Secretary Elaine Chao


The Europeanization of America's Workforce and Economy

Thank you, Pat. I want you all to know that Pat Pizzella did a great job as the Assistant Secretary for Administration and Management at the U. S. Department of Labor. He was there the entire eight years with me and was responsible for helping the Department win multiple awards for being the best managed department in the whole federal government. Thank you, Pat, for your service to our country.

Good morning! It’s great to be here today. Looking over the program, you’ve had an exciting two days! What an impressive roster of speakers and panelists.

We all need to thank David Keene and the army of volunteers for planning, organizing and hosting this annual conference which is always so inspiring and energizing.

It’s great to hear from Senator Santorum and Governor Pawlenty this morning! And, I’m delighted that Rush Limbaugh will be presented with the Defender of the Constitution Award today! So many of you are so young – but imagine when we didn’t have Rush – what a monopoly the liberal media had in disseminating information to our fellow citizens.

You’ve also had the chance to hear from one of my very favorite people - the Republican Leader of the United States Senate, Mitch McConnell. He’s got arguably one of the toughest jobs in our country – now I’m biased – but I think he’s doing a masterful job.

I’ve spoken many times before CPAC. In fact, the last time I spoke before CPAC was February 7th of last year! At that time, the outcome in the November election was not very clear. A year later, we have a new president and a new party in power. I guess all I can say is: elections have consequences.

Since taking office January 20, 2009, a mere 39 days later, we are seeing the largest deficit this country has ever experienced.

In his first month in office, the new President and his congressional allies pushed through a $1.1 trillion stimulus bill and a $20 billion S-CHIP expansion.

This calculates to roughly $36 billion a day, an unprecedented level.

They are spending in two days what the entire Department of Homeland Security spent in a whole year!

They are spending in 11 days almost as much as a year of Medicare spending.

They are spending in three days more than what the previous Administration proposed for the entire Veterans Affairs Department, including veterans health and disability payments.

They are spending in two day more than last year’s annual budget for the Department of Education for approximately 56 million kids.

They have spent in 39 days more than what the previous Administration spent over seven years on prosecuting the War on Terror and rebuilding the Gulf region after Hurricane Katrina.

And, they promise more spending to come!

Let’s remember that the government doesn’t really have any money – the money comes from us - the taxpayers. How will this huge tab be paid for?

Beneath the warm and fuzzy bipartisan rhetoric is the same old tax-and-spend crowd that has now taken control of our government and is implementing policies that will turn our country into Europe. To some, that’s the goal!

We know better!

Nowhere is that more evident than in the labor policies affecting the workforce.

Ten days after taking office, the new Administration rescinded four Executive Orders and issued three new Executive Orders that would tilt the balance of the playing field toward greater access and advantage to organized labor.

The first is revoking employee notification of workers’ rights not to pay that portion of union dues attributable to political and other expenses with which they disagree.

Another Executive Order is “Neutrality for Federal Contractors” which prohibits contractors and subcontractors from spending any federal dollars to communicate to their employees during an organizing campaign. Since money is fungible, this Executive Order can potentially bar contractors and subcontractors from spending any money to defend themselves in an organizing campaign and is potentially an infringement against free speech.

A fourth Executive Order was issued on February 6th resurrecting Project Labor agreements which would significantly increase the costs of construction projects and disadvantage the smaller, non-unionized contractor.

It may surprise you that union members accounted for only about 12.4 percent of entire workforce and 7.4 percent of the private sector workforce. The remaining unionized workers are public workers, the sector of greatest growth for unions.

In 2008, the unions spent over $450 million to buy power and influence in Washington. Now, they’ve sent the new administration and congressional Democrats the bill!

Instead of being called the Employee Free Choice Act, this bill should more accurately be described as the Employee Forced Choice Act. This bill does away with the right of workers to a secret ballot election in deciding whether to join a union and pressures them to sign cards in support of unionizing. It would impose a 120-day deadline on employers to sign a contract or the federal government will impose an arbitrator to dictate pay, benefits, and union rights.

Another push is to empower mini-unions! This is a push to have the National Labor Relations Board recognize “mini-unions” – tiny cells of workers that don’t represent a majority of any bargaining unit – but can demand recognition and force employers to bargain on wages and benefits.

Another initiative is resurrecting the $8 billion ergonomics regulation. Ergonomics inspections and enforcement would ramp up and target health care, hospitality, food service, transportation, construction, manufacturing and clerical support occupations. And, there would likely be an addition of a private right of action for workers to sue employers for ergonomic violations.

We can all expect to see ratcheting up of OSHA, Wage and Hour, ESA enforcement - not to protect workers - but to harass employers to “soften them up” before organizing campaigns. There are also proposals to hold employers personally and criminally liable for OSHA violations.

