When it comes to regulating workplace safety, non-discriminatory practices and equitable wages, the U.S. government needs to set standards to prevent a small fraction of employers from mistreating workers. However, the nation's employers — especially manufacturers — have a warning for regulators and lawmakers: Over-regulation does more harm than good.
“The benefits of appropriate regulations are clear and supported by the public,” states the 10,000-member National Association of Manufacturers, which has published seven principles of effective regulation. “The issue is how to enable the regulatory system to provide for these concerns without unreasonably impeding innovation, research ... and product deployment.”
Consultant Pat Grischow, former government affairs manager at Timken Co. in Canton, Ohio, sees close up how potentially destructive over-regulation can be. Instead of helping hard-working Americans, it can harm them by limiting their personal choices, making benefits unaffordable, keeping companies from expanding and adding new jobs, or outright driving smaller companies out of business.
As an example, she cites government rules setting minimum funding for defined-benefit pension programs. The government's intent is to prevent private pensions from going bust, which happens, but is the exception — not the rule. The outcome, however, has been that without the ability to use more flexible financing models, companies can't afford to maintain pension programs at all, and so many have eliminated them. More workers would be better off without the requirement.
“The question is how intrusive does the government need to be when we know we are already doing a good job with our employees?” Grischow said. “People think all businesses can afford every regulation. But they can't, especially small businesses, which are our country's economic engine. The government has to allow the marketplace to provide what it can. Employees can move around. If they don't like a job, they can choose to go somewhere else.”
Grischow elaborated on two recent examples of over-regulation limiting choices for workers: The new health-care legislation and the Employee Free Choice Act, which is pending in the Senate following passage by the House.
“The government is going to mandate the [health-care] benefits package that employers provide. Right now we offer options, and we have different choices for our employees. Now the government is going to tell us what the choices are going to be as far as coverage is concerned.”
As for the Employee Free Choice Act, the current practice of the National Labor Relations Board holding a vote for workers to decide if they want their workplaces to become bargaining units of unions would end. Right now, if 30 percent of a workplace's employees sign authorization cards, the NLRB schedules a vote that is open to all workers and uses standard democratic voting practices. If a majority of the votes are pro-union, then the workplace becomes a union shop.
Under the Employee Free Choice Act, a union is installed if a majority of workers just sign authorization cards.
“The problem with that is that there is no vote,” Grischow said. “So potentially 49 percent of the employees don't have a say. And, it opens the door for workers to be coerced or lied to while being pressured to sign the authorization cards.”
The Society of the Plastics Industry has identified the Employee Free Choice Act as one of its top issues to address in 2010 because of the same potential problems that Grischow identified.
“The card-check method by itself invites the opportunity for coercion, misrepresentation, and fraud,” according to SPI. “Existing law recognizes that the secret-ballot election is the most-preferred method of ascertaining support for a union. Unions have also recognized the importance of the secret-ballot; the AFL-CIO has argued to the NLRB that the use of a secret-ballot is necessary when voting to decertify a union.”
Also, the Act sets a strict timetable for finalizing a contract after a union installation. If negotiations don't yield a final contract in 120 days, a federal mediator could ultimately decide what is in the contract. If the employer can't afford those obligations, it could close shop. Then the employees would have no jobs.
Cooperative efforts between government and business are more successful, Grischow said, such as voluntary safety programs that have reduced employee injury and death rates since the Clinton years. Employers see the value of government involvement when the aim is positive, not punitive.
“Employers know that their employees are their most important resource,” she said. “They don't want them to be hurt. They want them on the job being productive,” Grischow said.
Instead of dictating how to treat employees, Grischow and others contend that the government should be focusing on revising tax codes and structures to encourage growth and new product development and reduce taxes and fees that exist solely to generate revenue at the expense of business development.
“Plastics industry impacts are many,” SPI President and CEO Bill Carteaux said in a statement issued in March. “We do not yet know how insurance companies will respond to a 40 percent excise tax, or how states will pay for their increased Medicaid responsibilities; in all likelihood these costs will be passed on to our businesses, further hampering our ability to grow in this economic climate.”
Tuma is senior manager of assurance services at BCG & Co. in Akron, Ohio.
