Labor Relations Under the Bush Administration

By Daniel J. Doyle
2010, Vol. 2 No. 05 | pg. 1/3 |
This article is part of the compilation, Years of Tumult: Retrospective Analyses of the George W. Bush Presidency, composed by a class of Northeastern Political Science students and edited by Chris Federici and Nicole Wilkins.

On January 20, 2001, was sworn into office as America’s 43rd President. Bush stood out amongst his 42 predecessors as the country’s first President to hold a Masters Degree in Business Administration.1 This degree was granted by the Harvard Business School, an institution criticized by many in the Labor Movement as a place that has produced some of the uglier faces in modern business management.2 Bush was called the CEO President because his decision making process closely resembled that of a business leader.3 This style is marked by several advantages, including a persistent vision, decisiveness, and an unwavering certainty in his policy choices. The CEO President’s approach suffers from a tendency to act without adequate deliberation, an unwillingness to recognize the complexity of some policy issues, and an apparent inability to consider anything but a narrow range of choices.4 Bush saw himself as someone who could make tough decisions quickly. In his own words Bush said, “I listen to all the voices, but mine is the final decision … I’m the decider, I decide what’s best.”5 Unfortunately, this attitude leads to a narrow outlook on policy options. A limited view characterized much of the Bush administration, including the strategy taken with regard to labor relations. As is the case with most Republicans, it is assumed that Bush would take an approach heavily favoring management and business. Bush, who some called “the very model of an MBA President,” was determined to weaken the rights and benefits granted to working Americans through decisions that might be called unethical, and in some cases even illegal.6

Executive appointments are one of the most critical decisions any President can make in the field of labor relations. First among these is the appointment of the Secretary of Labor. In this case, Bush chose Elaine Chao. Chao served as Deputy Secretary of Transportation under President George H. W. Bush and is the wife of Republican Senator Mitch McConnell of Kentucky. After leaving government, she took up a position as a distinguished fellow with the Heritage Foundation, a conservative think-tank. Chao held the office of Secretary of Labor longer than any American since , and is the only member of the Bush Administration to hold the same job for both terms.7 Unfortunately, this extended tenure did not translate to effective governing.

In 2004, Chao’s Department of Labor (DOL) had its biggest victory in successfully updating overtime regulations under the Fair Labor Standards Act, which had not been reformed in over 50 years. The four Presidents preceding Bush all attempted to overhaul overtime rules, but each failed because the issue is so politically contentious.8 While the Bush Administration’s reform of the Fair Labor Standards Act is highly controversial, the DOL should be commended for making strides toward fixing this out-of-date law. The Bush Administration’s reform of the Fair Labor Standards Act makes improvements that both businesses and labor advocacy groups asked for. Prior to the 2004 revision, any worker who earned a salary of $155 a week, or $8,060 a year, would be exempt from federal overtime laws.9 Labor organizations took issue with this rate, which they saw as heavily outdated. Fifty years ago, a weekly salary of $155 may have been high enough to deny overtime, but it is not today. The number of overtime eligibility lawsuits brought against employers and their employees exploded throughout the 1990s. Employees of companies such as Starbucks, Wal-Mart, and Taco Bell sued their employers for using the outdated exemption standards to withhold overtime pay. These lawsuits culminated in a series of multi-million dollar verdicts in favor of the employees, and the Bush Administration’s decision to increase the overtime minimum salary exemption to $455 a week, or $23,660 a year. The new regulations also make white-collar employees who earn more than $100,000 a year exempt automatically. This regulation does not affect many Americans, as most of those who earned over $100,000 a year are already exempt for other reasons.10

The most controversial aspect of the Bush Administration’s reform of the Fair Labor Standards Act is the change made to worker classification. Workers whose jobs are considered “administrative,” “professional,” or “executive” do not qualify for overtime. These categories did not change under the overhaul, but the method for determining who falls into each was altered drastically. Prior to 2004, an employee’s job title and a narrow checklist of certain job duties were the primary factors used in determining eligibility under the aforementioned criteria.11 Following the Bush Administration’s reform, eligibility is determined by a broad look at each employee’s day-to-day duties. As an example of how the law has changed: prior to 2004 the manager of a fast-food restaurant would be considered ineligible for overtime only if he or she had the power to hire and fire employees. Following the reform, ineligibility is extended to any fast-food manager who is has a say in key staffing choices, such as hiring, firing, and promoting. Even if the manager does not have authority to make these decisions, their ability to influence them falls within the range of “administrative” duties.12 Business leaders commend the new regulations, which they believe will decrease the number of lawsuits their companies face for withholding overtime. Labor unions, on the other hand, are vehemently opposed to these new regulations, which greatly increase the number of workers exempted from receiving overtime. Former presidential candidate John Edwards blasted the new regulations in 2004, asking “Why would anyone want to take overtime pay away from as many as 6 million Americans at a time when they need it most?”13

