Posted on 05/19/2016 5:47:06 AM PDT by expat_panama
Most bad policies harm the economy in one identifiable way. But the Labor Department’s new overtime rule, released on May 18, harms the economy and the American worker in three different ways.
The new rule requires employers to pay white collar workers overtime if they earn less than $47,476 annually, instead of less than $23,660, the case at present. (Manual workers generally have to be paid overtime at all earnings levels.) The effect will be (1) to raise costs to employers, discouraging employment; (2) to prohibit flexible time for employees; and (3) to stunt American productivity and economic growth.
Consider Rob, an analyst at a consulting firm, who earns a salary of $45,000 a year. Now if he works late one night he can come in later the following day, or take extra time off. He can duck out of the office to attend his child’s kindergarten concert. He can come home for dinner and catch up with his work in the evenings.
With the Labor Department’s new overtime rule, effective December 1, this will change. Along with others who make under $47,476 annually, Rob will have to keep track of his hours by clocking in and out. Because of the need to track hours, telecommuting will be difficult. If he works longer one week then his employer will not be legally allowed to give him “comp time” (time off instead of the extra hours), but will have to pay him overtime instead.
Not that Rob will necessarily earn more than what he is making now. Either Rob’s employer will make sure he never works more than 40 hours in a week, or his rate of base pay will be lowered to make up for the extra hours worked.
The Labor Department’s new salary test means only that Rob is “protected” with the right to time-and-a-half pay rate for any hours worked over 40 per week, but he never works over 40 hours, it is an empty benefit. Most workers affected never get the chance to work over 40 hours per week. The administration estimates that about 4.2 million workers would qualify for overtime in 2017.
The administration touts the overtime rule as a device to raise the incomes of workers, but their own analysis calculates only $1.2 billion annual increase in wages of affected workers. The real effect of the rule will be to add significant administrative costs.
One cost is familiarization, the initial time and effort that each employer must expend to understand the requirements and assess what needs to be done.
A second cost is the initial wage classification adjustment costs. Firms need to identify each employee affected by the higher salary test, to decide for each case whether to raise their salary to the new threshold or to convert the status to non-exempt hourly. In the case of conversions there will be further effort to determine what base hourly rate to establish and what usual hours requirement and policies to set for assignment and approval of overtime hours.
A third cost is management costs. Workers converted from salaried to hourly status will require additional management supervision time for checking time records and for approval of overtime hours.
The administrative costs of the new rule could total $18.9 billion the first year – over 15 times greater than the $1.2 billion of increased wages that the administration estimates will be received by workers. In subsequent years, the ongoing management supervision costs imposed by the rule could total around $3.4 billion each year, almost three times the $1.2 billion of wage gains generated.
In an article in the Huffington Post, National Institutes for Health Director Francis Collins and Labor Secretary Thomas Perez write that the overtime rule will improve pay for the 38,000 junior scientists who are critical to biomedical research. NIH plans to raise its salaries above the $47,476 threshold to enable scientists to continue to put in long hours without having to pay overtime. At the same time, Collins and Perez admit that other “research institutions that employ postdocs will need to readjust the salaries they pay to postdocs that are supported through other means, including other types of NIH research grants.”
While NIH might raise salaries, there is nothing in the law that prevents the other labs from reducing the scientists’ rate of base pay, and giving them the same paycheck. Unless science labs get more funding, the labs will either reduce base pay, reduce hours, or both to meet the new requirement. Even the most advanced labs cannot manufacture dollars out of nowhere.
The fundamental problem in science is not lack of overtime protection, but that the United States undervalues science research. Science pays far less than law, business, or finance, and so the brightest American minds are going to other fields. Perhaps Collins can fix that problem by raising funds and awareness.
Most of the workers who will be affected by the new overtime rule will see no increase in their pay checks. Their only benefit will be to know that they will not be required to work more than 40 hours in a week without getting overtime pay. Instead of extra pay, most will lose the schedule flexibility, prestige, and career opportunities that they now enjoy as salaried workers.
A good lawsuit and the company having to pay back overtime and penalties should fix that problem. I know that some employees are fearful of losing their job and not being able to find another one. But I don’t think the government telling business how much they have to pay employees regardless of the work they do fix it. It will only hurt the employees that weren’t abused, that enjoyed flexible hours, as I know working moms sure do. This is a war on women!
