President Biden recently signed a sweeping new executive order granting federal agencies more power to meddle in private marketplace and businesses.
While the White House is pitched this 72-initiative order as a way “to promote competition in the American economy,” it seems more like a grab-bag of random products and industries that are targeted for micromanagement.
There are a few areas of bipartisan agreement like occupational licensing, but the Biden administration undermines that with other policies that will kill small businesses, reduce opportunities for workers, raise prices, reduce supply and choices, and stifle innovation.
What’s in this whale of an order?
Broadly, the EO affects healthcare, internet services, labor, agriculture, technology, transportation and shipping, and banking and finance. The Wall Street Journal provides a good summary of all of the regulatory reforms Biden proposed–and there are many! Some directives are very specific such as directing the Department of Transportation (DOT) to create rules requiring that carriers refund baggage fees when flights are delayed. The more concerning ones are the broad sweeping directives that encourage or empower agencies like the Federal Trade Commission (FTC) and the Department of Justice (DOJ) to ratchet up scrutiny of mergers or to impose new antitrust regulations.
Biden is sending a signal that he is fighting big business with big government.
Here are a few areas in this EO that stood out to us:
Biden encourages the FTC to ban or limit non-compete agreements. This is a big deal.
Non-compete agreements are contracts that new employees sign prohibiting them for working for a competing company for a certain time period after they leave their job. Companies often have legitimate reasons for requiring non-competes as a condition of employment. For example, they don’t want employees to carry trade secrets to their biggest competitors.
Some states have outlawed non-compete agreements entirely or for lower-wage workers, but giving the federal government the authority to ban them nationally will step on the toes of states.
Michael Wexler, an attorney with Seyfarth in Chicago, explained to SHRM why non-compete agreements still matter:
However, businesses and most states—even the most employee-friendly states—still recognize the need for restrictive covenants supporting the investment of time and resources by businesses to develop trade secrets and customer relationships which are vital to maintaining innovation, developing new products and actually protecting existing employees.
Remove Licensing Barriers to Work
The EO encourages the FTC to ban unnecessary occupational licensing restrictions that impede economic mobility. Call, this a holdover from the preceding Republican and Democratic presidencies, but this is actually a positive effort.
Occupational licenses are state-issued certifications for workers to be employed in a particular occupation. They require education, training, and fees that can be costly, time-consuming and totally unrelated to the actual job. Instead of preparing a worker with the skills and knowledge to do the job, it’s just a barrier making it difficult for new workers to enter. They hit military spouses, low-income earners, and those with criminal records especially. Read more about how excessive occupational licenses hold workers back through our award-winning Chasing Work campaign.
Here again, the proof is in the pudding on what any federal agency can actually do. Licenses are administered by states. There may be interstate compacts and multistate agreements, but it’s unclear exactly how the FTC could actually ban occupational licenses. States should absolutely eliminate or reform their occupational licenses and there are different ways to do it as we described in our recent Policy Focus: Solutions To Occupational Licensing Challenges.
Pushing the anti-worker, anti-woman PRO Act
President Biden has already said that he intends to be the most union-friendly president in history. He is making good on that promise by throwing his weight behind the Protecting the Right to Organize Act (PRO Act), which boosts private-sector union membership by repealing right-to-work laws across the country (that make it illegal to force a non-union worker to pay union dues), forcing employers to hand over the treasure trove of personal information about non-union workers to unions potentially exposing them to harassment, and effectively banning independent contract work.
Over 50 million Americans are freelancers and almost half of them are women. Women want flexibility and to work on their schedules. The PRO Act would take that flexibility away and kill critical work opportunities for workers nationwide. That’s why independent contractors across the country are speaking out.
So, President Biden’s labor regulations really are pro-organized labor, not pro-worker. Forcing Americans into unions however he can undermine their choices and freedoms to carve the kind of life they want.
Net neutrality is baaaaack
In addition to a number of Big Tech antitrust efforts, the EO wants to bring back net neutrality. Remember, President Trump rescinded President Obama’s net neutrality rule that gave the Federal Communications Commissions (FCC) sweeping new authority to regulate broadband internet companies. A big fight ensued. Since net neutrality has been gone the internet has continued to flourish uninterrupted. Technology even kept society functioning during the pandemic.
We and many other groups opposed net neutrality. We would hate to see it come back again, but that is how executive orders turn real policy issues into tennis balls hit back and forth by administratons until Congress ends the match with legislation.
This executive order is a road map rather than a blueprint. It lays out the places to target, but the agencies will craft the actual regulations. Undoubtedly, many of these proposals will be contested by industry groups, businesses, and perhaps even states. However, this EO should not be dismissed as it empowers regulators to make rules that will have lasting impacts.