House Education & Workforce Committee
“Each day more than eight million Americans go to work at our nation’s 757,000 franchise businesses,” said Rep. Roe. “The franchise model has encouraged entrepreneurship, the growth of small businesses, and job creation …Yet today we are discussing an effort that will force small businesses to close their doors, or at the very least, discourage new small businesses from being created. Workers will once again be on the losing end of this Big Labor bailout, and at a time they can least afford it.” In July, NLRB General Counsel Richard Griffin issued an unprecedented decision that determined McDonald’s Inc. and certain franchisees were joint employers. Griffin has also urged the board to overturn decades of precedent in favor of a far more expansive joint employer standard.
Labor law expert Todd Duffield explained the implications of this effort, “The [traditional] test is clear, it makes sense, and it’s worked for over 30 years … Congress should understand that these are not small, technical legal changes to labor law. The consequences of changing the board’s current joint employer standard threatens established business relationships and will cause significant economic upheaval.”
Those concerns were echoed by men and women engaged in the franchise business. Catherine Monson, chief executive officer of FASTSIGNS International, warned of the harmful impact that would be inflicted on employers and employees alike. “Such a rule change could completely upend the franchise model and have devastating consequences for franchising as an economic force in the United States … [I]ndividual entrepreneurs would be deprived of the opportunity to own their own business, franchisors would be denied the opportunity to expand their business, and millions of jobs will be lost.”
Clint Ehlers, a FASTSIGNS franchisee, shared these concerns: “If franchise owners have less independence and control, they can also expect lower profits. If profits are lower, there will be less demand from entrepreneurs to start franchised businesses … A revised joint employer standard will result in fewer new franchised businesses, at a time when our economy is thirsty for growth and expansion.”
Small-business owner and franchisee Jagruti Panwala added, “Mr. Chairman, I am no intermediary. I am a business owner and job-creator … I strongly urge this committee, and the National Labor Relations Board, to consider the tremendously adverse impacts on franchisees and workers.”
“The American people deserve to know what the federal government is up to and how it will affect their families,” concluded Rep. Roe. “Today’s hearing has helped shine a light on those consequences and I hope encouraged the NLRB to change course.”
To learn more about today’s hearing, read witness testimony, or to watch an archived webcast, visitwww.edworkforce.house.gov/hearings.
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Many college graduates are delaying some of life’s most important decisions – including starting a family and buying a home – because they face a pile of debt with no job prospects. A record number of young adults live with their parents and roughly half of college graduates under the age of 26 rely on mom and dad for financial help.
President Obama wants people to believe that shaving a few dollars off monthly student loan payments will solve the problems plaguing graduates. That’s the essence of a proposal being touted on the campaign trail that would raise taxes and allow some graduates to refinance federal student loans.
Let’s be honest: This scheme is more about helping politicians survive an election than helping graduates survive the Obama economy. Sadly this is not the first time young Americans have been used as pawns in political messaging.
In the summer of 2013, interest rates on most federal student loans were set to double. The president included a long-term, market-based solution in his budget proposal and urged Congress to pass it to prevent an interest rate spike.
Why the flip-flop? According to one press report, Democrats hoped to kick the can down the road to “rally younger voters to the polls” in the 2014 elections.
Fortunately, a long-term solution became law. We averted an interest rate spike and provided students and families more certainty. We did the right thing by taking the threat of an interest rate hike off the table, leading to some politicians’ current search for another election-year gambit to rally voters.
This political gambit fails to address the core of the problem: graduates entering a job market that lacks good-paying jobs. No monthly payment is affordable if you are underemployed or out of work.
Recently, Congress did come together to pass a bipartisan fix for our broken workforce development system. We got the job done because the House acted, the Senate came to the table, and the administration got out of the way. Now we have a reformed law that will help put people back to work.
Our nation desperately needs more bipartisan successes like this. Job creation will remain the House’s number one priority until every graduate and struggling worker who needs a job can find one. Meanwhile, we are also taking steps to strengthen higher education for current and future graduates.
