But Hamermesh said that to whatever extent employers reduced hours to avoid overtime the result would be morejob creation,...
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POLITICO on overtime regulation 6-8-2015

Published on: Mar 4, 2016

Transcripts - POLITICO on overtime regulation 6-8-2015

  • 1. POLITICO http://www.politico.com/story/2015/06/barack-obama-overtime-salary-levels-white-house-118688.html#ixzz3cZ8IWxgi LABOR Barack Obama poised to hike wages for millions The Labor Department could propose arule that would raise the current overtime threshold – $23,660– to as much as $52,000. By MARIANNE LEVINE 6/8/15 5:04 AM EDT Updated 6/8/15 11:25 AM EDT The Obama administration is on the verge ofpossibly doubling the salary levels that would require employers to pay overtimein the most ambitious government intervention on wages in a decade. And it doesn’t need Congress’s permission. As early as this week, the Labor Department could propose a rule that would raisethe current overtime threshold —$23,660 –to as much as $52,000,extending time and a halfovertime pay to millions ofAmerican workers. The rule has already come under fire from business and Republican opponents who say it will kill jobs and force employers to cut hours for salaried employees. “The minimum wage they can’t do,”said Bill Samuel, director oflegislative affairs for the AFL-CIO. “This is probably the most significant step they can take to raise wages for millions ofworkers.” Congressional Republicans aregearing up for a major battleagainst raising the overtimethreshold. The House Education and the Workforce subcommitteewill devotemuch ofa scheduled June 10 hearing on federal wage and hour standards to the overtime rule, even ifit isn’t yet released. Sen. Lamar Alexander, chairman ofthe Senate Health, Education, Laborand Pensions committee, said the rule—sight unseen—“seems engineered to make it as unappealing as possible to be an employercreating jobs in this country.” The business lobby, which is currently battling in two court venues what it calls the National LaborRelations Board’s “ambush elections rule”streamlining union elections, is likely to devoteat least as many resources to fight the overtime rule. Rand el Johnson, seniorvice president for labor at the Chamber ofCommerce, warned LaborSecretary Tom Perez in a Feb. 11 letterthat any changes to existing overtime rules “threaten to upend years ofsettled law, create tremendous confusion, a nd have a significantly disruptiveeffect on millions ofworkplaces.” By law, any salaried worker who earns below a threshold set by the Labor Department must receive overtime. The current threshold of$23,660 lies below the poverty line for a family four. The proposedrule is expected to raise that to somewhere between $45,000 and $52,000—closer to the median household income—greatly expanding the pool ofAmericans who qualify for overtime pay. The overtimethreshold is not indexed to inflation and has been updated only once since 1975. It covers 12 percent ofsalaried workers. Boosting the threshold to $50,440 would bring it back in line with the 1975 threshold, after inflation. By one estimate that would give somewhere between five to ten million workers a raise. Some workers abovethe salary threshold also qualify for overtime pay under current law. But the historic shift from a manufacturing-based economy to a service economy has reduced their number becausewhite collar workers—definedquite expansively—are exempt. The forthcoming overtime ruleis expected to tighten up that definition. Under the current rules, the whitecollar exemption excludes “executive, administrative and professional” employees from receiving overtimepay, which means, for example, that a secretary will sometimes be ineligiblefor overtimepay. Employers routinely avoid paying overtimeto lower-wageworkers such as store managers or fast food shift supervisors, and even to some non-supervisory workers by giving them discrete, only nominally supervisory responsibilities. “It’s hard to believe thatsomebody making $30,000 is a supervisor,”said Daniel Hamermesh, an economist at th e University of Texas at Austin, who has done extensiveresearch on overtime. “Atthis point, I don’t think even ourregulations are in line with the original intent ofthe law.” Hamermesh said raising the threshold was “an absolute no brainer.” One key concern about expanding overtimeis that it could prompt employers to reducethe numberofhours that individual employees work to avoidpaying time-and-a-half. McDonald’s, reportedly, already uses its computer system to record the hours worked by individual fast-food workers,and sends alerts telling franchisees to send this or that worker home when he or she is about to exceed 40 hours. In many instances reducing employees’ hours worked may endangertheir eligibility for benefits. Business groups carry that reasoning further, saying the rule will reduceemployment. Aloysius Hogan, a senior fellowat the conservative Competitive EnterpriseInstitute, said it will have a “job killing effect.”Hogan said businesses will be incent ivized to lay offhigher-paid executives and replace them with lower-paid workers. The National Retail Federation, a likely leaderin the battle against expanded overtime, last month issued a study thatcame to a similar conclusion.On its release NRF senior vice president for GovernorRelations David French said the rule would “hollow out middle -management careers and middle-class opportunities for millions ofworkers.” Getty
  • 2. But Hamermesh said that to whatever extent employers reduced hours to avoid overtime the result would be morejob creation, not less, since someone elsemust hired to perform that work. Jared Bernstein, an economic adviserto Vice PresidentJoe Biden during President Barack Obama’s first term, added thatfor many workers reduced hours wouldbe a plus:“Their salary is the same but they havemoretime with their families.” The Obama administration’s interest in updating overtime rules can be traced to November 2013,when Bernstein,by then a seniorfellow at the Center on Budget and Policy Priorities, and Ross Eisenbrey, vice president ofthe Economic Policy Institute, presented apaper on the subjectto the Labor Department. The following March President Obama issued a memorandum noting that overtime regulations “have not kept up with our modern economy” and instructing the Labor department to draft revisions. Both Eisenbrey and Bernstein voiced optimism that the administration will have time to review public comments on the proposed ruleand issue a final rule before the president leaves office. But that’s not likely to happen without a fight. When Obama issued his memorandum last year, House Education and the Workforce Committee Chairman John Kline and subcommitteechairman Tim Walberg issued a statement saying “executivememos and unilateral actions cannot providethe income security our struggling families need.” Republicans, they said, had long recognized the need to update the Fair LaborStandards Act, b ut they warned the rule should not be “just another political distraction from the president’s failed policies.” Ifthe responseto the “ambush elections” r uleis any guide, there will be litigation against the overtime ruleand at least one attemptby the Republican Congress to block its implementation. The fight is already spilling overinto the 2016presidential contest. In announcing his candidacy May 30 formerMarylandGov . Martin O’Malley called for “overtime pay for overtime work.” Sen. Bernie Sanders did the same in his May 26 kick-offspeech in Burlington, Vt., calling it a “ scandal” that “millions ofAmerican employees, often earning less than $30,000 a year,work 50 or 60 hours a week—and earn no overtime.” The Obama administration’s interest in updating overtime rules can be traced to November 2013. | AP

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