The Obama-era OSHA rule requiring employers to submit injury and illness date electronically to the agency that was originally set to go into effect on July 1, 2017, has been delayed to December 1, 2017, according to a proposed delay submitted by OSHA. OSHA states that the agency plans to issue a separate proposal to review or remove various provisions in the final rule. The proposal suggests that pushing back the deadline would be the first step in a long process that could include fully reviewing or even revoking the record-keeping rule. The rule was issued in May 2016. Concerns were particularly expressed by employers that the rule would enable OSHA to post injury and illness data on the agency’s public website, and the U.S. Chamber of Commerce has petitioned the Department of Labor to reopen the rule making to consider various changes, including a change involving restrictions on incentive and drug testing programs.
Last year a salary overtime rule was to take effect raising minimum salary levels required for certain managerial overtime exemptions from about $24,000.00 to about $47,000.00. Last November, a federal district court in Texas enjoined the rule’s implementation and the issue was appealed to the Fifth Circuit Court of Appeals. Labor Department lawyers told the appeals court on June 30 that it planned to revise the Obama-era overtime rule, but asked the court to affirm the DOL’s right to use salary tests to determine eligibility for time-and-a-half pay in the future. The DOL attorneys stated that they would not initiate a new rule-making procedure until the appeals court affirms the right to set a salary level.
The DOL on June 27 sent a request for information to the Office of Management and Budget on the subject, but the details of the request have not yet been made public, but they are likely to signal the specific aspects of the rule the DOL wants to change. DOL Secretary Acosta has indicated that he is open to raising the salary threshold but not as much as the $47,000.00 level the Obama Administration set. Speculation suggests that he may favor increasing the salary exemption level to something around $33,000.00.
Editor’s Note: The previous salary exemption level for managerial employees of $23,660.00 remains in effect during the litigation, at least until the appeals court makes a ruling. There is some uncertainty, however, due to the fact that the appeals court has the authority to vacate the preliminary injunction blocking the rule, although the DOL is likely to ask the court to continue the injunction in some manner. The revision of the rule will take a considerable period of time, as there must be a new notice of proposed rule making and a comment period, leading to a new final rule.
There has been a recent increasing interest on the impact of welfare programs in the U.S. on employment levels as well as the budget. Labor force participation in the U.S. has dropped from 67.3% in 2000 to 62.4% in 2015. Many sources suggest the declining employment levels are based on an aging population, while others suggest other considerations. Some considerations even include the opioid epidemic, the ability to get health insurance under the ACA without working, and benefits from welfare programs. The latter issue as to the effect of welfare is being suggested by some industry employers who say that some employees have high absenteeism to avoid losing welfare benefits under means-based tests, and that some employees even ask for pay cuts in order to maintain welfare benefits.
Let’s start off with some rather startling facts, which come from a 2012 report from the Congressional Research Service. According to the report, spending on 80+ federal poverty programs costs a total of $746 billion per year, increasing to over $1 trillion by including state contributions to those programs. By comparison, federal spending is $545 billion on defense and $725 billion on Social Security. Almost 110 million Americans received some sort of means-tested welfare in 2011. If the $1 trillion spent on federal welfare programs were converted into cash and divided exclusively among the 16.8 million households who lived below the federal poverty line, the government would be able to mail to each of those households an annual check of approximately $60,000. Senator Jeff Sessions, now Attorney General, raised many of these points in a budget committee hearing back on February 13, 2013, relying largely on the 2012 report.
That is, some welfare programs provide incentives not to work because workers face a level in which they rapidly lose more benefits for each extra dollar they earn. The issue has also gained interest due to a best-selling book by J.D. Vance entitled "Hillbilly Elegy," a book that Bill Gates recommends as to "insights into some of the complex cultural and family issues behind poverty." Federal Reserve Chair Janet Yellen was asked during her testimony before the Senate Banking Committee on July 13, 2017 if there was a clear connection between opioids and opportunities to go to a job, get employed, and have a purpose in life. Yellen responded that "all of those things are bound up in this opioid crisis" and are "interacting in ways that are really quite devastating for these individuals and their communities."
Using an analysis based on 2013 information from the Census Bureau, there were some 106 million full-time year-round workers in the U.S., who were outnumbered by the almost 110 million the Census Bureau says were getting benefits from means-tested federal programs as of the fourth quarter of 2012. Some would argue that working families are subsidizing those on welfare.
Many criticize the figures or at least the interpretation of the figures. First, most of these figures include a broad definition of welfare to include not only Temporary Assistance for Needy Families, but also programs such as Medicaid and food stamps. The numbers cited generally count anyone residing in a household in which one or more people receive benefits from the program, as part of the number of welfare recipients. Another point is that just because the persons are receiving means-tested welfare benefits doesn’t mean they are not working, at least in some fashion. According to 2012 Census Bureau data, roughly 23 % of households with at least one working adult receive means-tested benefits. For Medicaid, 28% of recipients between the ages of 18 and 64 worked full-time, according to the Census Bureau, and another 15% worked part-time. According to one Census Bureau sample, slightly over half of food stamp recipients who were of working age and were not disabled were employed in some manner. Some would argue that most benefit programs require recipients to work in order to collect welfare, and that many people are working to support their families and paying their fair share of taxes, but are so underpaid that they cannot get by without relying on government assistance.