If we enact a series of commonsense reforms, the federal government can help more Americans turn the dream of a college degree into reality. For starters, Washington should encourage more innovation, such as competency-based education, so students can earn a degree at a faster pace and lower cost.
Federal policymakers should empower students and families to make smart decisions by enhancing financial counseling and delivering better information to students looking for the right college or university.
We should improve federal student aid. Many students take out loans when other financial assistance is available. It is time to streamline the confusing maze of aid and grant programs, and make it easier for students and families to apply for help.
Congress should also strengthen the options available for students to repay their loans. The current system encourages students to borrow more than they need and can afford. We should pursue policies that ensure low-income individuals get the help they need, while also protecting taxpayer dollars.
The House has already passed legislation addressing some of these issues, often with overwhelming bipartisan support. These efforts would make a real difference in the lives of students and they deserve consideration in the Senate.
Life after graduation should be filled with hope and excitement. For far too many, it’s become a time of hopelessness and anxiety. Countless college graduates are struggling because of the president’s failed economic and education policies. Let’s stop treating young adults as political pawns and start working together to ensure they can build the future they deserve.
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Roe Statement: Hearing on "Expanding Joint Employer Status: What Does it Mean for Workers and Job Creators?"
For most franchise employers, it’s tough staying afloat in even the best of times. It’s especially challenging when Washington bureaucrats change the rules in the middle of the game. In recent months, it’s become clear the Obama National Labor Relations Board is determined to rewrite a franchise model that has served workers, employers, and consumers well for decades.
At the center of this effort is Richard Griffin. As the agency’s general counsel, Mr. Griffin has encouraged the board to blur the lines of responsibility between the franchisor and franchisee. Most recently, he determined McDonalds Inc. is a joint employer with its franchisees, a decision that no doubt sent a shockwave across the country. This radical effort is detached from reality for two important reasons.
First, it pretends the franchise business model doesn’t exist. Since 1984, the NLRB has applied a straight-forward test to determine whether two separate entities are joint employers of a business establishment. The board analyzes whether the alleged employers share control over essential conditions of employment, such as hiring, firing, discipline, supervision, and direction of employees. Control over these matters must be direct and immediate.
The current standard makes perfect sense when one considers how the franchise model works in the real world. As chief executive officer of CKE Restaurants – a company that includes iconic brands like Hardee’s and Carl’s Jr. – Andrew Puzder is no stranger to the franchise business or this subcommittee. Here is how he has described the franchise business model:
Make no mistake, the current standard reflects the way franchise businesses have been owned and operated for decades. So why the sudden effort to dismantle policies that work? As the Wall Street Journal noted in reaction to Mr. Griffin’s decision:
The franchiser/franchisee relationship is built on a division of roles and responsibilities. The franchiser owns a unique system, which it licenses and protects as a brand. The franchisee operates an independent business under the brand's trademarks at one or more locations as a licensee. … Franchisees independently choose who they hire, the number of people they hire, the wages and benefits they pay, the training that such employees undergo, the labor practices they use, how their employees are monitored and evaluated, and the circumstances under which they're promoted, disciplined or fired.
Which leads to the second reason why this radical effort is so detached from reality – it fails to recognize the difficult challenges facing workers in the Obama economy. Our nation remains mired in a jobs crisis. Workers are frustrated. After six years of President Obama’s failed policies, I am frustrated too. Stocks prices on Wall Street are breaking new records while wages on Main Street remain flat. Meanwhile, the prices for essential goods and services like food, gas, and health insurance have gone up.
This is a bonanza for trial lawyers who will be able to shake down the parent company for alleged labor violations at franchisees whose pockets aren't as deep. The other beneficiary is Big Labor. … Under Mr. Griffin's law, they can leap-frog their direct managers to corporate headquarters, which are more vulnerable to political pressure and less sensitive to local markets.
That’s not right and working families deserve better. Yet today we are discussing an effort that will force small businesses to close their doors, or at the very least, discourage new small businesses from being created. Workers will once again be on the losing end of this Big Labor bailout and at a time they can least afford it.
