The Wage and Hour Division: We Can Help Prolong the Recession

Since approximately day two of his administration, President Obama has boasted about what he has done since “day one.” Actually, day one was relatively harmless. It was only a half day, and Obama spent it delivering another vapid speech, having a long lunch, and reviewing a boring parade. But on day ten, January 29, 2009, he began his project of giving employers additional reasons not to hire American workers. On that day he proudly signed the Lilly Ledbetter Fair Pay Act, which allows employees more time to sue employers for alleged pay discrimination.

And from that beginning, the project of exacerbating unemployment and prolonging the recession has been carried out on a broad front of initiatives. The government has borrowed capital and diverted it to less productive uses under the guise of stimuli. Complex new mandates and penalties regarding employee health insurance have been imposed on employers. Further uncertainty has been created by thousands of pages of impending financial legislation and rules and by the possibilities that new energy taxes will be imposed and that President Bush’s tax cuts will soon expire.

The Department of Labor’s Wage and Hour Division (WHD) has pitched in and done its part. Under the direction of Deputy Administrator Nancy J. Leppink, a stereotypically narrow and humorless bureaucrat, the WHD has taken an adversarial approach to employers. The WHD has hired 250 field investigators to police employers and expects to hire 90 more with funds allocated in the Department of Labor’s fiscal year 2011 budget.  At a “stakeholder forum” in May, Leppink said she couldn’t understand why the WHD should, as it had in the past, give a break to employers who come forward and acknowledge past violations.

In March the WHD announced that it was ending its longstanding practice of issuing opinion letters responding to questions from employers about how labor laws apply to their situations. The questions frequently concerned whether a type of job would be classified as exempt from the overtime requirements of the Fair Labor Standards Act (FLSA). Rather than responding in opinion letters to employers’ questions about their specific situations, the WHD now issues “administrator interpretations” setting forth general interpretations of laws and regulations. The WHD claims that issuing administrator interpretations instead of opinion letters “will be a much more efficient and productive use of resources,” but so far it has only issued three of them.

While the WHD has ended its service of providing employers with opinions on the classification of their employees, it is preparing to issue regulations requiring employers to render opinions on that subject to the WHD. Next month a notice of proposed rulemaking is expected to be issued on rules under which”[a]ny employers that seek to exclude workers from the FLSA’s coverage will be required to perform a classification analysis, disclose that analysis to the worker, and retain that analysis to give to WHD enforcement personnel who might request it.”  This shift is consistent with the adversarial objective the WHD acknowledged in its Congressional Budget Justification: “WHD’s regulatory initiatives will be undertaken with an objective of determining where there are opportunities to shift the burden of compliance to the employer. . . .”

And so the businesses that the administration would like to induce into hiring people become the enemy if they do. On the bright side, however, the WHD has adopted a cheerful new slogan, “We Can Help.” They surely can, but if only they wouldn’t.

19 thoughts on “The Wage and Hour Division: We Can Help Prolong the Recession”

  1. Just sitting back on one’s rump and doing the bare minimum becomes even more attractive, too.

    (There has to be a variant of the old Russian joke “they pretend to pay us, so we pretend to work” to describe how Americans will adjust to our Glorious New Obamacized Future, but I just haven’t thought of it, yet.)

  2. the Lilly Ledbetter Fair Pay Act

    Ugh. Surely someone better-known then I am has already proposed the principle that any law named after someone is certain to do more harm than good; though I suppose it is useful as a warning label…

  3. Shannon…”This is what happens when you have a political philosophy whose core principle is that the economically productive are inherently evil”

    Merely a return to the traditional feudal view. “Villiens”=”serfs” in medieval parlance; ie, the people who actually did productive work making the lifestyle of the knights and nobles possible.

  4. If they’re shifting the compliance burden to employers, why do they need to hire so many new investigators?

  5. The beauty of the employer requirement is that employers will surely make mistakes in the paperwork of classification, which will provide an independent cause of action, thus requiring more investigators to second-guess employers. As someone once said, liberals profess to like employment, but hate employers.

  6. This issue really shows how the left is forever stuck in the past. Do we really need this type of labor enforcement in the internet era? Why don’t we just require employers to publish their statistics on their retention rates, average length of employment, percentage fired, percentage laid off, workman comp claims etc. People could use that information to decide where to work and for how much. Even in bad times, employers who treat their workers like crap would find it harder to find good people. Exploitation would be its own punishment.

    Of course, wage restrictions are not aimed employers but rather other workers. They are intended to prevent workers from underbidding each other. Those laws make it de facto illegal for one worker to bid to work for less than another. It protects the first person who gets a job from having to compete with someone else on price.

  7. why do they need to hire so many new investigators?

    If your objective were to levy fines, what would you do differently? Anything?

    WHD is a revenue center.

  8. Michael K…I picked up the Spectator with this article, but have not waded through it yet. Someone should definitely post a summary for discussion here.

  9. MK thanks for the link to Codevilla-anything he writes is very worthwhile. I would particularly recommend The Character of Nations.

