What's stopping job creation? Too much regulation

By Clarence Otis Jr., Special to CNN
updated 8:22 AM EST, Tue December 6, 2011


Editor's note: Clarence Otis Jr. is CEO of Darden Restaurants, parent company of Olive Garden, Red Lobster and LongHorn Steakhouse. He is a member of the board of the Federal Reserve Bank of Atlanta.

Orlando (CNN) -- "Businesses adding jobs" is a headline every elected official loves to read. Sadly, it's one that's getting harder and harder to find because of a policy and regulatory landscape that makes it increasingly difficult for businesses to see why and where creating new jobs makes sense.

That's especially true for me and my colleagues in the restaurant industry, who find ourselves facing a plate piled high with more and more federal, state and local regulations.

Regulatory mandates flowing from federal health care reform may be the most visible, but the list also includes measures such as new mandatory paid leave provisions that require us to change the way we accommodate employees who need to take time off when they are ill and ever more unrealistic requirements regarding employee meal and rest breaks that, in California for example, force our employees to take breaks in the middle of serving lunch or dinner.

This reality is the result of the best intentions. Policymakers working in silos at every level are pushing through regulations that on their face seem to address admirable goals -- that are each directed at outcomes that seem desirable.

The cumulative effect of these regulations, however, is significant damage to the hard-working Americans who are the intended beneficiaries.

U.S. factories face labor shortage The employer mandate contained in the new health care reform law, for example, forces us to change the way we have offered health care coverage to our full- and part-time workers and, together with all the other looming regulations, causes us to rethink the way we schedule the hourly work force that is at the heart of how we deliver our product to customers.

Some suggest we accommodate the costs of new regulations in one of two ways: Accept lower profits, or charge customers more. Neither is a realistic alternative for many businesses, and certainly not for those in our industry. Like most in retail, low profit margins are a fact of life for us for good reason -- low margins are consistent with charging prices our customers can afford.

The difficult reality is that neither our shareholders nor our customers -- who are of course, the very working people policymakers champion -- can afford the cost of the unbridled increase in regulation we're experiencing.

This is not to say that the restaurant industry should not be appropriately regulated. Food safety and cleanliness standards are just two examples of categories of regulation we welcome given their importance in helping protect two critical elements of our promise to our guests, which are their safety and well-being.

So, what are restaurants doing about all of this? We are labor-intensive businesses and always will be, but we're relying more and more on technologies that make our businesses less labor intensive. It's an ominous development considering restaurants' role as a path to opportunity and entrepreneurship.

http://www.cnn.com/2011/12/06/opinio...ss_igoogle_cnn

The problem with this article is that it makes too much sense. I will get lost on the big government aficianado's frequenting this forum. That is, the liberals who espouse a liberal use of government into the lives of everyday citizens versus the conservatives who want to wisely use government.

Note that the article does not once cite the word "democrat" or "republican", or the names "Obama" or "Bush". The closest it comes to any of these words is "policy makers". This probably gets lost on the highly partisan as well.

David Brooks Teaches People How Not to Talk About Regulation
By: Dean Baker Tuesday December 6, 2011 7:39 am


David Brooks (Photo: doublespeakshow, flickr)

Some people try to teach by providing step by step instructions. This can be very tedious. David Brooks instead teaches by example. In his column today, David Brooks commits two of the great sins that would not appear in any serious discussion of regulation.

First he discusses the cost of the regulations put in place by different presidents:

“George W. Bush issued regulations over eight years that cost about $60 billion. During its first two years, the Obama regulations cost between $8 billion and $16.5 billion, according to estimates by the administration itself, and $40 billion, according to data collected, more broadly, by the Heritage Foundation.”

So regulation under the last president Bush cost $60 billion. Is this $60 billion a year (@0.4 percent of GDP)? Is it the accumulated cost over ten years (@0.04 percent of GDP)? Or, is it over a one-time cost of $60 billion? David Brooks doesn’t tell us. The differences are of course enormous, but we have not a clue based on the information given in the article.

The second major sin is that we have no idea how Brooks is measuring costs. Suppose that my neighbor has the disturbing habit of dumping his sewage on my lawn. If this is a common problem, then I and others similarly afflicted may unite to put a socialist in the White House who will prohibit people from dumping sewage on their neighbors’ lawn.

Most regulation does in fact have this character. It prohibits businesses from doing harm to the life and property of others. The question is does Brooks’ measure of the cost of regulation simply count the cost to my neighbor of dealing with his own sewage, or is it supposed to be some net measure that subtracts the savings that accrue to me and other current recipients of our neighbors’ sewage?

