On June 29 President Obama published a blog on Huffington Post announcing his “plan to extend overtime protections to nearly 5 million workers in 2016, covering all salaried workers making up to about $50,400 next year.”
This legislation would require businesses to pay overtime (usually time and a half) to their employees making up to $50,400 a year for working beyond 40 hours a week. Current laws require employers to pay overtime to those making up to $23,660 a year.
President Obama explained his new plan as protection for hardworking Americans who are undervalued by their employer.
“We’ve got to keep making sure hard work is rewarded. Right now, too many Americans are working long days for less pay than they deserve. That’s partly because we’ve failed to update overtime regulations for years”
President Obama wrote that “In this country, a hard day’s work deserves a fair day’s pay. That’s at the heart of what it means to be middle class in America.”
But even supporters of the new regulation disagree with the president on its impending impact. Judith Conti, an advocate for President Obama’s overtime plan at the National Employment Law Project, is excited about the new regulation not because it will increase workers’ pay (it will not), but rather because she wishes to protect the 40-hour workweek.
So, what will result from more than doubling the limit for mandatory overtime payment? Conti is right that it will “protect” the 40-hour workweek. Employers will be incentivized to place a cap at 40 hours so that they will not have to pay their employees time and a half. While Conti and liberal politicians might see this as a positive, their support shows a disconnect with the average American.
For most people making under $50,400 a year, money made by working a few extra hours per week is vital. Employers will be forced to hire more people (for jobs that are already satisfied) and reduce the number of hours their employees work (while cutting back the hours and benefits of their current employees). Of course, to most middle class workers, this will be devastating.
Vice President at the U.S. Chamber of Commerce, Randy Johnson, explained how vastly expanding the number of workers eligible for overtime will negatively affect those workers and the economy. Full-time jobs will disappear along with benefits and promotions.
"This change is another example of the administration being completely divorced from reality and adding more burdens to employers and expecting them to just absorb the impact," contested Johnson.
This is a win for President Obama, who will not have to deal with the repercussions after he leaves office, and for large labor unions. The rest of us? The average worker? We lose.