Politics as Usual – Obama Vows to Expand Overtime Pay

Politics as Usual - Obama Vows to Expand Overtime Pay

As a part of his “Year of Action,” President Obama will, as reported by The New York Times, will use his executive powers to expand the pool of workers covered by mandatory overtime regulations. This would allow millions more U.S workers to be eligible for overtime pay to close the “income gap.”

“Our businesses have created 8.7 million new jobs over the past four years,” Obama said in his weekly radio and Internet address. “But in many ways, the trends that have battered the middle class for decades have grown even starker.”

The President has already used an executive order to increase the minimum wage for federal contract employees, and has demanded legislation be passed that would increase the minimum wage from $7.25 to $10.10 an hour for all Americans.

“I’m doing everything I can, with or without Congress, to expand opportunity for more Americans,” the President said earlier in March, as he has said since his State of the Union address in February.

Currently, regulations prohibit employers from denying time-and-a-half overtime pay to any salaried worker who makes less than $455 per week. Also, employers can define which workers are exempt from receiving overtime based on the kind of work they perform. If an employer declares that an employee’s primary responsibility is executive, such as overseeing a cleanup crew, then that worker can be exempted from overtime.

It is unclear where Obama will set the salary threshold for overtime eligibility. Under recently passed laws, the California threshold is set to rise to $800 per week in 2016, and the New York threshold to $675. It is suspected that Obama will raise it to $640 a week. The rules do not require congressional action but could take more than a year to implement.

As good as Obama’s plan sounds, there will be clear consequences.

“Similar to the minimum wage, these changes in overtime rules will fall most harshly on small- and medium-sized businesses, who are already trying to figure out the impact of ObamaCare on them,” said Marc Freedman, executive director of Labor Law Policy for the U.S. Chamber of Commerce.

Sweeping millions of workers into the overtime system does not guarantee a pay increase for anyone. Managers will simply schedule more carefully and watch employees more closely. The trend of working at home would also end, because employers would have more difficulty monitoring hours and working conditions. Companies would also make sure that full-time employees did not work more than 40 hours and would bring in part-time help to cover unexpected needs.
The American Dream – that by working hard and taking on greater responsibilities and thereby person can move up in the organization – will not exist in Obama’s economy. A motivated worker would instead be told to go home and relax after hitting the 40-hour limit.

There are expected to be lawsuits filed against theses new regulations, thus it will be a few years before they go into effect. So why is Obama suddenly turning his focus towards increasing pay? 2014 happens to be an election year, and the President isn’t going to worry about losing votes from capitalists who already disagree with most of his economic policies. He might as well try to bolster support among low-wage workers.

Democrats as well as any supporters of a minimum wage bump will be disappointed to know that just 2.8% of people working make minimum wage. About half of those people are below the age of 25 and historically are least likely up at the polls to vote, especially in a nonpresidential election.

Obama’s “Year of Action” will lead to disaster if left unchecked and at the very least, it is all just a platform to buy the votes of people clinging to his promise of “Hope and Change.”