Just this week, President-elect Donald Trump made the announcement that fast-food executive, Andy Puzder, was going to be his pick for secretary of labor. As labor secretary, Mr. Puzder would oversee the federal apparatus that investigates violations of minimum wage, overtime and worker safety laws and regulations, all of which have an impact on retirement. The DOL also has recently made news regarding the passing of The Fiduciary Rule back in spring 2016, which put regulations on wealth managers to make sure that they make the best financial decisions for their clients retirement accounts (the American public), and not their own interests.
So what are Andy Puzder’s views on both minimum wage and the fiduciary retirement rule?
On policy questions, he has argued that the Obama administration’s recent rule expanding eligibility for overtime pay diminishes opportunities for workers, and that significant minimum wage increases would hurt small businesses and lead to job losses.
He has criticized paid sick leave policies of the sort recently enacted for federal contractors, and strongly supports repealing the Affordable Care Act, which he says has created a “government-mandated restaurant recession” because rising premiums have left people with less money to spend dining out.
Speaking to Business Insider this year, Mr. Puzder said that increased automation could be a welcome development because machines were “always polite, they always upsell, they never take a vacation, they never show up late, there’s never a slip-and-fall or an age, sex or race discrimination case.”
Puzder has also expressed disinterest in raising the minimum wage, he believes efforts to raise the floor to $15 an hour is destructive. “Most low-skilled jobs aren’t worth that much money,” he’s argued, “and it could spur companies to reduce staff, especially in industries with low profit margins such as restaurants.”
“Instead of creating a living wage, the fight for dramatic minimum-wage increases could leave millions with no wage at all,” Puzder wrote in a column in The Wall Street Journal in 2015.
In his own industry, Puzder said a higher minimum wage is helping to push fast-food restaurants to more quickly adopt touch-screens and other technology to replace staff.
To be clear, although Puzder’s views on the fiduciary rule are not on record, he has generally advocated for the withdrawal of the regulations issued by the Obama DOL secretary, Tom Perez, so it is likely that the rule is on his “hit list”.
The Department of Labor’s definition of a fiduciary demands that advisors act in the best interests of their clients, and to put their clients’ interests above their own. It leaves no room for advisors to conceal any potential conflict of interest, and states that all fees and commissions must be clearly disclosed in dollar form to clients. The rule — six years in the making — is scheduled to take effect on April 10th 2017.
Eyes will be on retirement advisors now, especially those who promised they would do away with commissions on retirement business, and trumpeted the move as a demonstration of their commitment to clients’ best interests. If these advisors decide to reverse course now that there’s a new sheriff in town, clients may have uncomfortable questions about what exactly is in their best interests and whether their advisor is indeed serving them.