Manhattan Institute Study: The High Costs of Proposed New Labor-Law Regulations

No. 21 April 21, 2013


This spring, the U.S. Department of Labor is expected to issue a new interpretation of the "advice" exemption to the Labor Management Reporting and Disclosure Act. The Labor Department’s new interpretation would require businesses to disclose the names of any attorneys or consultants from whom they seek advice regarding union-organizing activities.

In so doing, the administration will sweep away over 50 years of precedent and contravene the express language and intent of the law originally passed by Congress. The cost of the proposed rule could be in the billions of dollars—many multiples of the administration’s own, much lower, estimate, which notably (and perhaps conveniently) falls below the level required for mandatory cost-benefit review. By compromising companies’ ability to seek advice on compliance with federal labor law, the proposed rule would jeopardize firms’ as well as workers’ statutory rights. By raising the cost of doing business in America, the proposed rule would drive some businesses offshore and discourage others from locating here, harming economic growth.

This paper looks first at the text and history of the "persuader rule," which the administration is trying to rewrite without adequate attention to the full costs and implications of doing so and in a way that advances the interests of organized labor. Next, the paper places the administration’s position in context, by exploring the decline in

private-sector unionization and the Obama administration’s extraordinary efforts to reverse that decline. The paper then explores the proposed rule’s likely costs, which could exceed the Labor Department’s estimate by a factor of 10,000. Finally, the paper offers conclusions and policy recommendations.

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