Expanding OT

–  Eugene Register Guard Editorial

When the Obama administration announced last Wednesday it was expanding overtime pay protection for more than 4 million workers, the reaction from the business sector was swift — and completely predictable.

Few employees will actually benefit financially from the change, they said. The new rule will add burdensome paperwork for both employers and employees, and make employees’ schedules less flexible, they said…

The Obama administration estimates that the change will increase affected workers’ pay by $1.2 billion annually over the next decade, but acknowledges that some employers may choose to reduce employees’ pay rates or hours to avoid having to pay them overtime…

Most of the employees affected by the new rule work in fast food or retail industries, where employees are designated “managers” and paid salaries instead of hourly wages, but do much of the same type of work as their hourly wage subordinates, who often earn nearly as much as their bosses while working fewer hours…

We Respond & Your Comments

Here we go again…“compassionate” Progressives want to take money out of some Americans’ pockets and give it to Americans (they really mean “voters”) of their choosing in the name of “fairness.”

Let’s review some iron clad rules of economics and business:

• When you increase the cost of anything (in this case labor) you reduce demand for it – no matter how “fair” it is;
• One of the few things in business you can control is the cost of labor;
• The average fast food restaurant shows a pretax profit of just 3%;
• Businesses don’t just stand there while government takes their money.

The Wall Street Journal (WSJ) reports how some business people are reacting to the new overtime threshold:

• Roadhouse, Inc. may reduce bonuses by 25% – 50% to put managers’ salaries over the threshold;
• Domino’s Pizza will cut back on overtime;
• The National Retail Federation (NRF) predicts businesses will offset these new costs by cutting benefits.

David French, NRF Senior VP of Government Relations said it best in the WSJ: “Just because there’s an overtime rule does not mean there’s going to be overtime pay.”

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