I suspect some of my colleagues will protest today’s hearing. It will likely be noted the board hasn’t rendered a decision and suggested the committee is once again putting the cart before the horse. We’ve heard our colleagues sing that tune before and each time it has been followed by a radical shift in board policy.
The American people deserve to know what the federal government is up to and how it will affect their families. Hiding the truth behind some process nonsense isn’t fair to the men and women who will have to live by the rules issued by this federal agency. Today’s hearing will help shine a light on those consequences and I hope encourage the NLRB to change course.
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To learn more about these hearings, or to watch live webcasts, visit http://edworkforce.house.gov/hearings.
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***MEDIA ADVISORY*** Hearings to Examine Joint Employer Status Under NLRA and Oversight of Department of Education
On Tuesday, September 9th at 10:00 a.m., the Subcommittee on Health, Employment, Labor, and Pensions, chaired by Rep. Phil Roe (R-TN), will hold a hearing entitled, “Expanding Joint Employer Status: What Does it Mean for Workers and Job Creators?” The hearing will provide members an opportunity to examine efforts by the National Labor Relations Board to rewrite how the agency determines joint employer status under the National Labor Relations Act.
On Wednesday, September 10th at 10:00 a.m, the Subcommittee on Higher Education and Workforce Training, chaired by Rep. Virginia Foxx (R-NC), and the Subcommittee on Early Childhood, Elementary, and Secondary Education, chaired by Rep. Todd Rokita (R-IN), will hold a joint hearing entitled, "Improving Department of Education Policies and Programs Through Independent Oversight." Members will discuss recommendations from the Government Accountability Office and the Department of Education Office of Inspector General on ways to improve department services and save taxpayer dollars.
To learn more about these hearings, or to watch live webcasts, visit http://edworkforce.house.gov/hearings.
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As witnesses made clear, the president’s health care law is undermining the success of the nation’s schools and workplaces –
Hoosier business owners and education officials aired out their concerns about the Affordable Care Act to Congress without having to go all the way to Washington D.C. … The chambers there are clearly smaller than the halls of Congress, but that’s exactly the way committee members wanted it. Several panelists were concerned about how ACA has been affecting their budgets.
- The most significant impact is on our special needs students. These students need and want consistency … It is best for our special needs students to have the same bus driver for their routes. Unfortunately, we now must split the route between two drivers. By using different drivers for the same route, our special needs students are subject to constant change which is uncomfortable for our special needs students and not in their best interests. – Mr. Danny Tanoos, Superintendent, Vigo County School Corporation, Terre Haute, IN
- Like many community colleges our funding is very limited. It does not allow us to absorb large unfunded mandates such as any employee who reaches 30 hours being offered health insurance. We would have to pass along such increases on the backs of students by increasing tuition. As a result many of those who are at the lowest income levels trying to improve their lives would no longer be able to afford college. – Mr. Tom Snyder, President, Ivy Tech Community College of Indiana, Indianapolis, IN
- The Patient Protection and Affordable Health Care Act (PPACA) has had and continues to have a severe and disproportionately disruptive effect on our high performing school district. We have identified three categories in which these negative effects have occurred in our school district. There is the impact on our students, the impact on our employees, and the impact on the school district itself. These intertwined and interactive effects, taken together, are serious now and appear to be increasing in their severity over time. – Mr. Michael Shafer, Chief Financial Officer, Zionsville Community Schools, Zionsville, IN
- In summary, since the ACA took effect, our company and employees have seen premiums increase dramatically while deductibles and out-of-pocket costs have been raised, all during a period when the overall health of our employees has improved … From the experience of IDS, I can say that the Affordable Care Act is anything but affordable for our company and employees. – Mr. Mark DeFabis, President, Integrated Distribution Services, Plainfield, IN
- We offer health insurance to our full time employees although not affordable by government standards … This cost to our business is roughly in the area of $2.42 to $3.23 per hour per employee depending on hours worked. To meet the proposed guidance of not to exceed 9.5% of income that cost would move into the $2.87 to $5.15 range per hour per employee! Representing an 18 to 59% raise in cost per hour per employee. Where is the AFFORDABLE in this act? – Mr. Daniel Wolfe, President, Wolfe’s Auto Auctions, Terre Haute, IN
- The Affordable Care Act’s reporting mandates will absolutely ‘bury’ our Human Resources Department … The forms must be filed electronically for companies with over 250 employees, such as Draper. However, there is no guidance or process yet established to explain how to do this … Our HR Department’s worst fear is that the final versions will be made available on December 15, with a December 31 deadline for submission! – Mr. Nate LaMar, International Regional Manager, Draper, Inc., Spiceland, IN
Congressman Luke Messer (R-IN) noted during the hearing, “Our nation’s school children and hourly workers shouldn’t be forced to pay the price of that law.” Chairman Roe echoed the sentiment: “Our children and working families deserve better."
