by Terrie Ellerbee/associate editor

Heritage Foundation Fellow and Fox News contributor Elaine Chao spoke to Food Marketing Institute (FMI) Midwinter Conference attendees about current economic challenges and upcoming changes to union rules that could profoundly affect grocery store operators.

She discussed actions developing on the National Labor Relations Board (NLRB) and at the U.S. Department of Labor, including the Pension Protection Act and its new requirements, and generally what conference participants need to be watching in 2012.

“Never before in America’s history, and I don’t exaggerate, never before in American history have so many in government who’ve accomplished so little outside of government, presume to inflict so much damage, so much government control on the private sector,” said Chao, who, under President George W. Bush, was the longest-serving (2001-09) Secretary of Labor since World War II.

She said that although unemployment rates have improved slowly, the labor participation rate is only about 64 percent, down from 66.4 percent when she was secretary.

“There are nearly 14 million Americans who are still out of work, and about 42 percent, or 5.6 million, are classified as long-term unemployed. That means that they’ve been unemployed for more than 27 weeks,” said Chao. “In fact, there are so many long-term unemployed that the Bureau of Labor Statistics is actually trying to redefine what is ‘long-term unemployed.’ I’m totally serious.”

She described a “very different posture toward the private sector” in the current executive branch of the federal government.

“There’s been precious little understanding, or seemingly caring, demonstrated in the executive branch for what it takes to build, develop, sustain and grow businesses in the private sector and the impact on federal mandates and actions on payrolls,” Chao said.

She said uncertainty about taxes and mandates brought about by health care and financial reform are having a “dampening” effect and are “huge discouraging factors” to job creation.

She also discussed the disparity between the public and private sectors in terms of the rate of union membership. She described it as “striking” that 6.9 percent of the unionized workforce is in the private sector while 37 percent of public sector workers are union members.

She talked about the “even greater disparity in benefits, especially pensions,” remarking that public sector pensions “remain gold-plated and constitute a $1 trillion budget liability for state and local governments.”

Chao then discussed NLRB proposals that would constitute “the most sweeping changes to the federal rules governing union organizing elections since 1947 for the sole purpose of making it much easier for labor organizations to unionize new workplaces.”

These changes would, for one thing, shorten the notice given to employers of an impending election. She referred to it as the “snap election rule,” and said it is slated to take effect via regulation this April. It would handicap employers because unionization efforts often begin covertly long before management is notified, she said.

“In 2010, for example, unions won 66 percent of the 1,571 workplace unionization elections conducted by the National Labor Relations Board,” Chao said. “And the median time from a union petition to conduct an election to the election itself is just 38 days. Ninety-five percent are held within 56 days. The NLRB aims to cut that time down by at least half, to basically 10 to 21 days.”

She also warned of “mini unions,” or what the NLRB describes as “micro-bargaining units.” Essentially, it would mean that not all hourly workers would belong to one collective bargaining unit. Organizers could “cherry pick only those workers who want to join the union into a collective bargaining unit,” Chao explained.

The result would be mini unions for bakery employees or for baggers or for checkers. Management would have to bargain with multiple unions of a few workers in each unit, she said.

She said the funding balance has shifted away from pursuing union fraud cases to favor agencies that enforce rules on employers. In addition, the labor department and executive branch have done little in the way of guiding employers as far as wage and hour regulations.

“So be aware that this is a new norm. I’m sure you’re very much aware of it,” Chao said. “Employers will be doing much more guesswork of whether they’re in the compliance zone, and you can bet that the enforcers will be much more zealous if employers guess wrong.”

The Pension Protection Act, passed nearly six years ago, has seen many changes. This year, new disclosure rules take effect.

“The people that you hire to run your plans, the mutual fund companies, insurance companies, banks, financial advisors and so forth—will disclose more information to you about their fees, including what others are paying them in connection with your business,” Chao said.

Separately, employers will be required to provide new summary information to participants in their 401(k)-type plans.

These rules are intended to control costs and to help participants make better financial decisions. But, she said new rules always present new compliance challenges, and she expects confusion to add to uncertainty.

Increased discrimination audits also should be expected, she said.

Chao, a self-admitted History Channel geek who is “transfixed” by episodes of “Modern Marvels” about the “mechanics of potato chip manufacturing, the science of supermarket design and the psychology of background music,” said attendees were wise to work with the FMI.

“FMI is fighting on your behalf on these very important issues to protect your interests, and you need to work together,” she said. Then she offered further suggestions.

“You need to vote in national elections. You need to contribute,” Chao said. “You need to write letters. And let me tell you, those letters, faxes, scans, emails—they count. Lawmakers actually see them. They actually read them. You need to use this organization and use all the powers that you have as citizens of our country to amplify your voice in this very competitive marketplace—battlefield, in fact—of ideas.”

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