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  • Regulation: You Can't Have Jobs and Eat Them, Too

    As the debate swirls around regulations and jobs, it is refreshing to hear a businessman weigh in on the issue. This week, the CEO of Darden Restaurants, Clarence Otis, Jr., wrote that the excessive burden of new regulation makes it “increasingly difficult for businesses to see why and where creating new jobs makes sense.”

    Otis heads the parent company of Olive Garden, Red Lobster, and LongHorn Steakhouse, so his experience creating jobs in the private sector is extensive. Unfortunately for Darden Restaurants and other businesses around the country, Otis notes that mounting regulations at the federal, state, and local levels are a serious impediment to business growth and investment. To make matters worse, industries where “low profit margins are a fact of life,” like the restaurant industry, have much greater difficulty adapting to a “plate piled high” with regulations.

    Otis strikes an equally relevant chord when he highlights the dim prospect for job creation in today’s regulatory environment:

    …we need policymakers to understand the snowball effect of too many regulations. Their collective effect is to threaten job creation and prevent us in the restaurant industry from doing our part to put our economy back on its feet.

    As Heritage experts James Gattuso and James Sherk point out, “unemployment… has remained high, because job creation has been extremely low.” While certain lawmakers on Capitol Hill claim that regulations have no negative impact on jobs, the facts—and employers—say otherwise:

    When employers are asked about their concerns, they increasingly cite regulation. In a survey of small businessmen conducted last month by Gallup, for example, government regulation topped their list of concerns, cited by 22 percent of respondents. Consumer confidence was a distant second at 15 percent, followed by “lack of consumer demand” at 12 percent.

    To strengthen the economy and reduce unemployment, businessmen like Clarence Otis, Jr. need to be freed from Washington’s regulatory overreach. The task of creating jobs is best left to businesses and entrepreneurs, not the government.

    Johnny Russell is currently a member of the Young Leaders Program at The Heritage Foundation. For more information on interning at Heritage, please visit: http://www.heritage.org/about/departments/ylp.cfm

    Posted in Economics [slideshow_deploy]

    18 Responses to Regulation: You Can't Have Jobs and Eat Them, Too

    1. doug russell says:

      I could not agree more. Companies are not hiring due to both increasing regulation and uncertainty about likely new regulation. Keep up the great work Heritage. Doug Russell

    2. Increased regulations also mean employers are not giving raises or paying bonuses so consumers have less discretionary money to spend. This means they eat out less which also has a negative impact on restaurants.

    3. Jeff, Illinois says:

      Which regulations are a problem and what were they intended to curb? I don't understand the broad brush accusation about essentially any and all regulations. Someone put them in place to help either consumers, the populace as a whole or for level playing in industry. Our country I thought wants to be responsible and provide the best practices in the world. Isn't that american exceptionalism? If the rest of world wants to do things in an irresponsible way it seems the only alternative is to place tariffs on their products entering the US, or simply not accept them. Let's lead the world in workmanship and industry practice!!

      • tim says:

        Sorry Jeff, but you need to do some research. Increasingly regulations are less and less about workmanship and more and more about money for special interests or government jobs.

      • Sick of socialism says:

        You hit it right on the nose with at least one line. Level the playing field. Yes some regulation is acceptable and needed. But the one not needed is LEVELING THE PLAYING FIELD. That is complete and utter socialism. The playing field gets leveled by free market pratices. If you put out a good product at a reasonable price you should be able to succeed not be Penalized.

      • yea.. says:

        Most regulations often are the result of lobbying or cronyism used as a hammer against the competition – not as a quality control measure as perhaps they were 100 years ago.

      • Loralei says:

        Please allow me to give you an example. This spring, the US Department of Education decided that career colleges that offered certificate/diploma programs could not use the same measurement of a "credit" that is used by degree-granting colleges, unless the school offered a degree in which all of the credits would transfer. So I spent the summer converting to the new credit definition, then revising every syllabus, the catalog, and just about every one of our marketing materials to reflect the change. This means that 15 hours of lecture in my paramedic program is only worth a half credit compared to the same lecture taught at a university for a full credit. All of us use the same, national curriculum. Not only does it make my program look weaker in comparison when it is in fact more rigorous, but all the time spent on revisions meant that I could not complete development on a new education program (which would have meant new admissions staff and instructors.) Who was suddenly protected by this regulation? Many regulations are actually done by established businesses or industries to reduce competition from new sources (this is why you read about hair braiders being forced to attend beauty college.) I would never be able to start my school now based on new state & federal regulations, and we only started in 2004.

      • David says:

        How quickly people forget history! In 1988, the Council of Economic Advisors proclaimed that the Smoot Hawley Tariff Act was "probably one of the most damaging pieces of legislation ever signed in the United States."

