Chao: Halt Government Intervention in Workforce

By Kathy Gurchiek Oct 3, 2008

U.S. Labor Secretary Elaine Chao is taking Congress to task for what she called a push toward a “Europeanization of the American workforce” that she predicted would have “dire” consequences.

Chao delivered her remarks during the U.S. Chamber of Commerce’s “Labor Policy at a Crossroads” event on Oct. 2, 2008, at chamber headquarters in Washington, D.C.

“Rather than embrace a regulatory and labor-management regime from the Old World, our country should pursue standards in keeping with the values of the New World, the unique American way forward,” said Chao, who immigrated to the United States at age eight.

Her comments came as she prepares to step down as the first Asian American woman appointed to a presidential cabinet. She has served the current administration since her Jan. 29, 2001 Senate confirmation.

Europeanization of U.S. Workforce

“Congress has already begun to push our economy towards Europe … in which the government would dictate to employers what leave policies they must offer, who they can promote, which benefits their health insurance plans must offer, what kinds of investments can be included in their pension plans and how they can even handle the most basic business decisions, and this is the short list,” she said in prepared remarks.

“This kind of Europeanization of the American workforce would have dire consequences for our country’s ability to compete abroad and would disrupt the traditional labor relationships here at home.”

She pointed to European labor policies that include state-mandated limits on the work week, limits on work hours and mandated, government-subsidized leave policies.

“These policies revolve around a number of concepts that directly contradict” American ideals, Chao pointed out, adding that some countries are abandoning these policies. France, for example, is ending its 35-hour work week, she said.

Education Emphasized

It’s critical, Chao said, that U.S. labor policy focus on fostering cooperation between employers and employees to update technology and train workers for jobs in the new economy. She cited statistics showing the relation between education level, earning power and unemployment rates.

Approximately 600,000 U.S. jobs have been lost since the economic downturn began in December 2007, according to the Economic Policy Institute, and the national unemployment rate has risen to a five-year high of 6.1 percent.

Chao spoke to chamber members of a need for a greater emphasis on making the nation’s publicly funded workforce development system more responsive to employers’ and workers’ needs—a reference to some reforms the Labor Department was unable to get through Congress.

“The next administration must be willing to challenge the current system to do even more.”

Government as HR Manager?

Chao wants to put the brakes on government intervention in the workforce and let decisions affecting things like pay, benefits and job creation rest in the hands of employers and employees.

“The government is really ill-equipped to make the kinds of decisions that employers and workers make together every day,” she said.

“Does anyone really think it’s really, truly a good idea to make the federal government the human resources manager, the union representative, the plant manager for the entire country? I don’t think so.”

How workplace decisions are being made reflects what Chao called “considerable changes” between employers and organized labor as union activity shifts its intensity to those who work in government and other service sectors, such as health care, hospitality and retail.

Instead of strikes, leafleting and picketing, unions are resorting to corporate campaigns, advocating for card check and neutrality agreements and harnessing their pension plan assets as leverage in organizing campaigns.

Among the union tactics she criticized was the Employee Free Choice Act, proposed legislation that she’s previously spoken against.

There are four versions of the bill—sometimes called the card check law—before the 110th Congress. Instead of voting for or against the creation of a union through secret ballot, the card check law would allow a union to be certified automatically if organizers can gather the signatures of a simple majority of workers on cards.

“This [card check] legislation should not become the law of the land,” she said.

With a nod to what she called “serious economic challenges right now,” she noted that “the next administration will undoubtedly pursue significant oversight and reform of the financial markets” and play a major role in crafting labor policy.

“Policymakers should be very wary of adopting new policies that strike at the core of what has made our country great.” The larger issue, she said, “is bad regulation that has unintended consequences in the real world.”

She warned them to stay away from “inflexible and rigid employment policies” and urged policymakers to be “wary of regulations that stifle job creation.”

She called for keeping taxes low; advancing free and fair trade; lowering trade barriers to goods and services manufactured in America; tax policies that reward risk-taking and promote global competitiveness; a regulatory stem that focuses on producing benefits and solves problems, and a public policy that advances a new model of labor-management relations of working together.

Chao is married to Senate Republican Leader Mitch McConnell of Kentucky. Her government service included working as deputy secretary at the U.S. Department of Transportation, as chairwoman of the Federal Maritime Commission, and as director of the Peace Corps. Her work in the private sector included Bank of America Capital Markets Group and Citicorp.

Kathy Gurchiek is associate editor for HR News. She can be reached at


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