Tom Perez's record-breaking year of Labor Department regulation
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When the U.S. Senate debated the nomination of Tom Perez to lead the U.S. Department of Labor (DOL) in 2013, there were plenty of misgivings.

Many feared his ideological leanings would lead to an overly activist agency, rewarding favored constituencies and pushing through onerous regulations. As a result, 46 senators voted against his nomination, and he won confirmation on a straight party-line vote.

Now that the ink has dried on 2016, the fears of those 46 senators have been realized. The potential DNC head has auditioned through an overly aggressive regulatory apparatus at DOL.

Secretary Perez and his staff shattered records in 2016, for the output of major rules and for the magnitude of regulation last year. For instance, DOL imposed nearly $46 billion in regulatory costs in 2016, according to the American Action Forum’s RegRodeo tool.

In addition, the agency published more than 40 million paperwork burden hours on individuals and businesses. For perspective, it would take more than 20,000 employees working full-time, or 2,000 hours annually, to complete DOL’s regulatory imposition last year.

If those figures sound significant, it’s because they are. The Environmental Protection Agency (EPA) only managed $32 billion in regulatory costs last year. It is not just the scale compared to other agencies, it is the relatively pedestrian regulatory history of DOL compared to 2016.

Consider, in 2008, the agency finalized $1.7 billion in costs. In 2010, it was $4 billion. In 2012, it was just $2.6 billion. Then, in an election year, DOL manages $45.9 billion in costs, or 3.5 times the entire regulatory tally from the agency over the previous decade.

The vertical takeoff in 2016 was a result of the final touches from Secretary Perez’s ideology mixed with the last-minute desperation of the Obama Administration.

Leading this chorus of expensive rules were the agency’s much-maligned “fiduciary” standards for investment advisers. At $31.5 billion in long-term costs, that rule alone imposed more burdens than all final rules in 2013. In essence, one DOL regulation eclipsed an entire year’s worth of regulatory costs.

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It’s not just the scale of one rule, however. In 2016, the Labor Department pushed through 10 economically significant final regulations. Over the past decade, DOL has averaged just three significant regulations annually.

In other words, Perez’s Labor Department has more than tripled the output of significant regulations. By virtually any metric, Secretary Perez has become exactly the kind of activist regulator that many senators feared he would become in 2013.

Perhaps no rule embodied DOL’s regulatory surge more than its expansion of federal overtime standards. Touted as an easy way to generate more money for 4.2 million Americans, this regulation created no new wealth. It acted as a federally-directed transfer from employers to employees, at a cost of $2.9 billion and an additional 2.5 million paperwork burden hours on individuals and businesses.

A federal judge (and Obama appointee) took note of the economic impact and DOL’s overreach and placed a permanent injunction on the overtime expansion. That, and an incoming Trump administration, likely mean the end of the rule.

But it was a report from the Congressional Budget Office (CBO) that put the intellectual dagger through the heart of one of the Labor Department’s most expensive measures. In its study, CBO noted repealing the rule would reduce regulatory compliance costs, actually increase real family incomes, and reduce prices by more than $1 billion annually. In other words, CBO found the costs of the overtime expansion exceeded the benefits.

The overtime rule wasn’t the only regulatory expansion in 2016 that federal courts have rebuffed. Its “persuader” rule, aimed at shaming lawyers who help during union elections, and its “blacklisting” rule for federal contractors, also met temporary judicial vetoes. Courts have largely agreed with many vocal critics of DOL during the past few years, that not only is its regulatory expansion unprecedented in scope, but also illegal.

In sum, the Labor Department’s $46 billion in regulatory costs under Secretary Perez and the recent tripling of the average major rule output might not sound significant, but these rules will create profound implications for the average American.

It might take the form of higher prices, as CBO outlined it its overtime report. DOL rules could also reduce real family incomes, reduce profits and even cause layoffs. Someone must bear the cost of $46 billion in new regulations. Often, it’s average Americans.

If there is any solace, courts, Congress, and the new administration seem ready to examine and potentially repeal the most egregious acts from DOL’s busy last year.

 

Sam Batkins is director of regulatory policy at the American Action Forum, where he leads research on the rulemaking efforts of administrative agencies and Congress.


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