President Obama has decided to change the overtime ceiling from $23,600/year to over $56,000/yr – but it won’t have the affect he promises.
Currently, salaried workers making more than $23,600 per year are exempt from the overtime pay rate which requires that employers pay them 1.5 times their pay for each hour over 40 hours.
According to Secretary of Labor Thomas Perez, the President has already sent an order to the Office of Management and Budget (OMB) for review that would almost double that limit. The OMB report will likely be glowingly in-favor of Obama’s proposal.
Obama’s plan is to make more employees eligible for overtime or push them up to a new ceiling. Unless someone is already close to the new ceiling, neither will happen.
The economy has been struggling to create wage inflation, so what could be wrong with the president’s idea? Won’t it increase wages?
Ummm, no. The only thing that can create wage inflation is a tight labor market and, despite Obama’s claims, the market isn’t even close to that.
First, employers aren’t seeing the economic boom progressive demand-side economics were supposed to produce. Cash for clunkers, shovel ready projects, stimulus, stimulus II, night of the living stimulus and more have all failed to create the booming economy of yesteryear.
Second, oppressive taxes and regulations make it much more expensive for employers to hire or even retain existing employees. Obamacare, skyrocketing energy prices and silly rules like this make it impossible to compete.
Employers will examine the rule, do the math and realize that they can neither afford to raise essential personnel to $56k nor pay them 1.5x their pay. Instead, they will trim back operations or send them overseas. *Gasp* you say?
U.S. regulations already make it favorable to build factories, offices and distribution overseas. Add this stupidity to TPP and just like NAFTA, there won’t be any work left for Americans in America.
This and TPP might just crush middle-income earners into the ground.
But maybe that’s the point .. the President is kinda’ running out of time to fundamentally transform the nation.
