James Gattuso of the Heritage Foundation applies Bastiat’s “broken windows” fallacy to the arguments of David Michaels, OSHA Administrator, to shattering effect. From “Jobs, Regulations and Broken Windows“:

[Michaels] cited OSHA’s recently withdrawn proposal to limit workplace noise. The standard was criticized for imposing excessive costs. But Michaels argued the requirements would be a boon to private enterprise. “[B]ecause OSHA has a weak noise standard…,” he explained, “U.S. employers have no incentive to buy modern, quieter machines, which means that U.S. manufacturers don’t build them, and there are few jobs in the United States for engineers who could design them.” Imposing mandates would presumably create those jobs, boosting the economy.

That would be a good thing if true. Think of how easy it would be for regulators to rev up the economy. Just place more burdens on businesses, and see the economy grow as they spend money to comply with them. That, however, is simply not the way the world works. Michaels’ argument is nonsense on stilts.

Frederic Bastiat, the 19th Century French economist, refuted the argument that breaking windows produced net economic benefits. Yes, glaziers did well in the repairs, but the work misallocated capital that could be better spent on more productive investments.

It’s not only regulators who base their arguments on jobs without the context of productivity or greater economic good, Gattuso notes.

[Some] have argued that pending FCC “net neutrality” rules would destroy jobs because the marketplace “losers” would be telephone and cable firms who employ large numbers of people, while the “winners” would be lean Internet content firms such as Google and Amazon.com, who have relatively small workforces. But such arguments completely miss the point. The problem with net neutrality rules has nothing to do with protecting fat telephone and cable payrolls. The problem is that, by interfering with innovation and investment, the recently-adopted rules will stymie growth of the Internet. That will probably mean fewer jobs for the economy as a whole – but certainly it would mean fewer benefits for society.

The goal should not be jobs, but wealth creation.

President Obama has made it very clear that he wishes to work with employers to help ensure they have an environment to creating jobs. We appreciate this commitment and look forward to see how his recent Executive Order on federal rulemaking is implemented. The Obama Administration has sent many signals that they’re going to be carefully reviewing regulations that may hinder job creation.

However, as analysis of the President’s budget continues it appears that the Administration is sending mixed signals. Specifically, the Department of Labor’s budget request does trim $1.1 billion dollars for FY 2012, it would still increase spending for agencies that regulate employers. Looking specifically at OSHA, there are increases for “safety and health standards” for the agency to develop new rules and spending on whistleblower programs. We should note that this request does slightly increase funding for compliance assistance programs, but the agency has proposed rules that would gut many employer outreach efforts like the on-site consultation program. A half a step forward, a full step back.

Looking beyond OSHA, the President’s budget would increase spending to “combat” employee misclassification. The Administration has often stated that they perceive a problem a widespread misclassification of employees as independent contractors by employers to skirt obligations associated with employees. The President’s request would increase spending for the Wage and Hour Division of the Department of Labor to beef up federal employees to investigate misclassification. This comes on the heels of the Department’s fall regulatory agenda that indicates that the Department is still in the process of developing “Right to Know” regulations that would likely impose a new burden on employers to perform extensive employee audits of each worker – independent contractor and employee alike.

Also troubling is the Department’s proposal to lure states into launching paid-leave programs. The Department is looking to increase spending to encourage states to start programs that would create new entitlements, which inevitably lead further funding down the road.

If the President is serious about assisting employers to create jobs, the Administration needs to do more than simply sign executive orders calling for a review of regulations; he needs to focus on supporting an environment that allows employers to create jobs.

Joe Trauger is the NAM’s vice president for human resources policy.

The National Association of Manufacturers co-chairs the Coalition for Workplace Safety, so we pass on this from the Coalition’s website, “CWS Spokesman To Tell Congress of OSHA Priorities“:

From the House Education and Workforce Committee:

On Tuesday, February 15 at 10:00 a.m., the Workforce Protections Subcommittee, chaired by Rep. Tim Walberg (R-MI), will hold a hearing on “Investigating OSHA’s Regulatory Agenda and Its Impact on Job Creation” in room 2175 of the Rayburn House Office Building. Since 1970, the Occupational Safety and Health Administration has been charged with enforcing federal safety and health standards in America’s workplaces. With nearly 14 million individuals out of work, members of the committee will examine OSHA’s current policies and priorities and how they affect job growth.

Among those testifying is Stuart Spencer on behalf of the Coalition for Workplace Safety.

More information is available from the Committee’s website.

The detailed budget summary for OSHA’s FY12 budget is available from the Department of Labor here. The President’s budget requests $583.4 million for the sub-cabinet agency, up $24.8 million from current spending, about a 4.3 percent increase.