Brooks doesn’t tell us, but since analyses of most regulations show the benefits far exceed the cost (in the case of the Clean Air Act, the net benefis were estimated as $2 trillion over the next few decades), it is likely that Brooks is simply counting the cost to my neighbor of cleaning up his own sewage. It’s not clear what this tells us exactly about the burden of regulation, but hey, this is David Brooks, what did you expect?

David Brooks is a moderate to Conservative Republican. Though i dont agree with many of the things he says in this and other articles, he clearly knows that people claiming all kinds of things about regulation under Obama are way off base.


OP-ED COLUMNIST
The Wonky Liberal
By DAVID BROOKS
Published: December 5, 2011

Republicans have many strong arguments to make against the Obama administration, but one major criticism doesn’t square with the evidence. This is the charge that President Obama is running a virulently antibusiness administration that spews out a steady flow of job- and economy-crushing regulations.

In the first place, President Obama has certainly not shut corporate-types out of the regulatory process. According to data collected by the Center for Progressive Reforms, 62 percent of the people who met with the White House office in charge of reviewing regulations were representatives of industry, while only 16 percent represented activist groups. At these meetings, business representatives outnumbered activists by more than 4 to 1.

Nor is it true that the administration is blindly doing the bidding of the liberal activist groups. On the contrary, the White House Office of Information and Regulatory Affairs and its administrator, Cass Sunstein, have been the subject of withering attacks from the left. The organization Think Progress says the office is “appalling.” Mother Jones magazine is on the warpath. The Huffington Post published a long article studded with negative comments from unions and environmental activists.

If you step back and try to get some nonhysterical perspective, you come to the following conclusion: This is a Democratic administration. Many of the major agency jobs are held by people who come out of the activist community who are not sensitive to the costs they are imposing on the economy. President Obama has a political and philosophical incentive to restrain their enthusiasm. He has, therefore, supported a strong review agency in the White House that does rigorous cost-benefit analyses to review proposed regulations and minimize their economic harm.

This office, under Sunstein, is incredibly wonky. It is composed of career number-crunchers of no known ideological bent who try to measure the trade-offs inherent in regulatory action. Deciding among these trade-offs involves relying on both values and data. This office has tried to elevate the role of data so that every close call is not just a matter of pleasing the right ideological army.

This should probably be under Hava-gafa-kasha's Obamacare cheerleading thread, but it really gets at the spirit of the original article.

The Obamacare Onslaught Begins

The law was passed a while ago, but the effects of the 2,700 page bill misnamed the Patient Protection and Affordable Care Act – and commonly referred to as Obamacare – are slowly taking effect. The CLASS portion may have been eliminated and the individual mandate will be decided by the Supreme Court, but I’d like to discuss one of the many hidden costs contained within the legislation.
As most people know, the law was frontloaded with a basketful of goodies with all the pain coming after Obama’s was supposed reelection. Benefits such as having your child tethered to your insurance until they turn 27 years old are already in effect. Other changes, such as lifting lifetime caps and eliminating the ability to cancel insurance for sick people, no doubt have beneficial effects. But they contribute greatly to the skyrocketing cost of insurance.

One of the major concerns allegedly addressed by the law was the affordability of insurance for small employers, and how these companies could extend coverage to all their employees. The answer that the Democrats came up with was to provide a tax credit. Like the CLASS provisions, which were to confront the issue of long-term care, the costs and benefits of the credit were wildly misjudged. In fact, it appears that the projections were done by the same people who estimated how far away the iceberg was from the Titanic. Mercifully, the CLASS Act was repealed before the outrageous costs were thrust on taxpayers’ backs, but the Small Employer Health Insurance Tax Credit has an entirely different story.

The number of claims for the Credit has been low despite IRS efforts to inform the 4.4 million taxpayers who could potentially qualify. According to the IRS, through May 2011 only about 228,000 taxpayers had claimed the Credit, for a total of just over $278 million. The Congressional Budget Office estimated that the Credit would provide benefits of $37 billion over 10 years, and that taxpayers would claim up to $2 billion in Credits for the 2010 tax year. The IRS plans to conduct focus groups to determine why the claim rate was so low.

Page 2 starts here: http://townhall.com/columnists/bruce..._begins/page/2

"Over the past 40 years, small business leaders have eloquently complained about the regulatory burden. And they are right to. But it’s not clear that regulations are a major contributor to the current period of slow growth.
The Bureau of Labor Statistics asks companies why they have laid off workers. Only 13 percent said regulations were a major factor. That number has not increased in the past few years. According to the bureau, roughly 0.18 percent of the mass layoffs in the first half of 2011 were attributable to regulations.
Some of the industries that are the subject of the new rules, like energy and health care, have actually been doing the most hiring. If new regulations were eating into business, we’d see a slip in corporate profits. We are not."


