The Obama administration has now changed the rules on who is eligible for overtime pay.
Anyone who earns $47,476 a year or below is now entitled to paid time and a half for each hour worked after the forty hour workweek. The former cutoff was $23,600. The new rules were announced Tuesday by Vice President Joe Biden and Labor Secretary Thomas Perez.
Sounds great for the American workers, no? Like many initiatives supposedly on behalf of the worker, this is likely to backfire:
“This regulation hurts the very people it alleges to help,” [Speaker Paul Ryan] said. “Who is hurt most? Students, nonprofit employees, and people starting a new career. By mandating overtime pay at a much higher salary threshold, many small businesses and nonprofits will be unable to afford skilled workers and be forced to eliminate salaried positions, complete with benefits, altogether.”
Ryan accused President Obama of focusing on his political legacy to the detriment of the country.
"President Obama is rushing through regulations — like the overtime rule — that will cause people to lose their livelihoods. We are committed to fighting this rule and the many others that would be an absolute disaster for our economy."
House Majority Leader Kevin McCarthy (R-Calif.) called the rule “misguided meddling in the economy."
"The rule will force employers to waste time and resources logging hours,” he said in a statement. “It will also require workers to fit their lives into a mold that bureaucrats impose, not what works best for them."
Interesting that Ryan uses the word "alleges"–yes, the administration is trying to sell these rules as a benefit to workers, but it is really designed, according to an editorial in the Wall Street Journal this morning, to benefit . . . surprise, surprise . . . Democrats running for office:
Incomes have barely budged during the Obama Presidency, but an election is coming so the White House has found a way to conjure raises another way: simply declare them, via the week’s rule mandating that employers pay overtime to millions of more workers. As usual, this mandate will hurt more workers than it helps.
The practical outcomes will not help as many workers as the administration would like you to believe:
Some employers will bump up the salaries of workers who earn just below the threshold to avoid the mandate. But in return these workers may receive fewer benefits and bonuses, only 10% of which count toward the threshold.
A National Retail Federation study estimates that the rule will cause employers to shift about a third of salaried retail and restaurant workers to hourly status. One in 10 salaried employees—including many managers—will see their hours reduced. Some employers will hire more temps and part-time workers. And Democrats complain about the uncertainty of the “gig” economy?
And the administration knows this:
Vice President Joe Biden all but conceded this point this week by suggesting that workers would benefit if their hours are scaled back since they would have more time with family.
So this is not so much about overtime for the American worker as time in office for Democratic politicians.