An entirely predictable, nakedly apparent campaign of political outrage flurried briefly after Rep. Darrell Issa (R-CA) sought input from business groups and others about regulations that his House Oversight Committee could review in committee hearings. See, see, he’s letting Big Business set his agenda!

Phhpt. A committee chairman who seeks information about the economic impact of regulations logically talks to the people who are being regulated. If you’re concerned that excess regulations discourage hiring, it makes sense to talk to groups that represent employers.

The Daily Caller summarized the artificial controversy in a piece Thursday, including links to letters sent to Issue from business groups, including the National Association of Manufacturers.

From, “In letters to Issa, industry and policy groups target expanding reach of EPA regulators“:

A series of letters solicited by top GOP oversight official Rep. Darrell Issa put the Environmental Protection Agency in crosshairs, urging the aggressive new chairman of the House Oversight and Government Reform Committee to investigate a series of strict new regulations finalized by the Obama administration.

Letters from the Business Roundtable, National Association of Manufacturers, Competitive Enterprise Institute and Heritage Foundation all focus on a slew of new EPA regulations, especially the agency’s “endangerment finding” giving it the green light to regulate to stop global warming.

Of course EPA raises the most concern. It’s the source of the largest number of jobs-killing regulatory proposals, as the Administration itself documents!

(continue reading…)

Or neither…

Washington Post editorial, “The right balance on business regulations“:

On Wednesday came the first concrete result of the president’s new emphasis: withdrawal of a proposed Occupational Safety and Health Administration rule that would have required businesses to protect workers from shop-floor noise by changing schedules or installing new equipment rather than by passing out earplugs, as current rules require. Strongly backed by organized labor, the proposed rule had triggered loud business protests, especially from manufacturers, who said it would cost billions and destroy jobs. Now it will be progressives’ turn to howl.

Our emphasis. Associated Press, “Feds drop plan to change workplace noise standards“:

OSHA spokeswoman Diana Petterson said the noise standards decision was “completely unrelated” to Obama’s order. The proposal did not involve issuing a new rule, but reinterpreting an existing rule.

The Post comments after OSHA pulled its noise plan, “Now it will be progressives’ turn to howl.” While it’s a safe prediction that “progressives” will howl just on general principle, on the OSHA interpretation they’ve been quiet. We looked for expressions of outrage from organized labor and the usual suspects who supported OSHA’s noise plan, and nothing.

Our guess is that the noise plan was so unworkable and business’ objections so persuasive, even the activists expected it to be pulled.

P.S. OSHA Administrator David Michaels will address the American Bakers Association next week. We’ll be interested to see his responses to questions about the noise rule and President Obama’s regulatory instructions.

A round-up of the news coverage of yesterday’s announcement by the Occupational Safety and Health Administration that it was withdrawing its proposal re-interpretation of occupational noise standards. (Earlier posts here.)

Associated Press, “Feds drop plan to change workplace noise standards“:

Agency head David Michaels said excessive noise experienced by employees working around heavy machinery is a serious health concern. But he said the problem requires more public outreach than the agency expected, given the costs of better worker protection.

OSHA spokeswoman Diana Petterson said the noise standards decision was “completely unrelated” to Obama’s order. The proposal did not involve issuing a new rule, but reinterpreting an existing rule.

Completely unrelated? Assuming the partial quoted is representative, that’s a missed opportunity. If we were running OSHA’s message shop, the statement would have gone something like: “The business community responded to the proposal with legitimate concerns and new information, and we gave them a serious review. There’s no direct relationship between today’s announcement and the President Obama’s new executive order, but we absoutely take the President’s direction on regulation to heart. OSHA believes that workplace safety, jobs and economic growth go hand and hand.”

Well, that would be three hands, but you get the drift. Embrace the spin!

News release, “Senators Snowe, Lieberman Praise OSHA’s Withdrawal of Noise Regulation“:

U.S. Senators Olympia J. Snowe (R-Maine) and Joseph I. Lieberman (ID-Conn.) today praised the Occupational Safety and Health Administration’s (OSHA) decision to withdraw its proposed rule change regarding workplace noise exposure in light of a letter the senators sent to U.S. Secretary of Labor Hilda Solis expressing their concerns with the new regulation.  In their letter, Senators Snowe and Lieberman, Co-Chairs of the Senate Task Force on Manufacturing, noted that OSHA published the change as a “proposed interpretation,” rather than submitting the proposal for a notice and comment rulemaking, which allowed the agency to circumvent critical input from small business stakeholders.

