Obama has a plan that would require salaried workers to get paid overtime. This could potentially affect all types of employers and workers, and ultimately could encourage the creation of more part-time jobs — possibly in place of some full-time ones.
Obama’s Vision for More Paid Overtime
A study by Intuit predicts that by 2020 more than 40 percent of the U.S. workforce will be freelancers or contractors — workers that are less likely to give their working time away for free. The Obama administration has pointed out that some convenience store managers, fast food shift supervisors and office workers may be expected to work 50 or 60 hours a week without overtime, and that their hourly pay rate may actually be less than the $7.25 an hour minimum wage. Some consider it a good thing to replace every overworked salaried worker with several part-time workers, which arguably could give employers more bang for their buck with more efficient (rested) employees.
Currently many companies in the U.S. are not required to pay overtime to salaried workers making over $455 per week (about $24,000 per year). The current limits extend only to people earning less than the federal poverty level of income for a family of four. The $455 threshold for overtime hasn’t been raised in 10 years, since President Bush upped it from $250 a week. CNN reports it would be $553 today if it had gone up in line with inflation. Proposals have suggested raising the scope of overtime-pay requirements to a limit of $700-1000 per week.
Another Job-Killer by Obama?
Obamacare and new recent minimum wage increases have been called job killers, so it’s no surprise that the new overtime proposal is being called a job killer as well. Yahoo Finance suggests the following:
“To create a scenario in which more overtime pay actually costs the economy jobs, you’d have to argue that the added cost of hiring part-time workers to do work full-timers used to do beyond 40 hours — basically for free — is so onerous the company would lose business, be forced to lay off other workers, or shut down altogether.”
Those against Obama’s minimum-wage proposal might point out that his raising base pay rates could push up labor costs starting with the very first hour each worker logs weekly. A business employing minimum wage workers must bear that cost inevitably. When pay raises don’t kick in until the 41st hour of weekly labor, however, costs don’t necessarily rise immediately. So to some people, this “job-killing” idea might not be as bad as Obama’s suggested minimum-wage bumps.
There are many arguments in favor of and against Obama’s overtime plan. It will certainly help management workers in food service, retail, and other small operations, where managers often work long hours micromanaging and covering for no-show employees. The plan undoubtedly will change how employers hire and schedule their employees, and it could affect who gets to be salaried and who gets to keep their benefits. At the end of the day, however, few will disagree with underpaid salaried employees getting paid for their long hours, or hiring more part-time employees who get paid for the work they do.