President Obama likes to say that Washington needs to give the American people a raise. The American people need a raise, alright, but the President needs to get it out of his head that Washington can wave a wand, declare more people will get overtime or higher pay, and people will have more money in their pockets. If that were the case, why didn’t President Obama use this magic at the beginning of his presidency?
It’s not that government can’t do anything. Good policies create conditions that allow wages to increase, businesses to grow, and the economy to be strong. But when it comes to the Administration’s recently announced overtime rule, it won’t work as intended and raise people’s wages. It will actually cause many people’s hours and wages to be reduced all while increasing the cost of hiring employees.
In my hometown of Bakersfield, California, I used to own a small deli. It was regulations like this that caused more problems than they solved, keeping my employees and me from doing our jobs as best we could.
Here are just a couple problems with the new rule:
The overtime rule will lower wages and reduce hours
Announcing that more workers will get overtime pay doesn’t change the fact that businesses still have the same amount of money to pay their employees after the edict as they did before.
We know that the money to pay for extra overtime costs has to come from somewhere whether that’s cutting hours for workers to below the overtime threshold to avoid the cost altogether, firing workers or reducing hours of some employees and using that saved money to pay for overtime for others, passing the extra overtime costs onto consumers, or something else.
A recent study found that, generally, it’s employees who bear the added cost of increased overtime regulations because the cost of raising the overtime threshold is often offset by lower wages. In fact, the Labor Department itself predicts that pay will drop for salary workers covered by the new overtime threshold by around 5.4% next year.
The President’s overtime rule will increase compliance costs
What happens when new regulations force employers to track hours, follow confusing bureaucratic rules, and fill out more paperwork? The employers have to spend more time and money on human resources and less on hiring new employees or giving their current employees a raise.
Complying with federal regulations already costs our economy nearly $1.9 trillion peryear. America certainly doesn’t need to spend more time and money complying with federal regulations. It would be better if employers could spend that money on better jobs and higher wages.
The overtime rule will blindside businesses
Small businesses are having a hard enough time staying afloat and hiring more workers. And getting blindsided by a potentially very costly federal regulation won’t help them.Data show that 49% of business owners aren’t even aware of the Department of Labor’s final overtime rule, and only 31% are “somewhat aware” of it. For businesses fighting to stay afloat, a large unforeseen expense like this could force them under, or at least to cut back.
All said and done, you can’t be for workers if you institute policies that hurt workers. Increasing overtime pay may sound good on paper or in a speech, but the American people are smarter than that.
That’s why the House will vote today to delay the Administration’s overtime rule for six months. Not only will this give employers and employees time to adjust, it will give the next President an opportunity to look at the situation clearly and put an end to harmful regulations.
But this is just the beginning. We need policies that actually help workers, not Washington diktats that are merely intendedto help workers and do the opposite. The House’s Better Way agenda is a real pro-worker program doesn’t have gimmicks. It starts with putting economic growth at the center. That means cutting red tape that makes it harder to hire workers and pay them more. It means reforming our tax code so that everyone pays their fair share and has the chance to succeed. And it means removing the regulations in everything from healthcare to energy — regulations that have increased costs and hit low- and middle-income Americans the hardest.
The House’s Better Way agenda will give America workers the relief that they never felt during the Obama years and won’t feel with this new overtime rule.
Originally published at Medium.