The Biden administration has issued a flurry of new rules over the past week aimed at increasing worker and consumer power as the president seeks to combat gloom about the economy ahead of what is expected to be a tight election.
The Federal Trade Commission (FTC) voted last Tuesday to ban noncompete agreements that block employees from working for competitors or starting a competing business after they leave a job.
The same day, the Department of Labor finalized a rule requiring salaried workers making less than $59,000 be compensated for overtime work, as well as a separate rule cracking down on retirement savings advice.
The Department of Transportation also announced two rules Wednesday mandating that airlines issue automatic refunds to passengers for canceled or significantly delayed flights and share baggage, change or cancellation fees upfront.
“All of these rules really have at their core the idea that people deserve a fair and functioning economy that works for them,” said Rakeen Mabud, chief economist and managing director of policy and research at the Groundwork Collaborative, a left-leaning think tank and advocacy group.
Mabud argued that the rules on noncompete agreements and overtime compensation give workers “so much more power in their decision making about how they engage in the labor market.”
“I absolutely think these rules are going to have an enormous impact on the way people feel about the economy and on the way that they feel about their lives and their well-being,” she said.
The flurry of rulemaking comes six months before the election, in which Biden is struggling to counter persistently negative views about the economy during his time in office.
Biden trails Trump in the polls by less than 1 percentage point, according to The Hill/Decision Desk HQ’s polling average.
However, he has more ground to make up on the economy, with 41 percent of respondents in a recent Reuters/Ipsos poll saying the former president has a better approach to the economy, compared to 34 percent who said the same of the sitting president.
Americans’ confidence in the economy — which had improved slightly in recent months despite remaining largely negative — dipped 9 points last month, according to a recent Gallup poll.
The dip in consumer confidence comes as inflation has ticked up slightly in recent months, increasing the likelihood that the Federal Reserve will maintain two-decade high interest rates for longer.
The central bank raised rates throughout much of 2022 and 2023 in an effort to tamp down on inflation, which peaked at a 40-year high of 9.1 percent in June 2022. Inflation has since eased significantly, falling to 3.1 percent as of January.
However, consumer prices rose at a quicker rate in February and March, increasing to 3.2 percent and 3.5 percent, respectively.
Amid the modest uptick in inflation, traders, who were once widely expecting the Fed’s first rate cut to come in March, are now increasingly looking to November.
Biden acknowledged the likelihood that the latest inflation readings could delay potential rate cuts last month.
“This may delay it a month or so,” Biden said in early April. “I’m not sure of that. We don’t know what the Fed is going to do for certain.”
On Wednesday, the central bank once again opted to hold rates steady at a range of 5.25 percent to 5.5 percent, where they have been since last July, citing a “lack of further progress” on bringing inflation down to its target of 2 percent.
Douglas Holtz-Eakin, president of the right-leaning think tank American Action Forum, was more skeptical about the impact of the Biden administration’s latest policies on voter opinion.
“Things like overtime pay and stuff are getting lost in the noise,” Holtz-Eakin said. “There are just not enough people who are focused on that issue for it to matter that much.”
He primarily attributed the rapid pace of the administration’s recent rulemaking to the lookback provision of the Congressional Review Act (CRA).
The CRA, which allows Congress to overturn certain agency actions, contains a provision through which a new session of Congress can review any rules adopted in the final 60 legislative days of the previous session.
“Rough calculations are that anything done after May will be subjected to that lookback provision that says in the final 60 legislative days, any rule that’s finalized, if it’s overturned by Congress, can’t be replaced,” Holtz-Eakin told The Hill.
“You could imagine a situation where if Republicans controlled the House, Senate and the presidency, they look back, take anything in the final 60 days, overturn it, it can be signed by the president, and those rules will be gone,” he said, adding, “So that I think explains the pace this spring. They’re pedaling like mad to beat the end of May.”
Rules adopted prior to the projected 60-day mark are likely to be more polarizing, appealing to Biden’s base while alienating those on the other side, said Lori Yue, an associate professor in the Management Division at Columbia Business School.
For instance, the FTC’s vote on noncompete agreements fell along partisan lines, with the three Democratic commissioners supporting the rule and the two Republican commissioners opposing it, Yue noted.
The response to the rule has been similarly split among experts and advocates. While some, like Mabud, have praised the move, several business groups led by the U.S. Chamber of Commerce sued the FTC, accusing the agency of regulatory overreach and arguing that noncompete agreements are necessary to protect intellectual property.
While Yue noted the ban on noncompete agreements has “intensified the conflict with the business community,” she also emphasized the substantial group that stands to benefit from the FTC’s decision.
The agency estimates about 18 percent of the U.S. workforce — or about 30 million people — are currently covered by noncompete agreements.
“That’s going to be powerful for Biden to win over this constituency base,” Yue said.
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