The High Cost of Obama's Overtime Edict

The Obama administration this week announced final regulations doubling the salary threshold (from $23,660 to $47,476) at which most employers must pay time-and-a-half overtime to white-collar workers, and indexing future thresholds to advances in the wage level. Employees 25-34 and those with a bachelor’s degree are expected to be the most heavily affected groups; among sectors expected to be hard hit are not only retail chains, restaurants, and small businesses that hire on-site managers, but also colleges and even food co-ops. As colleague Jeffrey Miron observed in this space on Wednesday, the notional paycheck benefits to employees reassigned to hourly status are likely to prove temporary, since employers have many ways over the medium term of dodging a permanent upward jump in payroll costs: they can forbid employees to clock more than 40 hours a week, lay off those who regularly do so, cut back on non-cash perks for the salaried, and so forth, not to mention suppressing the level of base pay itself. The final version slightly softens some of the worst features of last year’s proposal, knocking down the pay threshold a bit, allowing bonuses and commissions to count toward 10 percent of the sum, and dropping a scheme to expand the range of duties forbidden to salaried managers. But overall, it’s still impractical in the extreme - as House Democrats, of all people, discovered when they tried to comply with the spirit of the rules in their...
Source: Cato-at-liberty - Category: American Health Authors: Source Type: blogs