Read more http://www.newyorker.com/online/blog...#ixzz1furm6stV

I thought this thread was about JOB CREATION and REGULATION? Weird how the health care
post and discussion which seems not to be talking about job creation got here? lfmao.

"This should probably be under Hava-gafa-kasha's Obamacare cheerleading thread, but it really gets at the spirit of the original article."

You are pitifully stupid. You clearly didn't read the article. It's about Obamacare for sure, but more generally, regulations. Pitiful.

http://www.policymic.com/articles/sl...nment-policies

In my previous articles on PolicyMic, I introduced the idea that there are three myths of the conservative economic examination, and that these constitute the main ideas of conservative arguments for policy action. This piece argues that low demand, not government policy is to blame for slow job growth.

The "uncertainty" argument is one that has often arisen during discussions of economic policy. The issue posed is that current tax and regulatory regimes are unnecessarily burdensome. If you are looking for the culprit for persistent high unemployment, look no further, the argument goes. While the uncertainty problem feels intuitive and fits nicely within libertarian narratives about “big government,” there are several flaws that must be addressed.

To begin: "Uncertainty" has the potential to, and does, affect the way businesses make strategic decisions about investment, including hiring. The crux of my argument is that – when taken both individually and collectively – business behavior, surveys of business leaders, and the reality of the current tax and regulatory regimes (compared to previous administrations), do not indicate a particularly unique uncertainty problem today. There is little evidence to suggest that "uncertainty" is the driving force behind slow job growth.

First, we must put the current tax and regulatory environment in context. The current tax burden is at an historic low, with revenues amounting to just 14.8% of GDP, the lowest level since 1950 (average revenues under Reagan were 18.2% of GDP). Moreover, American corporations enjoy the lowest taxes on corporate income as a percentage of GDP compared to all other OECD member-states. Also, despite the alarming rhetoric, the current regulatory regime isn’t dramatically different from those experienced during previous administrations.

A recent survey conducted by the National Federation of Independent Businesses shows that small business owners are equally concerned with taxes and regulations under the current administration as they were during Reagan’s second term and less concerned relative to George H. W. Bush’s term or either of President Bill Clinton’s terms in office. This suggests that even during periods of relatively high concern about taxes and regulation, substantial job growth has occurred; "uncertainty" is not prohibitive for job growth. On the other hand, survey responses indicate high concern over poor sales (low consumer spending a.k.a. low demand). This accounts for the trends of high cash reserves and sluggish investment, as businesses are less likely to expand if they do not anticipate growth in demand. Furthermore, while small businesses report that general economic uncertainty is hampering business growth, they also indicate that they believe certain environmental regulations and standards will be beneficial for small business in the long term.

Even if we entertain the idea that current regulation is the cause of slow job growth, we would expect to see highly regulated sectors relatively more affected, but there is no evidence to suggest that this is the case. If businesses were concerned that tax rates or regulation will increase in the future, then we would expect to see businesses investing now to avoid the future higher relative cost of investment. There is no evidence to suggest that this is occurring either.

I will acknowledge that there may be some American business owners who are primarily concerned about tax and regulatory structures and are basing hiring decisions on those concerns, but the survey suggests this is far from a satisfying explanation of slow national job growth.

One particularly instructive piece from The Economist suggests something that often receives little attention in an uncritical, politicized informational environment: The fact that we have no idea what effect regulation and uncertainty have on job growth. There is no proper gauge or measurement of this effect, and the phrase "government regulation" covers a broad range of policies and rules, each with its own idiosyncratic implementation and widely varying degrees of impact. A generalized claim that “regulation is bad for job growth” fails to acknowledge this complex reality. The article further dispels the "uncertainty" argument by asserting that government decisions to temporarily suspend or postpone regulatory rules actually increase "uncertainty," but businesses prefer this to the certainty of imposed regulation, something paradoxical to the typical "uncertainty" argument.

CLICK on link at top to read more of this article.

These needs a bump.

It's simply funny that Hava-get a freakin' acccountant-kasha challenges a businessman in the restuarant industry about HIS industry. Oh, that's right, his political party knows what is right and what is wrong.

Just another example of the way the administration tries to bring some balance to the process.

http://www.latimes.com/health/la-na-...,6033978.story

"The campaign to minimize disruptions — by easing requirements for insurers, employers, doctors and others — is winning cautious praise from some of the toughest critics of the law in the business community.

"Our members have generally been surprised and pleased by the lengths to which the administration has gone to answer our concerns," said Neil Trautwein, vice president of the National Retail Federation, who was a leading opponent of the law."