Davis-Bacon prevailing wage requirements has been added to all federal contracts thereby driving up the costs and discriminating against smaller local employers.

Blacklist federal contractors that don’t go along with unions. This would ban firms from eligibility for federal contracts if they’ve been cited for labor, environmental or other legal violations – regardless of whether the complaint is frivolous or has been finally adjudicated.

There’s a move to insert rules in Medicare and Medicaid programs to prohibit and debar participating health providers from spending money to oppose unionizing.

There are bills for new family and medical leave mandates that will cover employers with fewer than 50 employees. Paid family and medical leave is already a reality through a back door channel. In the stimulus bill that just passed, workers who leave the workforce voluntarily are now allowed to tap the Unemployment Insurance Funds to pay for family and medical leave.

On the pension front, there are proposals to levy stiff financial penalties on employers that switch from Defined Benefit Contribution Plans to Defined Contribution pension plans.

The tax code will be used as a weapon against employers. The IRS will give preferential tax subsidies to companies that spend more on health benefits, pay “living wage” rates, offer paid sick leave, and submit to “neutrality” during union organizing drives.

This is a huge bill! And, it’s only a partial list - that will decrease the competitiveness of our workforce and country.

Our country’s flexible and productive workforce is the foundation of our economic strength. And it is imperative as our country moves forward in the 21st century that we continue to empower individual workers to succeed in the global economy.

America’s labor policy must continue to emphasize flexibility, worker training and competitiveness. Unfortunately, the Majority in the Congress and the new team in the White House prefer that government assume a much larger and permanent role in the workplace. They advocate that the United States should be more like Europe, and adopt European-style entitlement programs and more rigid labor laws.

In the past few months, we have already seen the federal government taking a much larger role in many companies’ management decisions. Do we want more proposals that would push the government to dictate even more to employers on what leave policies they must offer, who they can promote, which benefits their health insurance plans must offer, what types of investments can be included in their pension plans and how they can handle even the most basic business operations. And, this is only a short list! This kind of Europeanization of America’s labor policies would have dire consequences for our country’s ability to compete abroad and would disrupt the traditional labor relationships here at home.

More government interventions in the workforce will not make our country’s workers more competitive. It will not increase growth. It will not decrease unemployment. It will not increase wages. We have seen evidence of this in Europe’s declining growth rates, higher unemployment, lower per capita income and longer durations of unemployment.

Government is ill-equipped to make the kinds of decisions employers and workers make together every day. Every sector of our economy is different. Adopting a “one-size-fits-all” system limits flexibility. It will have a ripple effect on other decisions affecting things like pay, benefits and job creation—all while taking negotiating power away from workers. Does anyone really think it’s a good idea to make the federal government the human resource manager, union representative, and plant manager for the whole country?

These decisions should be left in the hands of the people best equipped to make them—employers and workers themselves.

How employers and workers make those decisions is evolving just as fast as the economy is. In particular, we have seen considerable change in the relationship between employers and organized labor in the past 50 years. More changes in this relationship can be expected in the years to come.

The most intensive organizing activity today is not amongst manufacturing workers, but amongst workers in government and in services like health care, hospitality and retail. And the tactics unions are using in those drives are changing as well. Gone are the days of strikes, traditional leafleting and picketing campaigns. Nowadays, unions are using corporate campaigns, pushing for card check and neutrality agreements, and tapping their pension plan assets to use as leverage in organizing campaigns.

These tactics can be effective, but the baseline question is—“Are they good for workers?” For example, does it make sense to threaten workers ability to make a real free choice about joining a union through elimination of the secret ballot election?

And when unions use their pension assets as an organizing tool, are they placing workers’ retirement in jeopardy? By law, fiduciaries must use these assets for the exclusive benefit of the members who have earned them. Abuse of these assets to pursue social, political or other unrelated objectives cannot be tolerated.

Rather than embrace a regulatory and labor-management regime from the Old World, our country should pursue policies in keeping with the values of the New World—the unique American way forward. That means keeping taxes low, being wary of regulations that stifle job creation, advancing free and fair trade, lowering tariffs to goods and services manufactured in America, which promotes export growth and job creation at home. Public policy should focus on advancing a new model of labor-management relations in which both sides work together, recognizing that the true competition isn’t sitting across the bargaining table. Our regulatory system must focus on producing benefits, not simply needless costs, and actually solving problems, not creating more of them. And we can develop tax policies that keep our country competitive globally.

America faces serious economic challenges right now. So, policy makers should be very wary of adopting new policies that strike at the core of what has made our country great.

The Europeanization of America’s workforce and economy is not the answer. America’s greatest strength lies in her people, and we can never go wrong by relying on the productivity, innovation and hard work that has been the hallmark of the American workforce since the founding of our great republic.

Thank you for the opportunity to discuss these very important issues that will determine the long term competitiveness of our workforce and economy.