Jobs & Economy22 June 2016

Notes from Norm: Working Overtime to Undermine the American Worker

Over the past few weeks I have outlined some of the staggering costs of the Obama Administration’s obsession with growing the size and scope of the federal government.

From its ill-advised creation of ObamaCare and its horrific impact on Medicare, there is no doubt that its desire to have government be all things to all people has had a profound negative impact on our lives.

The implications of the Obama Administration’s “big government” philosophy has hamstrung our economy, resulted in a lagging job market and threatens to undermine the nascent economy recovery that is barely registering a heartbeat.

On January 23rd, 1996, President Bill Clinton declared before Congress and America in his State of the Union Speech that “The era of big Government is over.”

That November, Barack Obama was elected to the State Senate in Illinois.

Whether it was a case of selective hearing, or choosing to ignore what President Clinton had to say in 1996 when he was State Senator Barack Obama, it is clear that President Barack Obama is unwilling to accept any notion about the death of big government.

Most recently his reluctance to allow the big government patient to succumb can be seen in his Administration’s adoption of new overtime rules that will weigh heavily on the private sector, as well as non-profit organizations.

Under the new rule, everyone making less than $47,476 will be made eligible for overtime automatically, regardless of their job duties – how long they have been at their job – or the level of responsibility within a company.

Supporters of the rule shouted that there will be immediate positive impact on America’s lowest wage earners because they will instantaneously become members of the middle class.

Not so fast.

An exhaustive analysis by the American Action Forum (AAF) makes it clear that despite the Administration’s claims of raising the economic fortunes of millions of Americans, the new overtime rules will actually result in job loss and have barely minimal positive impact on the financial health of workers.

According to AAF, “A careful reading of the rule itself, however, reveals it will do very little for workers. The Department of Labor (DOL) projects that only about 825,000 workers will actually regularly benefit with an increase in weekly pay and that those workers would only receive at most an extra $20 per week. This is not something most rational people would call a “major victory for working people.” Meanwhile, the rule will impose billions in compliance costs and burden the economy with millions of fewer hours of work.”

Furthermore, AAF finds that contrary to the DOL final overtime pay rule being touted as a “…substantial pay raise for millions of U.S. workers…a closer look at the rule reveals the worker benefits are quite limited and the regulatory costs on businesses are substantial.”

• Only 825,000 of the 4.2 million newly-covered workers would regularly benefit from the rule;

• For all 4.2 million newly-covered workers, the net average weekly pay increase would be only $5.48, while for those who regularly work overtime, the increase would be a dismal $19.97; and

• Businesses would face nearly $3 billion in compliance costs and over 2.5 million paperwork burden hours.

Additionally, a separate analysis on www.money.cnn.com points out that mandating hourly workers to become salaried workers is likely to cost them money – as the requisite overtime pay they might have received for working over 40 hours will disappear.

Not only that but resentment among longer tenured workers suddenly seeing junior level employees being paid as much – or more – than them will increase.

Other opportunities for career advancement might be lost as employers will have to absorb higher salary expenses rather than paying for employee programs to enhance professional development, travel for training conferences or other types of activities.

Finally, those employees at the threshold of the newly minted minimum salary could find themselves stuck at that level for another three years as the federal law mandates an adjustment every three years. The incentive for the employer to increase that salary again prior to that three year mandate is likely to be slim to none.

As harmful as the Obama Administrations DOL overtime rules are to the private sector, the non-profit sector will find itself even more significantly impacted.

In a post by AAF analyst Ben Gitis, those involved in charitable endeavors to help our fellow citizen will see their work significantly and negatively impacted by these rules.

One organization, Operation Smile, writes that “The leadership team at Operation Smile is opposed to the proposed changes to the salary threshold tests, specifically the drastic increase to a salary level of $50,400… Yet still, this proposed update will increase our payroll cost by nearly $1 million annually affecting over 50 percent of our workforce. Considering that a cleft lip surgery performed somewhere in the world costs an average of $240, this would mean 4,166 fewer surgeries provided by Operation Smile globally each year.”

To read what other non-profits had to say about the Obama Administration overtime rules, click here.

All of us should have a vested interest in seeing our fellow working Americans being able to earn enough to support themselves, raise their families and achieve the American Dream.

This Administration and its liberal allies have for years pushed a populist agenda that is rooted in the notion that income inequality is at the core of what ails the American worker.

In fact, at the core of what ails the American worker is the growing impact of the Obama Administration’s obsession with piling on more costs and more regulations on consumers and companies in America.

More government doesn’t create jobs. More economic freedom and less government are at the core of the formula for job creation in America.

Forcing non-profits and the private sector to comply with massive new overtime regulations without regard to the impact of those regulations on their capacity to make a profit – pay for employee salaries and benefits – and invest back in their operations and mission – is a sure-fire way to further weaken the economy and undermine job growth and security in the United States.

Americans are working harder than ever to make ends meet and finding themselves falling further and further behind.

Only to be thwarted by the President and his allies who are working overtime to make sure that the era of big government lives again.