  10. The repeated extension of unemployment benefits is another disincentive, in this case affecting workers directly. It’s nice to help people who have lost their jobs, but to the extent Congress extends the duration of unemployment-insurance payouts it is 1) reducing incentives (including by creating expectations of further benefit extensions) for laid-off workers to return to the work force and 2) increasing those workers’ dependence on govt.

  11. A direct quote from the American Spectator article:

    “How, for example, to remind America of, and to drive home to the ruling class, Lincoln’s lesson that trifling with the Constitution for the most heartfelt of motives destroys its protections for all? What if a country class majority in both houses of Congress were to co-sponsor a “Bill of Attainder to deprive Nancy Pelosi, Barack Obama, and other persons of liberty and property without further process of law for having violated the following ex post facto law…” and larded this constitutional monstrosity with an Article III Section 2 exemption from federal court review? When the affected members of the ruling class asked where Congress gets the authority to pass a bill every word of which is contrary to the Constitution, they would be confronted, publicly, with House Speaker Nancy Pelosi’s answer to a question on the Congress’s constitutional authority to mandate individuals to purchase certain kinds of insurance: “Are you kidding? Are you kidding?” The point having been made, the Country Party could lead public discussions around the country on why even the noblest purposes (maybe even Title II of the Civil Rights Bill of 1964?) cannot be allowed to trump the Constitution.

    How the county class and ruling class might clash on each item of their contrasting agendas is beyond my scope. Suffice it to say that the ruling class’s greatest difficulty — aside from being outnumbered — will be to argue, against the grain of reality, that the revolution it continues to press upon America is sustainable. For its part, the country class’s greatest difficulty will be to enable a revolution to take place without imposing it. America has been imposed on enough.”

    1.we have a “living constitution”. As the Queen said, “The words mean what I say they mean”.
    2. All power resides in Washington – Russian style
    3.Bills on Attainder, aimed at all the members of Government (Presidents, Congressmen, Senators, Lawyers, Lobbyists, Bureaucrats) responsible for the National Debt in any way, will be a splendid way to balance the budget, pay off the national debt, and silence the opposition. The proscrptions by the First Triumvirate come to mind as marveously re-enacted on the HBO series ROME.

    We will live in even more interesting times, thanks to Hope and Change.

  12. Jon,
    reducing incentives (including by creating expectations of further benefit extensions) for laid-off workers to return to the work force

    Laid-off workers can’t find jobs to return to. The supply is minuscule.

  13. Laid-off workers can’t find jobs to return to. The supply is minuscule.

    I think there is a great churning of the job market as the economy changes. I am in the process of buying a home after having sold the last one. I have been dealing with small contractors and they are as busy as they can possibly handle. They are not building new homes but they are doing multiple small jobs for homeowners Several of them are quite good at several different trades and, being older, are training their kids to do the jobs. Over the past two years, I have spent about $40,000 with such small contractors.

    My nephew has recently finished an apprenticeship with the elevator repair and installation union in Chicago. He has decided he would like to move to a warmer climate but I told him he locked himself into cities with lots of tall buildings so he is probably going to be a Chicago fixture. I had an interesting conversation with him shortly before the 2008 election. We talked about the difference between Democrats and Republicans. He is fiercely pro-union so we talked about craft unions versus industrial unions. He did four years in the Marines, has a college degree and is a deeply responsible young man. I think he will figure the rest out before long.

    I’ve started watching a few TV programs about car rebuilding and home repair, like “Holmes on Homes.” It’s on HGTV several times a day and, if you haven’t seen it, I recommend it. I am not a TV watcher but I am renting while waiting for the escrow to close on my new house so have more spare time than usual. There are quite a few such programs and I’ll bet there is a good audience for them.

    Finally, my 20 year old daughter found a job pretty quickly this spring although she, while very smart, is a perfect image of an airhead “Valley Girl.” She is now moving to San Diego for school and will have to find another job as her restaurant employer does not have a presence there. She is sort of a canary in a coal mine for me on the job market. She is the one who attended U of Arizona for two years and whose curriculum just appalled me. She came home and will continue in school in California.

    I think there is a generation of white collar workers who are in deep trouble. Here is another very significant piece about the working world of middle class young people by John Derbyshire, another favorite writer. Thinking of all the jobs I had growing up, it had really not occurred to me that most young people growing up in middle class families have no experience with manual labor or menial tasks. It would be an interesting study to see the rates of chronic unemployment among different groups distinguished by their experience working at low status jobs growing up. If your life plan is to quickly have a corner office, you have greatly limited your choices and probably increased your chance of unemployment.

  14. One wonders how long any government and society can deny reality. We’ve been acting as if reality is optional since at least the 1970s, and one could argue, much longer.

    At some point, the unrealities must come crashing down. Apparently 2007-09 wasn’t enough to make an impression on our rulers. What will it take, either for them to wake up and adjust, or for the rest of us to shove them aside?

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