Saturday, July 4, 2015

Free Raises for Everyone: Obama’s Plan to Help Democrats Stay Overtime in Washington

If after more than six years as President the economy hasn’t increased take-home pay, here’s an idea: Declare that millions of Americans get a raise by government fiat.
Get Used To This
That’s the latest brainstorm of President Obama’s Labor Department, which on Tuesday released its new regulation governing which salaried workers are eligible for overtime pay. The new rule would nearly double the threshold below which workers automatically qualify for time-and-a-half to $50,440 a year from $23,660. The new threshold will also be indexed to some measure that Labor will determine in the future so it rises automatically.
The regulation will cover huge swathes of the economy, from retail to finance, technology, food workers and nonprofits. The White House is crowing that the rule could qualify an additional five million workers, while the liberal Economic Policy Institute estimates the number will be closer to 15 million. The President’s timing is no accident, coming as it does after his rift with Big Labor over trade. Automatic overtime is supposed to heal that political wound.
Yet there is no free lunch, and for many of these workers the raises will be an illusion. In the private economy, unlike the government, there are consequences to ordering a higher price for labor—one of which is less labor. Recall ObamaCare, with its redefinition of the 40-hour work week to 30 hours for the purposes of the employer mandate. This has caused many low-margin businesses to cut worker hours below 30 a week.
Mr. Obama’s new rule may soon demote five millions workers. One immediate business response will be to reduce the hours of some workers so they no longer qualify for overtime even under the new rule. Some businesses will also promote fewer people into the ranks that qualify for the overtime pay.
Read the rest of this WSJ op-ed HERE.

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