        By creating tariffs we essentially subsidize business's and don't let resources flow efficiently to where they need to. It decreases the standard of living for everyone by forcing Americans to pay higher prices for items that they previously got at a cheaper price, why would we do that?

    4. Bobbie says:

      Where government isn't needed they shouldn't be. Government's abuse of authority is regulating common sense business owners live by without mention. let the businesses rightfully run within the owners control where accountabilities are held and if any consequences are rightfully their own. Putting outsider government of no reason accountable only increases taxes with costly time and interference to the business.

      My young one tried to run a business but it cost more hassle and money through government controls (obstructions) then the ability to make a living.

      Owners also have to deal with union demands. Why the heck own a business if it's going to be taken over by government regulations and union irrationalities? Please draw the line to get rid of the government burdens where the government has no Constitutional warrant and unions that exist by coercion…

    5. steve h says:

      Keep in mind, regulations can actually create jobs. Environmental jobs have shot up due to a whole new industry of trying to keep the air and water and land safer. Sounds like Otis wants to go back to times when you can make shildren work for low wages, with no health care or vacation days or sick leave. No benefits, nothing to help the average american. Who cares what the CEO says, he obviously only cares about his bottom line, which is makign money for him and his stockholder – not what's best for the country as a whole.

      You want to get rid of regulation in the banking industry and let those clowns go wild again – seems as if you want the economy to face brink of collapse again because of shady dealings.

      • Bobbie says:

        government imposed burdensome regulations that create jobs reduces revenue of the business, steve. reducing revenue from the business effects the business and employees and the economy! and if banks weren't following GOVERNMENT regulations, the responsibility of government's consumer protection agency would have it corrected before it became an unconstitutional concern to the federal government…

        obama just pins it on the banks because they're an easy target and he can, forgetting that government neglect of their claimed duty in "oversight" and shady dealings within government control is the cause of all domestic problems filtering throughout the world.

    6. rose says:

      Remember him from CNBC—-he was an Obamabot.

    7. Africanus says:

      "You want to get rid of regulation in the banking industry and let those clowns go wild again – seems as if you want the economy to face brink of collapse again because of shady dealings. "

      Lol, you keep beating that straw man to death. With all the regulations the sub prime market still melted down thanks to government interference in the housing industry. Health care, vacation days or sick leave are not a requirement for employment. Those bonuses are to be negotiated between employer and employee due to the fact the employer wishes to retain workers that improve the efficiency of his business.
      Regulations in general are used to shakedown lobby money, not protect the public. As for all those Green Enviromental jobs, where exactly are they and why isn't that industry dragging Spain out of it's financial crisis??? Ever heard of Solyndra???

    8. crazyrightwing says:

      Steve is spouting the liberal line that we would ever go back to child labor, no health care, etc. etc. The truth is, in a true capitalist system, to get the best employees, and having tons of jobs, employers pay top wages and give the most benefits to get the best people. I always pay my employees as much as I can and they give me a great responsible return.

      Educate yourself!!! CEO's that care about the bottom line care about jobs!!!

    9. NHNancy says:

      Jeff -Steve . Government regulations are no longer there to help the populace. That's what they want you to believe. Regulations are the grease on the politicians hand; a politician pushing industry regulation now-a-days is a pimp for a failed idea. Why did Solyndra need energy regulations? Cause their ideas in practice sucked but they paid a politician a ton of money to make it seem otherwise. When reality hit- Who made out? Politician and sleazy business. Who lost out? Tax payers. Never fails.
      If we go back to the times when children worked for low wages then you win. I am betting our kids are far too smart nowadays. Their parents though….whole other can of liberal worms.

    10. silvario says:

      "Environmental jobs have shot up due to a whole new industry of trying to keep the air and water and land safer. Sounds like Otis wants to go back to times when you can make shildren (sic) work for low wages, with no health care or vacation days or sick leave. No benefits, nothing to help the average american" Kimberly Clark just anounced that it is permanently laying off 500 Union employes in Everett, Washington due to new stringent environmental regulations recently signed into law by the democratic governor. They used to have high wages, health care, vacation,sick leave benefits, the company has spent millions on water treatment and sold power back to the city of Everett, so electricity rates will go up too. Jobs will be permanently sent overseas. Way to go democrats!

    11. crazyrightwing says:

      Steve is spouting the liberal line that we would ever go back to child labor, no health care, etc. etc. The truth is, in a true capitalist system, to get the best employees, and having tons of jobs, employers pay top wages and give the most benefits to get the best people. I always pay my employees as much as I can and they give me a great responsible return.

    12. dunce says:

      Lately more CEOs have been speaking up in print. I hope that they are letting their employees know that their jobs could be in jeopardy if obama gets re-elected because it is his policies that are hurting our economy and we could be facing another collapse under him.

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