Chapter 9: Reagan Administration, 1981-1988

In January 1981 Ronald Reagan took office as President after defeating the incumbent Jimmy Carter the previous November. The Reagan Administration took office at a time of high inflation, slow economic growth and nationwide concern about the United States' ability to maintain its prestige and defend its interests abroad. The Administration's agenda for the nation included a massive military buildup to put the nation on a stronger footing internationally and a multi-faceted Program for Economic Recovery to restore a stable prosperity. The Program included tax cuts, a budget reform plan to control government spending and provide a balanced budget, a monetary policy that would reduce inflation, and a program of "regulatory relief" from government rules and red tape. While a balanced budget proved elusive, there was significant progress toward the other goals: a large buildup of the armed forces was accomplished; tax cuts enacted in 1981 reduced individual income tax rates by 25 percent; the overall rate of growth of spending on non-military programs was reduced; and, the program to relieve the economy of overburdensome regulation achieved great success in limiting the growth of government regulatory programs.

President Reagan considered regulatory relief, in which the Department of Labor was destined to play a major part, one of the cornerstones of the Economic Recovery Program. First he established a government-wide Task Force on Regulatory Relief to provide advice and oversight. The next step was a memorandum in January 1981 from the President to all federal agencies freezing for two months the issuance of most of the "midnight" regulations that had been published by the departing Carter Administration. The President also abolished a White House agency that provided voluntary wage and price guidelines.

The core of the "cornerstone" of regulatory relief, however, was Executive Order 12291. Its purpose was to assure that regulatory actions are based on adequate information and that they are not taken unless the potential benefits to society outweigh the potential costs. The order required agencies to determine the most cost-effective approach for meeting a regulatory goal, taking into account the economic conditions of the industry in question and the national economy. It also required that they coordinate among each other and within themselves the setting of regulations to minimize duplication and inconsistencies. This coordination was achieved by requiring that all proposed regulations be submitted to the Office of Management and Budget for review and approval.

To carry out the Economic Recovery Program and regulatory relief at the Department of Labor, President Reagan selected Raymond J. Donovan to be Secretary of Labor. Donovan was vice president of a construction company in his home state of New Jersey and had been active in Reagan's 1976 and 1980 presidential campaigns. With his company, Donovan had acquired considerable experience in dealing with construction unions and was considered by them a tough but fair negotiator. While lacking experience in government, he believed that working with the highly variable problems of the construction business had given him the ability to successfully tackle the constantly changing situations he expected to face as a member of the Cabinet. Also, as one of 12 children raised in a working class family, Donovan felt he brought to his new post a sensitivity to the needs of working people.

Donovan also brought a short agenda of goals with him to the Department, which he expressed at his Senate confirmation hearings. He was committed to carrying out the laws administered by the Department in an even-handed fashion. He intended to seek the goal of full employment through economic growth, not government programs, but promised to help the unemployed to make the transition to new jobs. He also promised to help those with special employment problems to overcome them and enter the job market on an equal basis.

One of the primary goals, however, was regulatory relief, and OSHA, as one of the main regulatory agencies of the government, showcased the Department's implementation of this. As part of the freeze of Carter Administration "midnight" regulations OSHA froze a number of proposed rules, including revisions on the hearing standard and the generic cancer policy. It also began reevaluating existing standards and those under development to find ways of making them less burdensome. Progress came more easily with the latter, but because of the complexity of rule-making procedures existing rules tended to be impervious to change. Better success was achieved through changes in enforcement policy, which could be made administratively. OSHA adopted a less punitive approach to citations and penalties, without letting up on serious violators. It developed a targeted inspection program that concentrated on workplaces whose records indicated below average safety and health performance and placed greater emphasis on supporting state programs and encouraging voluntary compliance by employers. The agency also made deep cuts in its staff of compliance officers. These cuts and other actions were viewed by unions and workers' advocates as "gutting" the agency.