The Senators’ engagement on this issue really made a difference. It’s much appreciated. (continue reading…)

From the Occupational Safety and Health Administration, “US Department of Labor’s OSHA withdraws
proposed interpretation on occupational noise“:

The U.S. Department of Labor’s Occupational Safety and Health Administration today announced that it is withdrawing its proposed interpretation titled “Interpretation of OSHA’s Provisions for Feasible Administrative or Engineering Controls of Occupational Noise.” The interpretation would have clarified the term “feasible administrative or engineering controls” as used in OSHA’s noise standard. The proposed interpretation was published in the Federal Register on Oct. 19, 2010.

“Hearing loss caused by excessive noise levels remains a serious occupational health problem in this country,” said Dr. David Michaels, assistant secretary of labor for occupational safety and health. “However, it is clear from the concerns raised about this proposal that addressing this problem requires much more public outreach and many more resources than we had originally anticipated. We are sensitive to the possible costs associated with improving worker protection and have decided to suspend work on this proposed modification while we study other approaches to abating workplace noise hazards.”

This is the right outcome, and OSHA is to be commended for reaching it. The National Association of Manufacturers had worked diligently on the issue, raising serious objections based on the proposal’s unworkability. (A formal statement from the NAM is coming.)

[UPDATE, 11:05 a.m.: The Wall Street Journal reports, "Workplace-Noise Rule Gets Shelved," citing the NAM: "Clearly the message has been heard by OSHA," said Joe Trauger, NAM vice president of human-resources policy."]

For more, see the NAM’s backgrounder on the OSHA noise proposal. The NAM’s ManuFact summarized the most serious objections, noting that the NAM successfully sought an extension in OSHA’s deliberations. Earlier blog posts:

• OSHA Needs to Explain Its Unfounded Noise Proposal
• OSHA Slows Down on Expansive, Expensive Anti-Noise Mandates
• Lots of Noise Around OSHA’s Reinterpretation of Noise Standards

The announcement is a pretty good way to reinforce President Obama’s new emphasis on reasonable regulation. Of course, this proposal’s excess was so obvious and simply to explain — even if ear plugs and individual noise-reducing earmuffs worked effectively, businesses would still have to redesign their operations — it was an easy one to back away from.

OSHA’s administrator, David Michaels, spoke Tuesday at Public Citizen, one of the leading advocacy groups for the expanded regulatory state. Judging by Public Citizen’s reporting (Tweeting) on the event, Michaels did not give the group a head’s up about the pending withdrawal. Boy, they must feel burned, especially as it came in the wake of President Obama’s executive order on regulations.

Interesting, too, that Reina Steinzor of the all-regulations, all-the-time Center for Progressive Reform decried the President’s regulatory announcement with this observation: “[The] President’s newly stated position diminishes EPA’s Lisa Jackson, FDA’s Margaret Hamburg, and OSHA’s David Michaels, siding instead with his regulatory czar, Cass Sunstein, who has steadily pushed to issue an executive order that throws a net over his colleagues rather than helping them do their jobs.”

The AFL-CIO posted an open letter to Rep. Issa (R-CA) from California Labor Federation Legislative Advocate Mitch Seaman reacting to an article in POLITICO about the Congressman seeking input from companies, business groups and think tanks on federal regulation. The AFL-CIO snidely and incorrectly cited part of the article that reported the National Association of Manufacturers’ call for oversight of OSHA’s regulatory proposals that would gut employer compliance programs (e.g. on-site consultation).

The National Association of Manufacturers responded to your request for marching orders by naming OHSA consultations as “high-priority regulations that can cost manufacturing jobs.” Not to nitpick, but OSHA consultations are free services provided by OSHA—or a state OSHA program—that identify potential hazards before they happen. This is a win-win that creates both safer and less expensive work environments. As workers, we are curious as to exactly how jobs are created by eliminating a free service that saves employers money and reduces workplace injury.

Marching orders? What silliness.

Still, we’re pleased to see the labor group’s apparent agreement with the NAM about the value of the consultation program, as the blogger describes them as “a free service that saves employers money and reduces workplace injury.” Absolutely. We feel strongly that OSHA should not hinder a successful program that allows small businesses to voluntarily approach OSHA for advice on how to make their businesses both more productive and safer for their employees. The NAM joined with numerous other organizations in the Coalition for Workplace Safety’s comments to OSHA which urged the agency not to remove important aspects of the program that encourage company participation. It’s rare when the AFL-CIO and the NAM can find common ground on policy, but we were optimistic that we may have found a new ally in our effort to protect an important OSHA program.

Labor’s newfound support is especially welcome since the AFL-CIO submitted comments to the agency’s regulatory proposal calling for major changes that would have made it much more difficult for employers to use the OSHA program effectively. Let’s hope that the members of the California Labor Federation can make AFL-CIO’s staff in Washington aware of why they agree with the NAM when they describe the program as a “win-win that creates both safer and less expensive work environments.”