Upon accepting her position as Secretary of Labor, Elaine Chao made a public statement saying “If we really are going to protect workers, we must put more emphasis than ever before on prevention and compliance assistance — rather than just after-the-fact enforcement.”14 Unfortunately Chao’s Department of Labor then went on to earn a reputation for ignoring its regulatory responsibilities. The Department of Labor is more prone to politicization than many other federal agencies, a fact that led to a sharp degradation of worker rights and workplace safety during the Bush Administration. Scott Lilly, a senior fellow at the Center for American Progress, wrote several critical reports on the Bush’s Department of Labor. Lilly called the DOL “a deeply troubled department,” wherein “you've got people embedded there who are philosophically hostile to the mission of the agency."15 Regardless of its cause, the DOL clearly fell short of its responsibilities under the leadership of Elaine Chao.

In the summer of 2008, the Government Accountability Office released two reports which found that the Bush Administration’s DOL failed on several fronts. The reports show that the DOL had inadequately investigated reports from low-wage workers of employers who failed to pay the federal minimum wage, neglected to pay overtime, or refused to issue final paychecks.16 President Obama took time out of his presidential campaign to contact Elaine Chao and express his “serious concern” with the performance of the DOL after reading these reports.17 Even more concerning is the deterioration of the Occupational Safety and Health Administration (OSHA) during the Bush Administration.

The Occupational Safety and Health Administration is an agency under the Department of Labor. OSHA’s mission is to prevent workplace injury, illness, and fatality through effective regulation and enforcement of workplace safety standards. Despite Elaine Chao’s stated commitment to worker safety, OSHA’s budget fell each year that George W. Bush was in office, resulting in a cumulative loss of 5% to the agency’s overall budget, and an 8% decrease in its enforcement budget.18 This budget decrease made it very dangerous for working Americans under the Bush Administration. A report issued in 2007 by the DOL’s inspector general found that more than 14% of the country’s underground coal mines did not receive federally mandated inspections in 2006. In this same year, the number of mining fatalities in the more than doubled from the 2005 level.19 Without adequate funding, OSHA complained that it could not put enough inspectors in the field. Denial of this funding request quite plainly translated into unsafe conditions that led to the deaths of American working people. An audit conducted in 2009 found that over the previous six years, dozens of Americans died at firms that should have been subjected to much tighter enforcement.20

The 2009 audit aimed primarily to evaluate President Bush’s much-touted Enhanced Enforcement Program (EEP). The EEP aims to increase inspections and enforcement in workplaces that have shown willful and repeated violations, resulting in serious injury or death.21 On paper, EEP is a great idea; in practice, it is an irredeemable failure. The 2009 audit found that OSHA inspectors failed to collect required data, and conducted uneven investigations at different workplaces. It was discovered that multiple fatalities under a single employer often went unnoticed, because a company’s name was misspelled on OSHA records or because fatalities that occurred at different subsidiaries of the same negligent company were overlooked.22 In the EEP audit, OSHA’s assistant inspector general wrote that proper enforcement could have “deterred and abated workplace hazards at the worksites of 45 employers where 58 subsequent fatalities occurred."23 Repeat fatalities at irresponsible firms did not receive the inspections they should have. Companies that were investigated for repeat fatalities and came to settlements seeking to improve workplace safety, were often not held to their agreements, thereby allowing the same deadly practices to continue in their workplaces. One example occurred at two worksites managed by the Tennessee Valley Authority where two workers died under very similar circumstances. Had the first fatality been investigated, the second would likely have been prevented.24 The EEP audit concludes that only slightly more than half of the 282 fatalities that should have triggered increased enforcement under the EEP were properly logged and received the appropriate reaction. Celeste Monforton, a former OSHA policy analyst, condemned the Bush Administration’s EEP program, saying that the administration was “suggesting to the public that you've got an enhanced enforcement program going for five years, and it's not enhanced at all… It's not getting to the bad actors, and you're giving the public a false sense of effectiveness."25 It is despicable that American lives were lost due to the poor OSHA funding and the ineffective implementation of the EEP, and yet the Bush Administration still publicly claims success in its mission to improve workplace safety.26

