President Barack Obama’s new overtime rules are likely to have unintended consequences, some of which could actually lead to less take-home pay for workers.
The president recently enacted new overtime rules that will make anyone earning up to $47,476 a year eligible for overtime pay, up from the current threshold of $23,660 a year. While the new rule is being advertised as a way to increase wages, Mackinac Center Director of Labor Policy F. Vincent Vernuccio and adjunct scholar Jeremy Lott write in a Saturday op-ed for The Detroit News that the new rules may reduce workers’ flexibility on the job and could even lead to pay cuts.
Rather than pay workers time-and-a-half, analysts and experts predict companies will reduce salaried workers’ hours and hire more part-time employees. Vernuccio and Lott explain:
Obama may be touting the raises he hopes his rule will create, but the text of the regulations fail to mention giving workers a raise, notes Trey Kovacs, labor policy analyst for the Competitive Enterprise Institute. Rather, the two main objectives are to “spread employment ... by incentivizing employers to hire more employees rather than requiring existing employees to work longer hours,” and to “reduce overwork and its detrimental effect on the health and well-being of workers.”
Salaried workers should also expect their hours to be watched and regulated more closely, which could lead to a loss of flexibility.
Read the full op-ed in The Detroit News
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