Or at least they love to TRY to fix things…..
The latest episode of “Hi, we’re the Government and we’re here to help you” comes straight from the top, POTUS.
“The president plans to exercise his executive authority on Thursday, leapfrogging Congress to direct the Labor Department to come up with guidelines that would set a new, higher income threshold at which employers are required to pay overtime.”
“Under current law, only workers earning $455 per week or less are eligible for overtime pay, though two states — California and New York — have independently raised their overtime minimums.”
“A $250 per week threshold for overtime pay eligibility was originally established in 1975 by the Labor Department, under the Fair Labor Standards Act, for “white collar” employees; it was increased by the Bush administration in 2004 to its current $455 level. The White House argues that, adjusted for inflation, that threshold for workers today, overwhelmingly not white collar workers, would be $553.”
Here is the ‘logic’ behind this latest proposal from Team Obama (and I use that term loosely).
Based on the Fair Labor Standards Act (FLSA), a company has to divide its workforce into two classifications – non-exempt (paid hourly and overtime is compensate) and exempt (paid a salary and overtime is not compensated). The rules for determining what label to use is complicated (hey, the FLSA came from the Government so what do you expect?) but basically employees who supervise or manage are called exempt and the rest are called non-exempt. There is also a salary guide to aid in this classification and that is where the $455/week comes in – people who make less than that are ALWAYS non-exempt but you can make more than that and still be non-exempt if the FLSA guidelines allow it.
So Obama is aiming this regulation update at low level managers who make just above that $455/week threshold. I’m sure Obama is targeting companies like fast food restaurants and bargain retailers who pay their managers low wages (due to low profit margins) but under the FLSA they have to call them exempt.
And did you catch that? Under the FLSA rules, companies HAVE to classify their low wage managers as exempt. They might have easily called them non-exempt and paid them overtime wages but the FLSA wouldn’t allow that so now we have to add more regulations to fix the problems created from prior regulations.
My argument against this latest gimmick from the Left is the same as I have against raising the minimum wage – This will end up hurting workers. Companies will have layoffs and reduce hiring to offset the higher wages and will reclassify job duties of some exempt managers to non-exempt which will justify giving those employees a decrease in pay.
From the NPR article, Marc Freedman of the US Chamber of Commerce makes the point very well:
“Marc Freedman, who heads the labor law policy shop for the U.S. Chamber of Commerce, predicted dire consequences blooming from the wage and overtime changes — and linked the problems to the president’s health care legislation.”
“Changing the rules for overtime eligibility will, just like increasing the minimum wage, make employees more expensive, and will force employers to look for ways to cover these increased costs,” he said in a statement.”
“Similar to minimum wage, these changes in overtime rules will fall most harshly on small and medium-sized businesses already trying to figure out the impact of Obamacare on them,” he said.”
Here’s a crazy idea – How about letting businesses classify and pay their employees the way they see fit and get the Government out of that decision?
Drop the minimum wage along with the whole FLSA and let employees decide who is hourly, who is salaried and what each employee gets paid.
We no longer live in the 19th century when jobs were hard to find and most people were uneducated. If a company chooses to treat their employees like slaves, pay them a low wage or refuse to pay overtime guess what will happen? Nobody will want to work there and the company will go under.
The companies that treat their employees fairly will get the best and brightest and will subsequently succeed and turn higher profits. Companies will start competing against each other to offer the best salary and benefits to get the best workforce instead of what happens today where companies only have to meet the minimum requirements set forth by our all knowing Federal Government.
The Free Market works. It’s way past the time we get the Government out of the way.