Obama’s Overtime: Helping or Hurting the American Economy?
President Barack Obama recently announced a change to executive/professional overtime pay that has had critics concerned over the already struggling job market, with supporters praising his efforts to aid working class citizens who make less than they deserve. Just prior to the overtime change, Obama had moved to increase federal workers minimum wage to $10.10 to begin in 2015, part of his Congress-free, power of the pen approach to pushing for increased minimum wage and pay.
In his weekly address given Saturday, Obama spoke about why the change was necessary. “An overtime exception originally meant for highly paid employees now applies to workers who earn as little as $23,660 a year. It doesn’t matter if you do mostly physical labor, or if you work 50, 60, even 70 hours a week. Your employer may not have to pay you a single extra dime.” This means that some workers could actually be making less than minimum wage on their salaries, and that “business owners who treat their employees fairly can be undercut by competitors who don’t,” he said. “We’ve got to build an economy that works for everybody, not just a fortunate few.”
According to Republican critics, that might not be the actual affect, with some emphasizing the negative unintended impact the change could have. “If you don’t have a job, you don’t qualify for overtime. So what do you gt out of it? You get nothing. The president’s policies are making it difficult for employers to expand employment,” said House Speaker John A. Boehner, according to NPR. Partisan opponents aren’t the only ones who think so, though. “It is likely to slow job growth since, when costs of any kind go up, businesses will adjust,” said Jonathan Meer, economist at Texas A&M University, said to NPR.
Richard DeKaser, a corporate economist for Wells Fargo, voiced an alternate take on the situation: that economic recovery could be aided by an increase in payment, which would ultimately feed back into the economy. “If you think the problem is insufficient demand, then increasing pay for workers is helpful,” said DeKaser to NPR. “I would argue that that is where we are. At this particular time, programs that increase income will stimulate growth,” he said. “Our businesses have created 8.7 million new jobs over the past four years. But in many ways, the trends that have battered the middle class for decades have grown even starker. While those at the top are doing better than ever, average wages have barely budged,” said Obama.
Tammy McCutchen, formerly an administrator in the Labor Department and writer of the last rewrite on this policy in 2004, is less than thrilled with the changes. “It’s going to be bad for business,” he said, but added that it would certainly be good for lawyers’ pocket books around the country when she spoke with the Washington Post. “I spent two years of my life working on them. It’s personal for me,” said McCutchen.
More From Wall St. Cheat Sheet:
- Plot Twist: McDonald’s Isn’t Ignoring Workers’ Minimum Wage Pleas
- Amazon’s Warehouse Wages Get a Review From the Supreme Court
- Bill Gates: Technology Kills Jobs and So Will Higher Minimum Wage
Follow Anthea Mitchell on Twitter @AntheaWSCS