A counter-argument is that based on the fiscal year 2012 information, a combination of food stamps, housing support, child care, Medicaid and other benefits result in the average U.S. household below the poverty line receiving $168.00 a day in government support. That number can be compared with median household income of just over $50,000.00, which averages out to $137.13 a day, resulting in a higher income by being on welfare than working. Some employers who have difficulty hiring workers report they can’t compete with government benefits which they say provide an equivalent income of $30,000.00 or more per year. Some estimate with benefits the total can be as high as $50,000.00 per year.
In addition to the debate on the interpretation of this data, the question becomes whether the declining percentage of workers in the population is good or bad, and if bad, what can be done about this situation. Congress is currently looking at these issues, and bills are being introduced linked with overhauling the tax system, requiring some recipients in the Supplemental Nutrition Assistance Program (SNAP) and Temporary Assistance to Needy Families (TANF) to work or be in work training as a condition for benefits. Supporters say the moves would assist in avoiding a labor force participation rate decline, and that the long-term growth rate of the economy depends largely on the size of the work force. Some benefit programs already require recipients to work in order to collect welfare, at least to some extent. However, the work search requirements in the various public assistance rules include a very broad definition of work participation or community service, so that many work search requirements are not enforced in practice. Some studies indicate that when work search requirements are in force, as much as 30% of claimants choose not to apply for the benefits.
The bottom line is that most economists believe that we need workers to improve economic growth. Some say that if more domestic workers are not available, the only alternative is to import more people through some form of immigration to do the work. Others wonder whether increased automation and/or robots will in the future reduce the need for workers. Many say that there is dignity in work and that work has psychological and health benefits.
Editor’s Note: The effect of welfare programs is a very controversial subject, but one employers need to consider more fully. For example, employers that set up pay and benefit programs cognizant of employee needs for government assistance are more likely to create a "win-win" environment, by encouraging work and lowering absenteeism and turnover. Employers should find out what type of combined federal and state assistance is available in their areas and address whether variations in pay and benefits would allow a greater inducement to remain employed on a full-time basis. Employers can also encourage Congress to consider the type of benefit programs, such as expanding the earned income tax credit, which would do more to bring aid recipients back into the work force.
Some changes in ObamaCare (ACA) seem inevitable, but Republicans have not been able to gather sufficient votes to make major changes. Under the Senate’s current filibuster rules, Republicans need 60 votes to repeal ObamaCare, but budget reconciliation rules allow a Senate majority (51) to make changes in the ACA related to revenue. Not one Democratic senator has supported changes up to this point. Meanwhile, the Republican senators remain divided among those who are very conservative and want to go as far as possible to repeal the ACA, and those moderates who fear a backlash from reducing benefits provided by it.
The ACA was the Obama Administration’s signature domestic legislation, and America has never repealed an entitlement program once enacted. Further complicating the situation is that at least half of the additional persons covered by ObamaCare, but not covered by the ACA directly itself, came from the ACA’s expansion of Medicaid eligibility. States were not forced to accept the broader coverage, but 29 states did so, including a number of states with Republican governors.
The current situation is not sustainable, at least in the long run. First, Medicaid spending grew some 18% in 2015 and 17% in 2016 in the states that expanded the coverage. Unsuccessful Republican proposals have attempted to move Medicaid to per capita spending with automatic increases for medical inflation, giving state governors the incentive and flexibility to manage their programs most efficiently. Second, the basic premise of the ACA was that enough younger and healthier persons would be induced to sign up so as to offset the enormous cost from subsidizing the premiums of older and less healthy people. That central purpose of the ACA has been unsuccessful. Third, many insurers are pulling out of the state exchanges as being unprofitable, so that over 40 counties in the U.S. have no insurers in the state exchanges and about 1,400 counties have only one insurer that will sell under the ACA concept, in spite of the steep premium increases under the ACA. One example is in Iowa, where the only insurer participating in the ACA just requested rate increases in premiums of nearly 45%. Large insurers like Anthem and Aetna are pulling out of most markets entirely. Finally, the so-called "Cadillac tax" is looming to take effect in 2020, which would require additional penalties if employers pay too much in insurance coverage for their employees.
Perhaps the situation has to get even worse to bring about the necessary compromises, including support from the Democrats, to make critically necessary changes. The changes might include modification of the current system or the institution of a different system. Some even believe that the ACA was designed to fail, in the hope that Americans would never do away with such additional healthcare coverage, and that therefore the only Congressional solution would be to go to a "single payer" system like Medicare for everyone.
The solution to these issues appears to be a long way off, but by necessity decisions must continue to be made under current law. The trend will continue of employers adopting consumer-directed health plans, which combine health savings accounts with high deductible insurance coverage. Such plans appear to be relatively cost-effective, and more employers are also using wellness programs. Look also for changes in the ways in which workers receive healthcare such as use of telemedicine and health clinics, and other ways to lower costs without shifting costs to workers.
In the meantime, the new Administration issued an executive order allowing federal agencies to make discretionary modifications to the implementation of the ACA, and undoubtedly much of that will occur. However, the modifications cannot rewrite the statute.