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WASHINGTON — U.S. Sen. John Thune (R-S.D.) today discussed how the Biden administration is using the federal regulatory system to implement overreaching labor rules that prioritize union bosses over American workers and small businesses. Thune recently urged the U.S. Department of Labor to withdraw its new overtime rule that would result in higher prices, fewer jobs, and lower base salaries for employees.
Thune’s remarks below (as prepared for delivery):
“Mr. President, as I’ve said before, when it comes to the actions of government, it’s often legislation that grabs the biggest headlines.
“But it’s equally important to focus on what a presidential administration is doing with its regulatory power – something I was reminded of again last week when I signed on to a letter headed by Senator Cassidy on the Biden administration’s proposed new overtime rule.
“Because in the modern regulatory state, presidents have a tremendous amount of power to affect our economy and federal policy through regulation.
“And today I’d like to take a couple of minutes to talk about some labor regulations coming out of the Biden administration that are likely to prove detrimental to workers, business owners, and our economy.
“Let me start with the Biden administration’s proposed new overtime rule.
“This proposal would impose a 55 percent increase in the exemption threshold for providing overtime pay for covered employees.
“Currently, employers are required to pay covered employees making less than $35,568 per year overtime if they work more than 40 hours per week.
“Under the Biden administration’s proposed new rule, employers would be required to pay overtime to covered employees making less than $55,068 – as I said, a massive 55 percent increase in the exemption threshold.
“So what would be the effects of this proposed rule?
“Well, it would likely result in some combination of higher prices, fewer job opportunities, and lower base pay for employees.
“Because employers – and I am thinking particularly of smaller businesses, who are always going to be hit hardest by regulations like this – are going to be forced to look for ways to offset what could be a substantial increase in costs.
“Indeed, many smaller businesses will have to find some way of offsetting this cost increase if they want to stay profitable.
“And so businesses large and small are likely to compensate either by increasing prices on their goods or services, reducing the number of positions they have available, or lowering base pay to create room to pay overtime wages.
“And needless to say, none of these are attractive options for workers, consumers, or businesses.
“Consumers are currently stretched to their limit with price hikes in the Biden economy.
“And lower base pay or fewer available positions are not attractive options for American workers.
“And by the way, you don’t have to take my word for it on that lower base pay.
“The head of President Biden’s own Council of Economic Advisers has previously noted, and I quote, ‘The costs of increased [overtime] coverage would ultimately be borne by workers as employers set base wages taking expected overtime pay into account.’
“Mr. President, it would be nice if this were the only bad labor rule coming out of the Biden administration.
“But it’s not.
“Among other bad regulations, there’s also the independent contractor rule, which the Biden Labor Department is likely to finalize soon.
“It’s referred to as the independent contractor rule, but in many ways that’s a misnomer – because this rule is likely to substantially reduce the number of independent contractors.
“By replacing the previous administration’s independent contractor rule, which would have provided clear guidelines for determining whether a worker classifies as an independent contractor, with a vague, sweeping new rule that could end up with many workers being reclassified as employees.
“Mr. President, independent contractors – who range from computer programmers to freelance editors to Uber and Lyft drivers – generally value independent contracting thanks to things like the flexibility and opportunity this path provides.
“Indeed, a 2017 survey from the Bureau of Labor Statistics found that fewer than one in 10 independent contractors would prefer traditional employee status.
“But thanks to the Biden administration, many of them may be forced into employee status.
“The rule will threaten workers in the ‘gig economy’ – which is made up of platforms like Uber, Lyft, DoorDash, and TaskRabbit that allow workers to pursue full-time work with the platform or simply augment their income from a regular 9-5 position.
“And, Mr. President, the bad ideas don’t end with the independent contractor rule.
“There’s also the joint employer rule the National Labor Relations Board recently finalized – yet another move from the Biden administration to use the power of the federal government to advantage unions.
“The joint employer rule substantially changes the standard of what constitutes a joint employer – which comes into play in a major way with franchising.
“To put this in practical terms, this rule means that companies could end up being considered joint employers of employees at franchised locations of their business – which could force both the company and the local franchise owners to negotiate with unions, or make both the company and local franchise owners liable for unfair labor practices that potentially only one party is responsible for.
“The result is likely to be that companies cut back on franchising or increase oversight or control of their franchisees, which would disrupt one of the most accessible paths to business ownership for Americans looking to run their own businesses.
“In comments after the new joint employer rule was proposed, the International Franchise Association noted, and I quote, “The proposed rule will needlessly upend the franchise business model and close the door to opportunity for hundreds of thousands of Americans, especially women, people of color, veterans, and first-time business owners.”
“But apparently that doesn’t matter to the Biden administration as long as union bosses are benefiting.
“Mr. President, on the economic front, President Biden is perhaps most famous for helping to kick off the worst inflation crisis in 40 years with the so-called American Rescue Plan Act.
“But as these rules demonstrate, the president is continuing to build on that negative economic legacy with regulations that will diminish economic opportunities for workers and entrepreneurs and likely continue to drive up prices for consumers.
“In other words, business as usual in the Biden administration: The president imposes his big-government policies, and the American people pay the price.
“Mr. President, I yield the floor.”