To read witness testimony, opening statements, or watch an archived webcast of the hearing, visitwww.edworkforce.house.gov/hearings.
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Roe Statement: Hearing on "The Effects of the President’s Health Care Law on Indiana’s Classrooms and Workplaces"
Before joining Congress, I spent more than 30 years practicing medicine. As a doctor I experienced firsthand a health care system that is the envy of the world, one that has helped improve the lives of countless men, women, and children. But I also learned our health care system isn’t perfect.
In many ways health care is too costly, too bureaucratic, and far too many families lack access to the care they need. Health care reform has long been an urgent national priority, and it’s one of the reasons why I decided to run for Congress. Unfortunately, the president’s health care law is not the right prescription for reform. In fact, it’s making these challenges worse.
Under the president’s plan, health care costs are going up, not down; full-time jobs are being destroyed, not created; and people are losing the health care plan they like, not keeping it like they were promised. These harmful consequences are playing out in communities across the country.
The Federal Reserve Bank of Philadelphia recently surveyed area businesses to learn how the law was affecting their workplaces. Roughly 18 percent of businesses said they are cutting jobs and employees and another 18 percent said they were shifting more workers to part-time hours. Additionally, a majority of employers changing their health plans because of the law are passing more costs onto employees. Federal Reserve authorities in Atlanta and New York report similar findings.
The law is hurting not only businesses, but our classrooms as well. Higher costs, fewer full-time jobs, lost wages – these problems are plaguing schools nationwide. A survey by the College and University Professional Association for Human Resources found many institutions are passing more health care costs onto their employees. Students will ultimately lose as schools grapple with the law’s added costs and burdensome mandates.
Our children and working families deserve better. It is clear we need to set aside the president’s health care law and start over with real reform that will lower costs and expand access.
In the meantime, we need to take responsible steps that will provide relief to schools and workplaces. That is precisely what the House of Representatives is determined to do. I want to thank my colleague, Representative Luke Messer, for helping to lead that important effort.
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Messer Statement: Hearing on “The Effects of the President’s Health Care Law on Indiana’s Classrooms and Workplaces”
Put simply, the Federal government should not be taxing schools and small businesses to pay for the President’s health care law. It just isn’t right. And, if we really care about our economy and our nation’s future we will do something about it.
Dave Adams, the Superintendent of Shelbyville Central Schools, first brought this issue to my attention early last year when he said the employer mandate will cost his schools $794,000 each year. Bob Yoder, Assistant Superintendent of Southern Hancock School Corporation, estimated its price tag at $450,000 per year. Their stories are not unique, unfortunately.
That’s why I have introduced legislation to exempt schools from this onerous provision. We can’t fund the President’s health care law at the expense of education.
Small businesses are being harmed, too. Businesses statewide have been forced to reduce worker hours and scale-back their workforce to balance new budget constraints imposed by the law. That’s why I have introduced legislation that will exempt most small business from this tax, too.
Nate LaMar, the International Regional Manager of Draper, Incorporated in Spiceland, rightly notes that the law’s fees and taxes don’t stop with the employer mandate. There are very strong feelings about the President’s health care law on both sides of the aisle. I respect the views of those who believe deeply that it is the best way to address the challenges in our health care system.
