STEVE INSKEEP, HOST:
A Boston University economist will become the nation's Wage and Hour administrator when he's sworn in today. David Weil will enforce laws, like the minimum wage and the 40-hour week. Even though Weil is a business professor, some business interests are expressing concern about his appointment.
Here's Chip Mitchell of member station WBEZ.
CHIP MITCHELL, BYLINE: David Weil has spent his whole career studying workplace issues. But companies ranging from fast-food franchisors to home builders are worried. They like voluntary compliance with wage-and-hour laws. They don't want Weil to steer the Department of Labor toward more punitive enforcement.
And to see what's got them really worried, you have to look at what he's been studying the last decade or so.
DAVID WEIL: My wife is a geologist and she has taught me a lot about geology.
MITCHELL: Like fissures in rock formations...
WEIL: That typically start in one place and they deepen over time. They also can spread.
MITCHELL: Weil's not talking about rock fissuring. He's talking about big companies keeping workers at arm's length. So, let's say, a consumer electronics company designs its smartphones and builds its brand. It wants less to do with the nitty-gritty, like assembling them, running the warehouses, or even retailing them. For that, it outsources. It subcontracts. It farms out work to third-party managers who themselves, may turn to temp agencies. It franchises.
WEIL: And that really has become true in the service sectors, the manufacturing sectors, really, across the economy.
MITCHELL: Weil says the fissuring he's talking about can be good for investors and consumers.
WEIL: The problems arise, in many cases, for the workforce.
MITCHELL: With more businesses taking a cut, Weil says the fissuring tends to drag down wages and working conditions. Some other economists disagree with those conclusions. Francine LaFontaine's a franchising expert at the University of Michigan. She says low wages have more to do with low skills.
FRANCINE LAFONTAINE: It's more the industry that determines the working conditions of the employees than it is the way in which this is organized.
MITCHELL: David Weil, for his part, points to a study he co-authored about the top 20 fast-food brands, like Burger King, Taco Bell and Arby's. It found that restaurants run by franchisees are more likely to owe back pay for violating wage-and-hour laws than restaurants the big corporations run directly.
David Weil has not laid out many specifics on how he plans to enforce those laws. But it looks like he wants to hold the lead companies responsible for compliance - not just the contractors and franchisees.
(SOUNDBITE OF CHANTING)
MITCHELL: That might go over well with these low-wage workers here in Chicago. They've been protesting outside fast-food restaurants. But not likely with the companies that are doing the outsourcing or the franchising.
So, for example, a company like 7-Eleven says it should not have to be liable for how much its 6,000 franchises decide to pay their cashiers - the folks ringing up the Slurpees and Big Gulps.
Jay Mitchell is a franchise sales manager for the Dallas-based company. He considers 7-Eleven franchisees to be independent operators.
JAY MITCHELL: While we will certainly provide guidance, it's completely up to them on how they pay their employees.
MITCHELL: And Steve Caldeira of the International Franchise Association says the Wage and Hour Division under David Weil should be cautious about clamping down on companies that create so many jobs.
STEVE CALDEIRA: Franchising has been growing exponentially and that would not be happening if people did not see the great value in the business model. So to hear his views, especially now that he will wield enormous power and oversight over the private sector, is downright frightening to the franchise industry and the overall business community.
MITCHELL: Weil says the last thing he wants is to throw a wrench into job creation.
WEIL: I am a business school professor, so I have nothing against business organizations that emerge because of new technologies that allow them to be more nimble and more flexible and focus on areas where they're more productive.
MITCHELL: But Weil insists that companies that can enforce standards down to every last tomato or hamburger wrapper should have no problem making sure their franchisees and contractors don't break basic workplace laws.
For NPR News, I'm Chip Mitchell in Chicago. Transcript provided by NPR, Copyright NPR.