President Barack Obama met with business leaders last week to discuss “a shared agenda focused on moving our economy forward that not only continues to grow the economy, but also ensures America is competing and leading in the world.” He then later met with labor union leaders in which the President “reinforced the essential role the union movement plays in growing the economy, creating good jobs on Main Street, and keeping America competitive.”

It appears that the President is rightfully focused on job creation and enhancing our nation’s economic competitiveness.

We looked forward to going through the Department of Labor’s Fall 2010 regulatory agenda (on the last day of the season!) today to learn how the Labor Department was going to achieve the goal of achieving “Good Jobs for Everyone.” Now that’s it’s here, most of what we see is focused on increasing regulations on employers and achieving goals that were unable to be done legislatively.

Specifically the agenda includes:

• A new regulatory proposal that would require companies to disclose to both independent contractors and employees alike a description of their status as either an employee or independent contractor. While few details are offered on this expected regulatory endeavor it appears to place new requirements on employers to disseminate information to employees. This regulation appears to be very similar to legislation, the Employee Misclassification Prevention Act, offered by Sen. Sherrod Brown (D-OH) and Rep. Lynn Woolsey (D-CA).
• Information on proposals expected from the Office of Labor Management Standards that would require employers to disclose the details of when they engage in “persuader activities” and plans to “reconsider” (i.e. limit) the types of efforts engaged by employers to comply with labor laws that are not currently required to be disclosed. Note: the administration previously removed a set of disclosure requirements for union organizations citing the burden they posed for labor leaders to comply.
• An update on OSHA’s efforts to mandate an expansive safety and health program standard through what has been called the “Injury and Illness Prevention Program”
• An indication that OSHA intends to finalizing their proposed rulemaking to allow citations to be issued for certain small businesses that wish to work proactively with the agency to ensure that they are compliant with existing OSHA standards and regulations – a move that would deter participation in a very effective program.

As we’ve stated here numerous times: more regulations from the Executive Branch produce a lot of uncertainty for employers, to whom unnecessary costs represent an obstacle to economic growth.

OSHA formally announced in the Federal Register this morning that that the agency will be extending the comment period for their proposal to change noise abatement requirements. However, many on Capitol Hill are asking OSHA if the agency understands the impact that this proposal will have on manufacturers of all sizes.

From OSHA’s notice in the Federal Register:

Two commenters, the National Association of Manufacturers and the Coalition for Workplace Safety (CWS), representing employers who would be affected by the proposed interpretation, have requested an extension of 90 days to assess the operating changes that their members would be required to make to comply with the interpretation.

While this announcement makes the extension official we appreciate that OSHA has recognized that it would take much longer than then initially proposed 60 day window to accurately assess the impact of the agency’s proposal.

We say “proposal” and not “proposed rule” because the agency is attempting to make these changes outside of the formal rulemaking process. While OSHA officials are accepting comments to the regulatory docket the agency is not compelled to take stakeholder feedback into account. Manufacturers, particularly smaller sized manufacturers, will be impacted by these changes, which come at staggeringly high costs without any evidence that the current process of protecting employees is deficient.

David Michaels, the Assistant Secretary of Labor for OSHA, told The Hill newspaper that the agency is “sensitive to possible costs associated with improving worker protection”. Further he said:

Our common objective is to ensure that workers don’t lose their hearing without overly burdening employers. OSHA will take all stakeholder comments seriously and will fully consider impacts on business and workers before determining what final action, if any, we will take.

We hope OSHA does take these comments seriously and realize that the costs of making these changes far outweigh potential benefits (if any) that may result.

Yesterday Senators Olympia Snowe (R-ME) and Joe Lieberman (I-CT), who co-chair the Senate’s Task Force on Manufacturing, sent a bipartisan letter to Labor Secretary Hilda Solis asking for more information on why the proposal has been put forth. The Senators point to important data that shows that the number of hearing loss incidents in the workplace is quite low and is improving significantly.

OSHA does not appear to support this change with data or any suggestion that employees require this new level of protection. Indeed the most recent Bureau of Labor Statistics (BLS) data on hearing loss injuries shows that from 2004-2009, incidences of hearing loss injuries have decreased from just under 29,000 per year to 19,500 per year and the rate of injuries has gone from 3.2 per 10,000 employees down to 2.2

More importantly the Senators posed several important questions to the Secretary of Labor that we very much look forward getting answers to as well:

-Did OSHA consider alternative interpretations prior to deciding to publish the proposed interpretation in the Federal Register? If so, what were these alternatives?
-Did OSHA consider any unintended consequences the proposed interpretations could have on small businesses? How did the agency address these concerns during formulation of the proposed interpretation?
-Does OSHA have any quantitative data affirming the necessity to change this policy, given that numerous organizations have noted that the current policy is effective?