Author Topic: Employers Slam Obama's Overtime Plan: Will 'Cost Billions'  (Read 843 times)

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Offline mystery-ak

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Employers Slam Obama's Overtime Plan: Will 'Cost Billions'
Tuesday, June 30, 2015 01:02 PM

By: Matt Townsend and Lindsey Rupp

Retailers and manufacturers blasted President Barack Obama’s plan to make more Americans eligible for overtime pay, saying the move would stunt workers’ careers and cost companies billions.

The National Retail Federation says Obama’s proposed rule change to greatly increase how many salaried employees can claim overtime would force companies to use more part-time and entry- level workers. Businesses also may offer fewer promotions and convert salaried employees to hourly to avoid raising their pay, the NRF said.

“The proposal is going to cost billions of dollars,” said Neil Trautwein, vice president for the NRF, the industry’s largest trade group. “It’s going to limit advancement opportunities, and ultimately it will reduce employee benefits.”

The NRF said the move, which would go into effect next year, would cost $9.5 billion annually if retailers and restaurants implemented the change without making adjustments. Total payroll expenses for all 25 million workers in these industries was $545 billion in 2012.

Obama’s plan would make workers who earn a salary of as much as $970 a week, or about $50,000 a year, eligible to claim overtime under the Fair Labor Standards Act. The current threshold is $455 a week, or about $24,000 a year, which is below the poverty line for a family of four. This change would benefit 4.68 million people, the White House said Tuesday on its website.

More Covered

An analysis by the Economic Policy Institute showed large increases in the percentage of workers that would be eligible for overtime if the threshold were raised to a level similar to Obama’s proposal. Among retail supervisors, about 56 percent would be covered, up from 8 percent. The group calculated comparable jumps for restaurant managers, insurance clerks and customer-service representatives.

Major chains already were under pressure to boost hourly wages for their lowest-paid workers. Many, including McDonald’s Corp. and Wal-Mart Stores Inc., have done just that. Now Obama says he wants to boost the pay of middle management. Of those affected, a majority have college degrees, are women and are older than 35, the Department of Labor said.

“A hard day’s work deserves a fair day’s pay,” Obama wrote on the White House website. “That’s at the heart of what it means to be middle class in America.”

The NRF and other trade groups aren’t buying it.

“The Department of Labor announced the demotion of at least 5 million Americans,” Joe Trauger, a spokesman for the National Association of Manufacturers, said in a statement. “This proposed regulation is another in a long list of regulatory roadblocks to healthy and robust economic growth and job creation.”





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Offline mystery-ak

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Re: Employers Slam Obama's Overtime Plan: Will 'Cost Billions'
« Reply #1 on: June 30, 2015, 05:26:44 pm »
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Hillary Praises Overtime Pay Plan as 'Win for Economy, Workers'
Tuesday, June 30, 2015 01:02 PM

By: Courtney Coren

Democratic presidential candidate Hillary Clinton praised the plan by President Barack Obama to expand overtime pay to salaried employees.

Clinton wrote Tuesday on Twitter:

Quote
Hillary Clinton

@HillaryClinton

President Obama is right to update overtime rules for the modern workforce—a win for our economy and workers nationwide. -H
10:53 AM - 30 Jun 2015

    379 379 Retweets
    9

The Obama administration is proposing making up to 5 million more people eligible for overtime — its latest effort to boost pay for lower-income workers. These workers would benefit from rules requiring businesses to pay eligible employees 1 ½ times their regular pay for any work beyond 40 hours a week.

"We've got to keep making sure hard work is rewarded," Obama wrote in an op-ed published Monday in The Huffington Post. "That's how America should do business. In this country, a hard day's work deserves a fair day's pay."

Employers can now often get around the rules: Any salaried employee who's paid more than $455 a week — or $23,660 a year — can be called a "manager," given limited supervisory duties and made ineligible for overtime.

Yet that salary would put a family of four in poverty. Obama says that the level is too low and undercuts the intent of the overtime law. The threshold was last updated in 2004 and has been eroded by inflation.

The long-awaited overtime rule from the Labor Department would more than double the threshold at which employers can avoid paying overtime, to $970 a week by next year. The change would mean salaried employees earning less than $50,440 a year would be assured overtime if they work more than 40 hours per week.

Labor Secretary Tom Perez said Tuesday that the change would add $1.2 billion to $1.3 billion in wages for many newly overtime-eligible workers. Others, Perez said, will benefit from having additional hours. At the same time, he said, some employers may choose to hire new full-time or part-time workers to handle the work salaried workers had once performed.

A threshold of $984 a week would affect 15 million people, according to the liberal Economic Policy Institute. In 1975, overtime rules covered 65 percent of salaried workers. Today, it's just 8 percent, the White House says.

The White House's proposed changes will be open for public comment and finalized sometime next year.

Vermont Sen. Bernie Sanders, who is challenging Clinton for the Democratic nomination for president, said the proposal means businesses would no longer be able to shirk their responsibility to pay fair wages.

"This long overdue change in overtime rules is a step in the right direction and good news for workers," Sanders said.

Yet the proposals won't necessarily produce a big raise for the retail managers it aims to help, some say.

The National Retail Federation (NRF) says its members would probably respond by converting many salaried workers to hourly status, which could cost them benefits such as paid vacation. In a statement, the group said that it will hurt the career opportunities for those working in the retail industry.

"Turning managers into rank-and-file hourly workers takes away the career opportunities offered by private sector entrepreneurs and job creators that are the true path to middle-class success," said David French, senior vice president for government relations at NRF.

The U.S. Chamber of Commerce also condemned the move, saying it "will not guarantee more income, but instead will negatively impact small businesses and drastically limit employment opportunities."

Daniel Hamermesh, an economist at the University of Texas, Austin, called the proposal "a job creation measure. Employers will substitute workers for hours, when the hours get more expensive."
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Offline Relic

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Re: Employers Slam Obama's Overtime Plan: Will 'Cost Billions'
« Reply #2 on: June 30, 2015, 06:08:17 pm »
More Europeanization of our workplaces. I wonder how many jobs will be offshored or eliminated in response?

This move will resonate with many Americans. For a medium size corporation and up, if you make $40k, your employer can work your tail off, meanwhile, the executive staff wastes the equivalent of your annual salary on an offsite meeting.