The PJ Tatler

Too Much Regulation is Killing Job Creation, Says...Obama Donor and Friend

Clarence Otis is CEO of Darden Restaurants, parent of Red Lobster, the Olive Garden and Longhorn Steakhouse. He’s a member of the Federal Reserve Bank in Atlanta, a donor to Democrats and a friend of the Obamas. So this editorial might leave a mark.

Policymakers working in silos at every level are pushing through regulations that on their face seem to address admirable goals — that are each directed at outcomes that seem desirable.

The cumulative effect of these regulations, however, is significant damage to the hard-working Americans who are the intended beneficiaries.

The employer mandate contained in the new health care reform law, for example, forces us to change the way we have offered health care coverage to our full- and part-time workers and, together with all the other looming regulations, causes us to rethink the way we schedule the hourly work force that is at the heart of how we deliver our product to customers.

Some suggest we accommodate the costs of new regulations in one of two ways: Accept lower profits, or charge customers more. Neither is a realistic alternative for many businesses, and certainly not for those in our industry. Like most in retail, low profit margins are a fact of life for us for good reason — low margins are consistent with charging prices our customers can afford.

The difficult reality is that neither our shareholders nor our customers — who are of course, the very working people policymakers champion — can afford the cost of the unbridled increase in regulation we’re experiencing.

There’s more.

Policymakers and pundits bemoan the economic news of the day and chastise the business community for not “investing” or creating jobs to help lead us out of the recession. But through the lens of a business owner, a regulatory “perfect storm” is forming that causes even the most well-intentioned business leaders to pause.

Some industries — including the restaurant industry — continue to grow and add jobs, but what we see on the horizon puts that at risk. In the year ahead, the company I lead expects to open roughly 80 new locations, each with about 100 jobs. The entire industry projects adding 1.3 million jobs over the next decade, according to the National Restaurant Association.

My plea to policymakers is simple: Before you impose another well-meaning mandate, consider the burden we already bear and engage us in conversation. Regulations are not inherently detrimental to growth. Responsible companies such as ours, that have been supportive of the president and elected officials of both parties across the country, won’t say “no” to everything and, indeed, what you might find is that we can help craft solutions that truly are better for everyone.

It’s worth taking a look at the timing of this editorial. Otis met with Obama face-to-face back in July. The meeting reportedly concerned job creation. It may be that Otis delivered a similar message in this editorial, to the president at that meeting. But did the president listen? In September, Michelle Obama “endorsed” menu items at Red Lobster and Olive Garden, both Darden restaurants. The Obamas may have intended that endorsement to signal friendliness, but to a business leader such a smile comes with sharp teeth: Behind the endorsement remains a push to keep on increasing the regulating. And Mr. Otis is now speaking out.

Tonight might be a good night for surf ‘n turf.