So What About Increasing Over Time Pay?

Friday, July 31, 2015
posted by elizabeth @ 3:31 PM

There is no such thing as a free lunch. Come to my house and you will hear our kids repeat this mantra every time they hear about another government program that puts mandates, regulations or poorly thought out regulations on business in an effort to do good. The reality is that money does not grow on a tree somewhere, if you find one let me know, and at some point you run out of money even if you try to “soak the rich with taxes.” Eventually that goose will quit laying tax eggs of gold. I have tremendous respect for those who want to help others. However, most of the time the efforts of the well intentioned end up hurting more people than they actually help if it is by force of government. The private sector and non-profits are entirely different and most often more effective and impactful at achieving their goal and creating change that will help.

Mr. Obama has put forth a plan to raise the salary threshold for salaried employees who are eligible for overtime pay. This plan lacks logic and reason. It will kill jobs, hurt small businesses, employees working for small businesses, lower the salary of many in the workforce, lower benefits for working class Americans, limit growth opportunities for lower income Americans and single parents who are trying to make their way in an already no to slow growth economy.

The plan moves the eligibility for overtime pay up from workers earning $23,600 per year to $50,440 per year. The claims are that this policy initiative will help five million Americans. The reality is that it will not come anywhere close to helping that number of Americans and is highly likely to hurt millions of working class Americans now and millions more in the years to come. With an already anemic job market this will be another setback for working class Americans as well as small business owners. Don’t kid yourself into believing that any report claiming true unemployment numbers are down or decreasing is true. The fact is more Americans have left the workforce and have decided for any number of reasons to not seek employment and at the same time the number of Americans who depend on help from the government has dramatically increased. As Joe Trauger with the National Association of Manufactures said, “The Department of Labor announced the demotion of at least 5 million Americans.” He is spot on with his comment.

In response to this policy initiative, employers and small business owners will do what is in the best interest of keeping their company in positive growth mode. They will lower pay, limit full-time workers, and in many cases they will have to reconsider overall benefit packages that enhance and supplement salaries. One of the administration’s own admitted the policy initiative will be counterproductive and not achieve the end result that is being touted. In an article by James Sherk at Heritage.org, Jared Berstein, former chief economic adviser to Vice President Joe Biden, who helped lead the effort to raise overtime pay, said “The costs of increased (overtime) would ultimately be borne by workers and as employers set base wages taking expected overtime pay into account.”

A one size fits all and prescriptive approach is what is often used to try and force failed and poorly thought out policies on business and working class Americans. Might this policy be counter-productive to a mother who has worked with her employer to come up with a schedule that has flexible work hours, including working from home and telecommuting? Likely it will. In an effort to prevent law suits, employers will have to force employers and employees to diligently track their time which will add another layer of cost, reduce productive work time and in many cases create an environment in which flexible work schedules are done away with. Mr. Shrek highlights this in the same article with simplicity in a quote from a Pitney Bowes representative who in response to a question about flexible work schedules said that they “denied overtime eligible workers’ requests to work from home because “you just don’t take the (legal) risk.”

In contrast, freedom and flexibility for both the employer and employee is what helps both parties. What is great about this approach is that it allows employees the opportunity to make a decision on how and when to use their time at work and their time off from work.

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