Health care reform: not the only dark cloud on the horizon - Capitol Concerns - Column

Discount Store News, August 15, 1994 by Ken Rankin

While discount industry leaders have been wringing their hands over "employer mandates" and other unpalatable provisions in President Clinton's health plan, the prolonged debate about health care reform has produced at least one very positive bottom-line benefit for the nation's mass merchandisers.

It has effectively short-circuited action on a series of costly regulatory and legislative initiatives that together would have added more to the retail industry's payroll costs than any health reform scheme.

Clinton's old school chum, Labor Secretary Robert Reich, came to Washington 18 months ago with a briefcase full of plans that read like organized labor's annual letter to Santa. Reich wanted not only a stiff increase in the national minimum wage rate, but also an indexing requirement that would guarantee that the hourly pay floor would rise automatically in step with inflation.

The minimum wage increases advocated by some Labor Department officials and organized labor allies in Congress alone would have eclipsed the impact of Clinton's employer mandated health insurance plan. But there is more on Secretary Reich's wish list.

The rules exempting most assistant store managers and other supervisory workers from overtime wage rates has been a festering controversy within the Department of Labor for nearly a generation. During the 1970s, the Carter Administration's regulators moved to overhaul those standards with rule changes that would have left many retailers with a choice between paying premium (150%) wage rates to supervisory employees who work in excess of 40 hours weekly, or closing their stores early.

Those "reforms" were quickly iced by the Reagan Administration, and advocates of the scheme have been waiting to rekindle the proposal since 1981.

The election of Bill Clinton was supposed to have been the signal that the wage-hour gang could revisit the exempt manager/overtime pay issue--but again health care reform got in the way. Sensitive to warnings that the Administration's health reform proposal could drive up labor costs to the point of eliminating employment opportunities for millions of Americans, White House officials directed Reich to put his proposals back in his briefcase.

Until the health care debate is over, there won't be a serious drive to raise the federal minimum wage, revise the Fair Labor Standards Act's exempt manager standards, or take any other action that would significantly increase labor costs. Indeed, Administration officials are now suggesting that they may be willing to agree to a deal: a moratorium on minimum wage increases (and perhaps other federal rule changes adversely affecting labor costs) in return for employer mandated health benefits.

Presumably, that moratorium would last at least a couple years--more than enough time for Reich and other members of the current administration to find employment elsewhere.