Trump sees Labor makeover

The Labor Department under President-elect Donald Trump is facing a dramatic makeover.

After years of high-profile protests for a higher national minimum wage, Trump has selected Andrew Puzder, the man in charge of running fast food chains such as Hardee’s and Carl’s Jr., to run the Labor Department.

Puzder is looking to overhaul an agency at the forefront of some of the Obama administration’s most contentious projects.

Under President Obama, the Labor Department has pushed forward a number of initiatives aimed at empowering workers, from raising the minimum wage and providing overtime pay to more workers, to family leave and healthcare. 

{mosads}With Puzder and a business-friendly administration in charge, business groups see a chance to go in a dramatically different direction.

“There’s probably a lot of stuff for the new Labor Department to clean up,” said Robert Cresanti, president and CEO of the International Franchise Association, of which Puzder is a board member. “There’s a lot of wreckage laying around there.”

Puzder’s confirmation hearing will be lively, with Democrats and labor unions eager to paint him as harmful to the American workers he is supposed to protect.

“By nearly every measure, Andrew Puzder appears to be a uniquely unqualified choice and stands against the very mission of the department he’s been selected to lead,” said Sen. Patty Murray (D-Wash.), the ranking member of the Senate Health, Education, Labor, and Pensions Committee.

Murray was joined by labor and progressive leaders on a press call Thursday, where they painted Puzder as exploitative and dismissive of workers.

“He’s used his position and authority to enrich himself at the expense of working people,” said Richard Trumka, president of the AFL-CIO.

They called on Puzder to release details on legal arrangements between his corporation and franchisees, and detailed complaints from workers about wage theft, erratic schedules and other workplace woes.

Puzder has been a vocal critic of efforts by the National Labor Relations Board — which operates independently of the Labor Department — to change the “joint employer standard” that could require fast food franchises to be considered one overarching corporate entity for the purposes of labor disputes, rather than small independent businesses.

On the minimum wage, Trump has given mixed signals, and Cresanti argued it would be a mistake to paint Puzder as blindly against any wage hike.

“Andy was an outlier in our own organization, because he was one, if not the only, CEO that stood up at our board meetings to talk about finding a way to get to a higher minimum wage,” he said.

Puzder has said the push for a $15 minimum wage goes too far, however, and he opposed President Obama’s push for a $10.10 hourly wage. Trump at various points suggested support for both raising and lowering the current $7.25 federal minimum hourly wage.

At the confirmation hearing, Puzder is likely to face questions over previous comments he has made regarding the possibility of replacing fast food workers with machines going forward.

He told Business Insider earlier this year that he was interested in the idea of high-tech alternatives to traditional workers. He later clarified in an op-ed with The Wall Street Journal that there will always be a need for human workers at the front lines of the restaurant business.

Another area where Puzder could feel some heat is some of the racy commercials his company has run. Carl’s Jr. had garnered attention — and criticism — for a series of high-profile ads showing models in bikinis eating its hamburgers. Puzder has defended the ads.

Business groups see Puzder’s selection as a victory.

They cried foul when Obama’s Labor Department established rules doubling the salary threshold for workers eligible for overtime pay, making it available for millions more employees. A federal judge in Texas halted those rules from taking effect at the end of November.

Puzder has been a vocal critic of the rule, arguing in a May op-ed published by Forbes that it could force employers to cut their employees’ hours to reduce costs. Trump has also singled out that rule as one for the chopping block.

Another flashpoint for Puzder are the “fiduciary duty” rules for retirement advisers, which Labor completed in June. The new rules set a stricter standard for how investment advisers handle retirement funds and require them to act solely in the best interest of their clients.

Under Puzder, Labor could start the lengthy process of rewriting those rules.

Another option would be to offer a weak defense of the rules in court, since several financial industry groups are suing the government.

“They may not choose to replace it if it gets struck down,” said Douglas Holtz-Eakin, head of the conservative American Action Forum. “But all that gets measured in years, not days.”

A more technical area on which Puzder has voiced concern is the data measuring the strength of the economy. Puzder has been a longtime critic of the unemployment rate, which is calculated by Labor’s Bureau of Labor Statistics (BLS).

He co-authored a 2013 editorial in the National Review that said the jobless rate currently is “such a misleading statistic that anyone seeking a true picture of the American economy should stop using it.”

Like other conservatives, Puzder argued that the current unemployment rate can paint too rosy a picture of the economy, because it can fail to account for a large number of potential workers that have dropped out of the workforce.

Trump has hit a similar note. During a major economic address in August, Trump dismissed the then-5 percent unemployment rate as “one of the biggest hoaxes in modern American politics.”

Puzder does not go that far, specifically saying in the 2013 piece that the BLS is not trying to be misleading, while noting the unemployment rate has existed in the same format for decades. Instead, he called for a different measurement, a “growth ratio” that would compare job growth with population growth, which he argued would paint a more accurate picture of the overall economy.

How dramatic Labor’s shift could be under Puzder is an open question.

“Historically, there has been very, very little course correction … because the bureaucracy has ways of slowing those processes down,” said Cresanti. “This is a supertanker, and not a speedboat.”