Spending cuts made by Bush's Department of Labor cost workers their rights and their safety. However, there is one area in which the DOL became more rigorous in its enforcement: labor union oversight. New regulations put in place by Bush’s DOL required increase financial reporting from over 20,000 union locals.27 Supporters of this policy argue that more thorough reporting allows workers to see where their hard-earned dues are being spent, making unions more accountable to their membership. Critics of the policy argue that these regulations are being used to weaken and discredit labor unions.28 Regardless of the reason for this policy, it is irresponsible to make strict union financial reporting a top priority while underfunding safety enforcement. Prioritizing union scrutiny over workplace safety is reckless, and a clear example of the Bush Administration’s shortsighted willingness to politicize governing.

were further injected into the Department of Labor’s operation through a privatization program spearheaded by Elaine Chao in 2004. With this program DOL employees began to compete for their jobs with private contractors.29 The Government Accountability Office released a report in November of 2008 on the effectiveness of the program. Of those surveyed for the report, 60% said they felt demoralized by the program, damaging their ability to work effectively. Even more concerning is that the DOL deliberately falsified its reports to Congress on the effectiveness of the privatization program.30 Reports to Congress contained numerous inaccuracies. When reporting program costs, several substantial expenses, such as planning, transition, and review programs were excluded from the reports.31 This allowed the DOL to grossly understate expenses associated with this program. Reports of savings are unreliable as well. Inaccurate numbers were used in some reports, and others used projections when actual numbers were available.32 This resulted in an over-reporting of the savings created by privatizing the jobs of DOL employees. Fortunately, very few employees were actually affected by this program. Of the 314 employees who were affected, 263 were moved to a position with the same title and pay, or were promoted. Only 16 employees were demoted, and 14 of these received the same professional grade or pay in their new position. However, some of the actions taken against employees are alleged to be racially motivated. All of the 22 employees who were laid off or demoted are African-American, and two thirds of the employees who received promotions are Caucasian.33 Senator Harkin and Representative Obey, both committee chairs with jurisdiction over labor policy, condemned the Bush Administration’s handling of the Department of Labor. They denounced the privatization program as a failure for its damage to worker morale, as well as the use of “grossly overstated savings.”34

In 2006 Karl Rove called for members of the Bush Administration to come to the aid of beleaguered congressional candidates before the mid-term election.35 Elaine Chao is one of several members of the administration who answered this call. Chao attended over 20 events for Republican candidates.36 These trips were financed by taxpayer dollars and served a purely partisan purpose. Following the election, a Congressional investigation found that Chao and other administration members had clearly violated the Hatch Act of 1939 by using public funds for political gains.37 Unfortunately, no regulating or judicial body chose to take action against these violations.

Besides of the Department of Labor, the most important governing body in the field of labor policy and relations is the National Labor Relations Board (NLRB). The NLRB is an independent governing body established by executive order in 1939. The mission of this board is to conduct union authorization , investigate and remedy labor law violations, and enforce the National Labor Relations Act (NLRA). For the first years of its life, the NLRB was made up of three members, but that number has since been expanded to five.38 Many labor boards have specific rules mandating that their members be partisan appointments representing labor and management interests. However, because the NLRB is an adjudicatory body rather than a mediation or arbitration agency, no references are made in its laws to partisan appointments. Instead, it was accepted that the board would be made up of impartial public members, appointed from government service or academic careers. This tradition of non-partisan appointments continued until President Eisenhower began politicizing the board. Following Eisenhower’s precedent, the President makes appointments so that his own party holds a 3-2 majority on the board, as well as the chair. NLRB appointees are no longer impartial members, and are now often from management or union law careers.39 This politicization has been widely criticized as having damaged the fairness of decisions rendered by the NLRB. Instead of impartial members making fair decisions, we now see the NLRB disproportionately favoring unions when a Democrat is President, and favoring management when a Republican is President.

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