I would hope that most could agree, however, that our nation’s school children and hourly workers should be forced to pay the price of that law.
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The open enrollment period for insurance plans mandated by the Affordable Care Act is just months away. For most Hoosiers, that means a bigger bite out of their monthly budgets next year. Health insurance premiums in Indiana will go up an average of 13% in 2015 according to a study conducted by the Health Research Institute. That means individual Hoosiers can expect to pay about $497 per month for insurance without government subsidies. That’s not affordable, despite the law’s title.
Employers across the state are facing the same harsh reality. Business owners and cash-strapped school corporations are grappling with how to deal with a provision of the law that requires them to provide costly health insurance that many of their employees neither want nor need. These schools and businesses are facing big fines if they don’t. That’s bad for business and terrible for students.
Shelbyville Central Schools estimates the Affordable Care Act will cost $794,000 annually. Southern Hancock School Corporation estimates the cost at $450,000. To help deal with the increased strain on already cash-strapped budgets, bus drivers, teachers’ aides, and other support staff have already had their hours reduced.
The largest school district in Indiana, Fort Wayne Community Schools, has calculated that it would either face $10 million of added compliance costs or be forced to pay $8 million in fines to the IRS to comply with the mandate. The district has been forced to cut the hours of more than 600 part-time cafeteria workers and teachers’ aides as a result.
Small business owners have to make the same tough choices. The law’s redefinition of what is means to work full-time—30 hours—makes more employers with fewer employees subject to the same fines as schools unless they provide costly insurance. According to the non-partisan Congressional Budget Office, these tough choices will reduce labor force compensation and push as many as 2.3 million people out of the workforce over the next seven years. This “new normal” for our nation’s workforce is not OK.
The House of Representatives has acted to stop this damage by voting to repeal, delay, and defund this law. But the Senate has failed to follow suit. They need to hear your voices. That’s why the Committee on Education and the Workforce, of which I am a member, has decided to hold a field hearing in Greenfield entitled “The Effects of the President’s Health Care Law on Indiana’s Classrooms and Workplaces.” It’s a chance for Hoosier school and business leaders to express their concerns to Congress and draw attention to the harm the President’s health care law is having on students and workers.
The hearing, held by the Committee’s Subcommittee on Health, Employment, Labor, and Pensions, will bring together members of Congress from around the state and nation to hear first-hand how this law is hurting Hoosiers. The hearing is scheduled to take place on Thursday, September 4, 2014, at 10 a.m. at Greenfield City Hall located at 10 S. State Street in Greenfield.
I look forward to bringing Congress to Greenfield and invite you to join us on September 4th.
Most of the political class seems to have decided that ObamaCare is working well enough, the opposition is fading, and the subsidies and regulation are settling in as the latest wing of the entitlement state. This flight from reality can't last forever, especially as the evidence continues to pile up that the law is harming the labor market.
On Thursday the Federal Reserve Bank of Philadelphia reported the results of a special business survey on the Affordable Care Act and its influence on employment, compensation and benefits. Liberals claim ObamaCare is of little consequence to jobs, but the Philly Fed went to the source and asked employers qualitative questions about how they are responding in practice.
The bank reports that 78.8% of businesses in the district have made no change to the number of workers they employ as the specific result of ObamaCare and 3% are hiring more. More troubling, 18.2% are cutting jobs and employees. Some 18% shifted the composition of their workforce to a higher proportion of part-time labor. And 88.2% of the roughly half of businesses that modified their health plans as a result of ObamaCare passed along the costs through increasing the employee contribution to premiums, an effective cut in wages.
Those results are consistent with a New York Fed survey, also out this week, that asked "How, if at all, are you changing (or have you changed) any of the following because of the effects that the ACA is having on your business?" For "number of workers you employ," 21% of Empire State manufacturers and 16.9% of service firms answered "reducing."