I have seen it in companies that I have worked for. It’s not common practice if you work for good people and good companies that don’t ‘abuse’ the rules, but it does happen........................
The primary offender here is the retail industry. They routinely throw menial grungework at exempt, salaried members of management. Then stick their head in the sand and act like they had no idea it was happening when challenged. Thus they can avoid having to pay an hourly wage to an employee to do such things.
I had a management title and spent far more time stocking shelves, sweeping floors, and doing maintenance work than actually managing anything.
This goes on pretty much across the board in all retail chains. It was long past time this was addressed.
Yes, retail and food establishments. Probably why they have high turnover rates.
I understand. But again this is just updating a rule that was last updated by President Bush and for the same reasons.
And again: I completely oppose the minimum wage.
But if you’re going to have a real minimum wage then closing a loophole to allow certain employers to evade the legal minimum makes sense.
Making this change on Dec 1-—instead of Jan 1 of 2017 is another blow to employers.
This means changes to current payroll software-—and more time clocks in places where none have existed before.
Wonder how many time clocks are on the shelves ready to be sold to these employers???Many companies won’t accept hand written time cards——which also are somewhat short in supply.
Hear the enviros now——there go more trees for time cards~!!!!!
I was a payroll supervisor in the 79’s for a weekly payroll of about 750 people in 7 states. The time cards we got-—almost all were hourly employees-—were not all the same. Some were hours & minutes-—some were 10ths of an hour-—some were other combinations. Had to be sharp as you were processing those time cards.
What are they going to do with people in the medical industry? Most nurses are exempt from overtime I think.
I totally support your point of view.
I sometimes work as a pastry chef at a couple of resorts around here and the managers are there for six ten hour days per week and then they come in on the seventh day for manager’s stand-up meetings.
And they end up making less than minimum wage when you figure their hours worked against their pay.
Sucks to be a manager.
Nobody uses time clocks anymore.
In retail people clock in and out on the POS system.
Other businesses use tablets and handheld devices.
So $1.2 billion spread over 4.2 million people. About $300 a person, per year. That’s the benefit? About $4 per week, or less than $1 per day?
Seems like nothing, even to those who “benefit” from the rule. Dropping out a single Starbuck coffee per WEEK would put more money in their pocket at the end of the year.
A big problem for companies is the secret is out and nobody wants the “manager” titles anymore. I tell co-workers foolish enough to still chase that they should be careful what they wish for: They’ll just be worked longer hours for what amounts to a lower hourly wage (and any work/life balance is shot).
How about new lawyers at a large firm? They are expected to work long hours-—and this is their apprenticeship....
Getting any kind of legal help in the future will be very costly!!! Sane thing for accounting firms.
You’re right; “manager” just became an empty title given to the most reliable, conscientious workers to screw then out of overtime while they did the work of unreliable workers who show up late/leave early or don’t show up at all...
I was a payroll supervisor in the 79’s for”””
70’s sorry
BTW- There might be a train derailment-—or an airplane crash-—and medical & police have to work long hours to help those involved.
Do they get to walk off at the end of 8 hours???
The real benefit will be that salaried people will no longer be abused for free overtime. I doubt a whole lot of new overtime hours will be paid out. They’ll hire new part-timers instead.
oh....and the fact that Republicans did ABSOLUTELY NOTHING to address this problem (even though it has become increasingly blatant and obvious over several decades) hands the Dems a political win on this.
AND lots of small businesses in this country don’t have ANY of what you are describing.
A cattle or sheep operation in the western USA isn’t in the game for any of that stuff. OR a dude ranch-—Or a rafting company-—or a hunting guide business-—Or a fishing boat— OR OR-—
I live where houses within 7 miles of me are OFF THE GRID-—NO electricity.
Not everything is downtown New York or Los Angeles or San Francisco.
Or they could give ole Rob a $47.62/week raise and he’d actually see some more $ in his wallet, while the company would be clear of any more bureaucratic nonsense.
It is UTTERLY IMPOSSIBLE for Barack Obama and his legion of demons to impose this rule. THIS IS NOT AN EXECUTIVE ORDER, THIS IS MAKING LAW.
Everyone should effing ignore this bullshat, and throw the bird at that faggot.
FINE, then Congress should pass legislation that the Senate can review, and send a bill to the President to sign.
THIS AD-HOC LEGISLATING SHALL NOT STAND.
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