Other DOL regulatory agencies contributed to regulatory relief. Like its sister safety and health agency, MSHA revised its enforcement program to encourage greater voluntary compliance by mine operators and sought to make its safety and health rules less of a burden to employers without sacrificing protections to workers. The OFCCP began promoting conciliation actions and otherwise assisting employers in the promotion of equal employment opportunity. The Department administered the new Migrant and Seasonal Workers Protection Act which reduced regulatory burdens while protecting more workers. Changes in requirements under the Davis-Bacon Act saved employers hundreds of millions of dollars. Industrial home-work rules were revised to allow home-work in certain garment trades. Deregulation under ERISA reduced paperwork and encouraged formation of new pension plans.

A further contribution by the Department to the Economic Recovery Program was its effort to control its own growth and spending. Discretionary spending was reduced 60 percent by 1985 and departmental employment fell by 21 percent at the same time. CETA alone was cut from $8 billion per year to $3.7 billion, largely through elimination of public service employment jobs. These reductions were not intended to impair the Department's capability to provide training to the unemployed and the underemployed, and they were accompanied by administrative innovations and greater participation by the states.

Replacing CETA in 1983 was the Job Training and Partnership Act. The JTPA established a partnership between business, labor and government at all levels to deliver the maximum amount of training per dollar spent. The law targeted job training and related assistance to economically disadvantaged individuals, dislocated workers, and others who faced significant employment barriers. The ultimate goal was to move trainees into permanent, self-sustaining employment in the private sector. Since the law limited support costs to no more than 25 percent of expenditures, about 75 percent of JTPA funds went directly into training activities. Many responsibilities formerly carried out by the federal government were transferred to state and local governments. Governors were given authority to approve and monitor locally developed plans. The Private Industry Councils, originally established under CETA and composed of businesspersons, labor leaders and others, were revitalized and became the key group in planning job training programs delivered to local areas.

One of the primary missions of the Department during the Reagan Administration was to foster better and less adversarial relationships between labor and management as a way of promoting both economic competitiveness and national harmony. As both a symbolic and substantive action, in 1984 the Department's labor-management relations functions were reorganized into the Bureau of Labor-Management Relations and Cooperative Programs. This bureau served as a focal point for federal efforts to enhance national productivity and competitiveness by encouraging the growth and development of joint labor-management approaches and solutions to economic problems. BLMRCP programs were designed to provide labor and management practitioners throughout the economy with information which would help them create a climate in which cooperative labor relations might flourish. It gathered information on labor-management issues, conducted research on industrial relations issues, and held numerous conferences bringing together leaders from labor and management and the rest of the industrial relations community to discuss issues related to labor-management cooperation and employee involvement programs.

In March 1985 Raymond Donovan resigned to deal with a legal indictment unrelated to his tenure as Secretary. (He was later acquitted in a trial.) Replacing him in April was William E. Brock. Bringing with him a wealth of experience in government, Brock had served in both the U.S. House of Representatives and the Senate, had been National Chairman of the Republican Party from 1977 to 1980, and had served in the Cabinet-level job of U.S. Trade Representative from 1981 until his appointment as Secretary of Labor.

One of the first actions Secretary Brock took after taking the reins of the Department was to appoint a number of task groups to determine ways to improve the Department's efficiency and its delivery of services to the public. The task groups developed a number of specific recommendations on such pressing areas as ERISA enforcement, improving the regulatory process, MSHA inspections, and JTPA oversight. In addition, based on the findings of the task forces the Secretary's Office developed and the Secretary adopted a "Secretary's Management System." This system included: timetables for implementing departmental goals; a procedure for tracking progress, and; a long-range planning schedule. The system was designed to help the Department attain three broad goals: to improve economic opportunities for American workers; to increase the nation's ability to compete successfully in the world economy, and; to improve the effectiveness of the Department's operations. Each agency within the Department drew up supporting objectives to fine tune this system, and to reach out to special groups such as minority groups, youths, the unemployed, disabled veterans, single heads of households, and displaced homemakers.