To complete the triptych, an Atlanta Fed poll earlier this month found that 34% of businesses planned to hire more part-time workers than in the past, mostly because of a rise in the relative costs of their full-time colleagues. ObamaCare may be contributing to that surge to the extent the law's insurance mandates and taxes increase spending on fringe benefits for people who work more than 30 hours.
Liberals will dismiss this as merely anecdotal or of minor impact, but it makes sense that ObamaCare's labor effects would be concentrated in some industries with relatively low-wage or marginal workers. The data points also help explain why the number of people employed part-time surged by 12% during the recession but the rate hasn't fallen even as the economy has improved. Or why labor force participation is the lowest since the late 1970s.
Chief White House economist Jason Furman put out a report in July that attempted to explain this collapse in the share of Americans working. He attributed about half the decline to an aging population and a sixth to the conventional expected result of the downturn. But he simply threw up his hands and assigned a third of the responsibility to an "unexplained" category.
Our view is that Mr. Furman's gnomes were wrong to gloss over government-fueled labor distortions like ObamaCare. People are responding at least in part to the incentives to work fewer hours or not at all, as the research of University of Chicago economist Casey Mulligan on marginal tax rates has shown. But there are also simply fewer jobs available that would have been created in the past, as the Fed surveys show.
Slow growth is the great tragedy of the Obama Presidency, and maybe these findings will eventually get past the liberal Iron Dome of only positive thoughts.
***MEDIA ADVISORY*** Roe to Hold Indiana Field Hearing on Health Care Challenges Facing Schools and Workplaces
On Thursday, September 4, at 10:00 a.m., Subcommittee on Health, Employment, Labor, and Pensions Chairman Phil Roe (R-TN) will hold a field hearing entitled, “The Effects of the President’s Health Care Law on Indiana’s Classrooms and Workplaces.” The hearing will take place at Greenfield City Hall, 10 South State Street, Greenfield, Indiana.
Across the country, workers and employers are struggling with the consequences of the president’s health care law. For example, in response to a survey by the Federal Reserve Bank of New York, businesses generally expect health care costs to increase by 10 percent next year and a majority cited the health care law as the reason. The survey also revealed the law was leading employers to raise the number of part-time employees, lower employee compensation, and increase consumer prices.
The House Education and the Workforce Committee is examining how many of these same consequences are affecting the nation’s K-12 and higher education systems. Through testimony and the committee’s YourStory initiative, school leaders have shared stories of health care costs going up and staff work-hours being cut.
The field hearing will provide members an opportunity to learn how the health care law is affecting Indiana’s schools and workplaces. For more information about the field hearing, visit www.edworkforce.house.gov/hearings. Media interested in attending the field hearing must RSVP to Liz Hill at email@example.com.
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House Education and the Workforce Committee Chairman John Kline (R-MN) and Senator Lamar Alexander (R-TN), senior Republican on the Senate Health, Education, Labor, and Pensions Committee, today requested a study from the Government Accountability Office (GAO) on the Department of Education’s Elementary and Secondary Education Act (ESEA) waiver policies.
In a letter to GAO, they wrote, “In 2011, the department began issuing waivers to states regarding specific requirements of the No Child Left Behind Act, and to date, 42 states and the District of Columbia have received ESEA waivers. In order to receive waivers, these states were required to comply with a new set of requirements, not authorized by Congress, related to standards and assessments, school accountability, and teacher and principal evaluation systems.”
The lawmakers noted the supporting documentation required to obtain waivers in their home states, which ranged from more than 700 to more than one thousand pages. “However, Congress has little information about how the department utilizes the data required of these and other states to grant, deny, renew, or revoke a state waiver,” they wrote. “Additionally, Congress has little insight into how states are impacted by the time and cost associated with applying for and implementing these waiver requirements.”
“Finally, the department has recently altered various requirements for certain states regarding implementation timelines for teacher and principal evaluation systems. At the same time, other states have had their waivers put on ‘high risk’ status, and Washington recently had its waiver revoked, over issues related to teacher and principal evaluation systems. The department has provided no justifications for these seemingly contradictory decisions.”
To read the full letter, click here.
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