WASHINGTON — Sen. Ron Johnson (R-Wis.), chairman of the Senate Homeland Security and Governmental Affairs Committee, went to the Senate floor Tuesday alongside his colleague Sen. Lamar Alexander (R-Tenn.) in support of their resolution of disapproval of the Labor Department’s overtime rule.

“It’s a solution looking for a problem,” said Johnson, who spent 31 years running an Oshkosh manufacturing company, about the overtime rule. “I never had somebody in my operation ask to go from salary to hourly. I remember in 2004 when they tightened the rules, a number of people who worked for me were forced into hourly, none of them wanted to go. By the way, none of them received higher wages or higher salary. They just lost flexibility. And that's exactly what's going to happen.”

Employers, said Johnson, often compete in global markets and cannot just raise their labor costs — so in the end, employees’ total compensation won’t rise even as their hours become less flexible. Worse, he noted, the administration admits the rule also will pile $678 million more in costs on employers as they struggle to comply. This would add to an already huge regulatory cost burden. Johnson pointed out the consequences:

“Just four Obama regulations are costing one paper manufacturer the equivalent of $12,000 per year, per employee. So if you're concerned about income inequality, if you're wondering why wages have stagnated, look no further than this massive regulatory burden. And of course the overtime rule is just one of those burdens. Would you rather have that $12,000 feeding government in compliance costs or would you rather have that $12,000 in your paycheck feeding your family? Making a living is hard. Big government just makes it a whole lot harder. And this overtime rule is just going to make it that much more incrementally harder.”

Watch Sen. Johnson’s full remarks here.

Background:

Sens. Johnson and Alexander led 44 senators today in introducing legislation under the Congressional Review Act to block implementation of the administration’s “Time Card Rule,” also known as the Overtime Rule, which will require far more workers to punch a time clock, unable to take advantage of flexible work arrangements. The senators’ commented on the legislation earlier today.

Full transcript of Sen. Johnson’s remarks below:

Mr. President, I rise first of all to say thank you to the senator from Tennessee for leading this vote on disapproval on what is really a terrible rule. It is a solution looking for a problem. I spent 31 years running a manufacturing plant. It's been my experience, I’ve never had somebody in my operation ask to go from salary to hourly. I remember in 2004 when they tightened the rules, a number of people who worked for me were forced into hourly, none of them wanted to go. By the way, none of them received higher wages or higher salary. They just lost flexibility. And that's exactly what's going to happen. Being an accountant, I just want to go through the numbers. This is the Department of Labor's own calculations. They claim that there will be $1.2 billion more wages paid to workers. That's what they claim the benefits going to be. But they also admit there will be $678 million in compliance costs to business, just trying to figure out the rule. Trying to implement it. What they’re missing is, if wages, and I think that's a big if, because I think what will end up happening is employers are competing in a global economy, you can't just increase costs. So my guess is basically what's going to happen — happened to my business in 2004 — is they'll just adjust. The workers won't get any more money. But let's just say $1.2 billion in wages are paid to workers. Well, that's a cost to business. So if you take a look at the overall benefit to the economy, wages might increase $1.2 billion but business costs will increase at $1.2 billion. That nets to zero benefit to the economy. But there will still be a $678 million compliance cost to business. And of course that will be added to the already onerous regulatory burden on our economy. 

There are three different studies — the Small Business Administration, the Competitive Enterprise Institute, and the National Association of Manufacturers — putting the cost complying with federal regulation somewhere between $1.75 trillion to over $2 trillion per year. If you take the median estimate of that, divide it by 127 million households, that's a total cost of compliance of federal regulations of $14,800 per year per household. The only larger expense to a household is housing. That's the cost of complying. Let me finish with another figure: $12,000 per year per employee. That is the cost of just four Obama regulations to one Wisconsin paper manufacturer. I can't tell you which one because the CEO fears retaliation. Now think of that for a minute. But just four Obama regulations are costing one paper manufacturer the equivalent of $12,000 per year per employee. So if you're concerned about income inequality, if you’re wondering why wages have stagnated, look no further than this massive regulatory burden. And of course the overtime rule is just one of those burdens. I guess I just ask everybody: Would you rather have that $12,000 feeding government in compliance costs or would you rather have that $12,000 in your paycheck feeding your family? Mr. President, making a living is hard. Big government just makes it a whole lot harder. And this overtime rule is just going to make it that much more incrementally harder.”

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