The management system provided a plan for the immediate future, but the Secretary realized that, especially in the area of employment issues, a much longer-term view and approach was needed. Major technological and economic changes were taking place in the world and more lay ahead. The Department needed to know about job needs in 10 or 15 years so that it could develop policies to promote the kinds of education and training that workers would need. To learn more about the scope of the problem and to provide possible solutions the Department established the "Work Force in the Year 2000" project. One of the main goals of this effort, still ongoing, was to make positive plans for a skilled labor force that would help the U.S. remain competitive in world markets. Literacy is a crucial element in realizing this goal. The Department cooperated with Project Literacy U.S., an effort by the nation's broadcast industry to inform those with literacy problems on how to get help. The Department also implemented legislation requiring state and local sponsors to provide literacy training under JTPA.

The Department did not lose sight of current employment- related concerns, however. It established a task force headed by former Under Secretary Malcolm Lovell to study the problem of plant closings which displace thousands of workers each year. The Administration proposed legislation for a Worker Readjustment Program to provide almost a billion dollars of aid to workers who lose their jobs because of technological or economic change or through foreign competition. The Department took a number of steps to deal with youth unemployment, including proposing a new $800 million employment and training program to serve youths on welfare. It proposed legislation to refocus the USES to give the states more responsibility for financing and administering their local employment offices. This would allow the states to determine exactly what mix of services would be best for serving workers and employers in their areas.

The Department continued its efforts to promote cooperation, rather than confrontation, between labor and management. At the same time, it worked to promote improvement of workers' job satisfaction and to increase worker participation in solving workplace problems. The Department sponsored numerous conferences to further these goals. It also began a long-term inquiry into deterrents to cooperation between labor and management that exist in current labor law and collective bargaining practices.

Under Donovan the workers' safety and health programs of OSHA and MSHA had been redirected to make them less burdensome. The emphasis now shifted toward making them more effective. MSHA undertook an accident reduction program in small coal mines and mounted a special alert on the dangers of methane explosions in coal mines. Accurate data were essential to OSHA's recently instituted targeted inspection program. In order to assure the data would be available, the agency stringently enforced its recordkeeping rules, imposing a record $1.4 million in fines on one employer for recordkeeping violations.

To accelerate the process of setting standards to protect workers from toxic substances, OSHA explored alternatives. One was mediated rule-making, under which all parties interested in a particular substance are brought together and, under the leadership of a professional mediator, seek to develop a consensus on the best way for OSHA to regulate the substance. Another, generic standard-setting, had been used by OSHA once or twice in the past, but now was relied on more heavily to expand the scope of its protections. A prime example was the generic Hazard Communications Standard issued in 1983, requiring employers to identify hazards from all substances used in manufacturing and to inform workers on how to protect themselves. OSHA was hard at work on generic rules for respiratory protection and medical monitoring. OSHA also issued individual standards to meet needs for the provision of field sanitation for farm workers and for stronger protection from asbestos, and it continued work on a number of other regulations.

Important work continued in a number of other areas. To deal with the growing number of terminations of private employer pension plans covered by ERISA, a task force was convened. Out of its recommendations came a legislative proposal which would assure that plans would have enough funds to pay the full benefits to all participants and which would at the same time give employers some flexibility in the use of plan assets. The Department worked with other members of the Domestic Policy Council to develop a new proposed strategy for the government's welfare system. It involved experimentation and innovation in welfare reform at the state and community levels. The Department took special steps to help working mothers and displaced homeworkers in the work force, two groups heavily represented on the welfare roles. It promoted child-care programs, more flexible work schedules and flexible benefit packages, and it started programs to help women seeking to advance up the corporate ladder.

After Secretary Brock departed in October 1987, President Reagan appointed Ann Dore McLaughlin to succeed him. Mrs. McLaughlin had extensive experience in the private sector and had held several posts in the Reagan Administration, including Assistant Secretary of the Treasury and Under Secretary of the Interior. During her tenure as Secretary, McLaughlin stressed economic growth to enhance the welfare of American workers and advocated non-government action to help reconcile the demands of work and family life. She established the Commission on Workforce Quality and Labor Market Efficiency, which called for broad changes in worker education and training to deal with the imbalance between available skills and employers' job needs. The Department also helped shape an amendment to ERISA designed to strengthen private pension system by requiring employers with underfunded plans to increase their contributions and implemented the Economic Dislocation Assistance and Worker Adjustment Program to help displaced workers find new jobs.