.
They now have more time with their family, but that
employer has to make a decision, a fair decision, the right
decision, to hire a second person, give the original employee
time with their family, and in fact, the regulation can have
the effect of creating jobs.
Ms. Owens. Exactly.
Chairman Walberg. I thank the gentleman. His time has
expired. I want to thank the panel for your testimony as well
as your responses to our Committee and the questions we have
asked. I now recognize the Ranking Member for his closing
statement.
Mr. Pocan. Thank you, Mr. Chairman, and thank you to our
witnesses. I think our conversation today has been interesting.
That said, I think we have had a very Washington conversation
aimed at a very Washington audience.
For the vast majority of our constituents who may be
watching, this hearing has reinforced some of their bad
feelings perhaps about Congress, and no one here today has told
our constituents what this hearing is likely really about.
The congressional leadership strategy is simple, although
it is not necessarily obvious if you are not paying close
attention, shut down the appropriations process, bog down
Congress, and stuff an end of the year package with gifts for
special interests. That is probably more of what the hearing is
about today.
Referring to rules and regulations as an ``onslaught,'' as
many of our witnesses and colleagues on the other side of the
aisle did today, is part and parcel of the rhetoric that the
other side deems as necessary to accomplish the broader goal of
filling the omnibus appropriations bill with Christmas gifts
from big businesses' wish lists.
They say they are worried that this onslaught will hamper
job growth and lead to mass unemployment. We have already seen
today less than three-tenths of 1 percent of workers who lost
their jobs in mass layoffs during the early years of the Obama
administration was due to government regulations or
intervention. This rate is unchanged from the Bush
administration, according to data from the Bureau of Labor
Statistics.
All these rules and regulations referenced today have one
thing in common, they help hard working middle class Americans
by ensuring workers are afforded the dignity under the law that
they unquestionably deserve.
There is no doubt that ensuring worker safety, paying a
living wage, strengthening the average American's voice in the
workplace, and ensuring the Federal Government contracts with
responsible players come at a cost. We can debate that cost. I
tend to think the other side exaggerates it and I think the
data backs me up. I also tend to think that maintaining safe
workplaces and protecting workers' voices are worth that cost.
Earlier I referenced big businesses' wish list. We talked
about the things on their list today. Middle class Americans
are not sitting around saying you know, the income threshold
for overtime as proposed by the Obama administration is far too
high.
They are not doing so because middle class families are
focused on finding affordable day care for their children and
finding good, safe public schools for those who are over that
age. They are focused on other things that are important to
them.
One thing they are not doing is saying that Americans do
not deserve a raise, as some are saying on the other side of
the aisle, as they criticize the proposed overtime rule and
attempt to block it in the omnibus.
The raise came as a result of the Department of Labor
updating a regulation that in the past has been routinely
updated by both Democratic and Republican administrations
instead of an act of Congress.
I want to reiterate that I have owned my own small business
for 28 years. I understand the challenges small business owners
face. I say this because it is often interpreted that the
Chamber of Commerce and other groups speak for all businesses.
This could not be further from the truth. Most of the things on
their wish lists do not affect the majority of small businesses
that operate in this country.
As is often the case, we have been given a false choice. If
you are for an onslaught of regulations, or what I would call
strong workers' rights and sensible workers' protections, then
you are against economic growth. If you are for economic
growth, then you cannot be for increasing worker protections
under the law.
Nowhere do we mention ``shared growth.'' Nowhere do we
mention how workers are the only ones who have not been paid
for increased productivity over the last 30 years.
When we hold a hearing to debate big businesses' Christmas
list for the omnibus, we need to make sure that we are being
very clear exactly what this Christmas wish list is.
Before I came to Congress, people around here used to refer
to special interest projects requested by lawmakers as
``earmarks.'' These limitations or riders big business has
requested of the 114th Congress are ``earmarks.''
As we sit here and debate the Chamber's wish list, let's
call it what it is, a list of earmarks, and let's talk about
who gets what. In the old days, an earmark might be used to pay
for a handicap access ramp at a local library in a member's
district. Today's earmarks go to constituencies with far more
resources than your local library.
As we continue to debate big businesses' list, I ask all
Members of Congress to have their constituents check it twice.
Surely, we can come together to advance policies that can
benefit the American people in the manner other than asking
middle class Americans to stand outside in the rain and wait
for their fair share to trickle down as they have been doing
far too long.
Thank you, Mr. Chairman.
Chairman Walberg. I thank the gentleman. My perspective is
a little bit different. This hearing was meant to benefit both
sides or all sides of the equation.
There is no one on either side that want to see employees
hurt or wages held down. We want to see expanded living wages.
We want people in jobs that are their sweet spots. We want them
to go in each day excited about their work or the opportunity
to expand their work future.
Just like some of those we had in front of us testifying in
recent hearings, who started out on a grill, and ended up
running the company, multiple companies. The resume was built.
The time was there. Sure, there were decisions that were made
that had sacrifices for future award, opportunities for
building resumes. It was based up on the fact of reality that
choices were made, and with the responsibility also came the
benefit.
We certainly understand that 1938 law, the Fair Labor
Standards Act, is not fit for the present. We need to see some
change to expand the opportunity for flexibility in the
workplace.
However, the Department of Labor and what they have
proposed does not expand flexibility. It tightens the thumb
screws down and takes away that flexibility for people to
determine how they work.
We have heard in recent testimony from Uber that the
choices that people are making now are not necessarily for
remuneration but for the flexibility to have the opportunity
for what makes them tick and the opportunity to have a time
frame in place that better fits their needs.
Look at actual case experiences relative to regulations.
You see the costs that CBO puts out, the cost of loss of jobs
coming from the regulatory climate, from ObamaCare, the
Affordable Care Act, which has proven not to be affordable, and
not truly the care for more uninsured. That is regulation that
is hurting.
If we saw the Department of Labor Wage and Hour Division
looking at an expansion of wages for minimum wage that hit the
targets that we have looked at in the past, that we have seen
going up over $50,000, coming in under that, taking the
exemption away of overtime, New York and San Francisco do not
even fit in that area.
If we had realistic regulation building that took that in
place, that would be one thing. We do not see that.
When I go back to the simple issue of human care, home care
for people who need it, and I see the outcome of what is taking
place in Michigan, home care providers, companion care
providers, that provide great service to my mother and others
like that over the years, in their waning years, now being
frustrated as a result of those companies having an inability
to care for those needs because it costs too much, so they have
to make decisions on not providing that care for ones that need
it until someone literally dies off and they can move someone
in that place.
That is not what we are as a country. That is what we are
not as a government. I respectfully disagree with the approach,
and I think that is why these hearings are here in place, to
see that we have a tension, and we can get over it.
We have to understand it is not us against them, them
against us, but rather us working together to find regulations
that are needed, yes, but done in a realistic way that promote
opportunity, meet needs, and make a better society.
We will keep doing it, and I guess the debate will go on,
and we will do that with a smile on our face, but hopefully an
intention to come to a conclusion that benefits us all.
With no other testimony or information to come before the
Committee, the Committee is adjourned.
[Additional submissions by Chairman Walberg follow:]
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[Whereupon, at 11:29 a.m., the subcommittee was adjourned.]
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