Legislation: discounters, Washington gird for new struggles - Issues of the '90s

LEGISLATION

Discounters, Washington

Gird For New Struggles

Each in their own particular way, Congress, the courts and the federal regulatory agencies are creating major new concerns for the nation's discounters during the 1990s.

Indeed, just as the 1980s marked a major transition from the past in terms of industry/government relations, so too are the 1990s shaping up as a decade when legislators and regulators will shift course.

As a result, the discount industry can expect an upsurge in government involvement on several fronts, including the employment arena.

A key case in point: the U.S. Labor Department, where Bush admininstration officials are revitalizing enforcement activities and reshuffling priorities. The Occupational Safety and Health Administration, a toothless lapdog during the Reagan years, now has a sharper bite thanks to feisty Labor Secretary Elizabeth Dole.

In addition to beefing up OSHA workplace inspections, Dole has refocused the agency's attention on industries accounting for the most numerous violations. In terms of sheer numbers of occupational accidents and illnesses, retailing ranks near the top of the list and therefore figures to attract increased attention from federal OSHA agents in the years ahead.

Significantly, Dole is also re-energizing the Department's Wage and Hour Division--another Labor Department agency that has been dormant in recent years. Special emphasis is being placed on policing federal child labor laws in view of the steep, 128 percent rise in violations in recent years. Again, retailing ranks as a prime offender and discounters therfore can count on close scrutiny from the wage-hour division.

There are also signs of renewed life at the Equal Employment Opportunity Commission. Although it's unlikely that EEOC will revert to the overzealous enforcement stance adopted by that agency during the late 1970s, it does appear that employers will have to be mindful of the commission's enforcement arm.

Congress, meanwhile, will almost certainly add to the already heavy regulation of employment practices during the coming decade. One major bill likely to pass this session will require establishments to make potentially costly physical changes in the workplace to accommodate disabled workers and job applicants. Meanwhile, other pending legislation would raise the penalties for OSHA violations and create new ground rules restricting employment discrimination.

Not all of the employment-related developments from Washington during the 1990s will create additional pressures on the discount industry, however. The Supreme Court, for example, appears ready to loosen federal requirements for "affirmative action" minority hiring requirements, and Congress is under the gun to scrap "Immigration Reform" provisions which penalize employers for hiring illegal aliens.

Discount industry payroll costs are also likely to climb during the 1990s as a result of activity in Washington.

The federal minimum wage rate, which went up April 1 for the first time in a decade, will jump again next year by another 45 cents to $4.25. At that point, Congressional supporters of a rising national pay floor will launch another drive to boost the hourly minimum wage into the $5 to $6 range.

Even before that happens, though, both the House and Senate may approve a series of other bills which could have an even heavier impact on retail industry employment costs.

Not the least of these is Sen. Edward Kennedy's (D-Mass.) proposal to mandate health insurance benefits for workers. Under this plan, employers would be required to offer health coverage to all full-time employees as well as part-timers who work 17-1/2 hours per week of more. The cost of the insurance envisioned by Kennedy would average between $1,000 to $2,000 per year per worker, and employers would be obliged to pay at least 80 percent of that cost (100 percent for minimum wage employees).

If mandated health insurance legislation is enacted, look for Congress to begin shifting the cost of other social programs from the government to the private sector. Next in line: mandated child care benefits and parental leave rights, followed by other expensive new initiatives.

Tighten the Noose

At the same time, some influential policymakers in Washington will be moving to tighten the noose around the discount store industry through changes in antitrust enforcement, adjustments in trade regulation and other moves weakening price competition in the marketplace.

The Supreme Court, for instance, appears primed to continue chipping away at the longstanding antitrust law standards that have protected discounters and consumers from resale and consumers conspiracies. Although RPM remains a per se (automatic) violation of federal law, recent rulings by the high court have made it increasingly difficult for victims of resale price fixing to bring a case to trial.

A key question mark at this point is the position of federal antitrust enforcers. Although the Reagan administration's "Chicago Schoolers" have been forced out of power at the Federal Trade Commission and the Justice Department, it's still not clear whether Bush's replacement team is willing to resume vigorous enforcement of the anti-RPM law.

Another major question on the horizon involves the fate of "parallel imports." With the backing of an influential group of multinational manufacturers, key members of Congress are making another run at legislation to shut down the so-called "gray market." In the past, the discount industry has managed to beat back similar proposals, but the assault is certain to continue throughout the 1990s.

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