It was suddenly announced this week that President Obama would unilaterally change the definition of overtime pay, by raising the weekly pay threshold necessary to classify workers as “salaried” and thus exempt from mandatory overtime. The number of people who must be paid overtime will increase by an estimated 10 million, delivering a staggering blow to smaller business operations, especially coupled with ObamaCare costs and a minimum-wage hike.
It’s a calculated middle-class pander, with other people expected to pick up the tab. It will, of course, backfire hideously, as overtime opportunities grow more scarce for all employees, increased labor costs are passed along to consumers, and it dawns on business managers that they can minimize the mandatory overtime risk by cutting hourly wages. But it’ll sound real good to voters. President Obama wants to give you a raise!
As The Hill reports, business groups are fuming over the way they got “blindsided” by the announcement “This came as a shot out of the blue,” said David French, senior VP of government relations for the National Retail Federation. “Just on the surface, this looks like an enormous new administrative burden.”
“Nobody saw this coming,” added Tammy McCutchen, former administrator of the Labor Department’s Wage and Hour Division during the previous administration. ”This proposal has never been disclosed.”
Marc Freedman, executive director of labor law policy at the U.S. Chamber of Commerce, complained that “changing the rules for overtime eligibility will, just like increasing the minimum wage, make employees more expensive and will force employers to look for ways to cover these increased costs.”
Of course, the always-wrong-about-everything White House (remember their hilarious predictions about all the job growth that would flow from their trillion-dollar “stimulus” plan?) says nonsense, this’ll actually create jobs, because “there would likely be an increase in employment as a result of the change, with companies deciding to hire more employees rather than paying existing workers at a higher rate.”
Not with ObamaCare, they won’t. There is still a bright line of doom that makes it sheer economic madness to hire more employees. And the people who have been working these overtime hours tend to have advanced skills and certifications that can’t be easily replaced with new hires. Obamanomics is bizarrely insistent on the belief that making labor more expensive prompts businesses to purchase more of it, no matter how often that belief crumbles upon contact with reality.
Would anyone like to take a guess at the administrative cost that will be dumped upon businesses for complying with the new overtime rules? There’s going to be quite a bit more to it than merely raising the wage threshold for overtime exemption. Various other rules for eligibility will be changed as well. Has no one in this White House ever made a payroll?
Republicans in Congress clung to their quaint belief that the powers of the executive branch are somehow limited:
“It’s just a continuation of the president acting in an authoritarian, unconstitutional way and doing everything he can get away with, because [Senate Majority Leader Harry] Reid isn’t going to entertain any legislation to override him,” said Sen. Chuck Grassley (R-Iowa).
Grassley said he doesn’t believe Obama has authority to overhaul the overtime system and said he expected the regulations to wind up in court.
Others, including Rep. David Schweikert (R-Ariz.), questioned whether the move was motivated by election-year politics.
“You wonder how much of this is going on to try to find some enthusiasm … this cycle,” Schweikert said.
What possible non-political reason could there be for ambushing the business community with these new regulations? Clearly the White House didn’t want to give anyone a chance to formulate counter-arguments, or maybe ponder whether the President of the United States ought to be rewriting labor contracts by fiat.
Naturally, people who currently don’t get paid for overtime work would like to receive that benefit. Nobody ever went wrong by overestimating the political appeal of “free” money. But I suspect many of the affected workers are placed highly enough within their organizations to understand the disruption these new rules will cause, especially if they work for a small company. The current threshold for overtime is well above even the proposed higher $10.10 minimum wage, limiting the number of people who would be directly affected. Maybe the point of this little distraction was to score a few cheap political points by forcing business leaders and Republicans to defend the idea of not paying overtime.