Today, President Obama is expected to issue an executive order expanding the number of people who qualify for overtime pay under the federal labor law.
The executive order is designed help individuals who work more than 40 hours a week without receiving overtime pay and has the potential to affect millions of workers across the nation.
This rule change comes under the legal statute under the Fair Labor Standards Act, which currently guarantees salaried workers extra pay for overtime if they earn less than $455 per week.
House Speaker John Boehner reacted to the president’s decision by stating, If you don’t have a job, you don’t qualify for overtime, so what do you get out of it? You get nothing. The president’s policies are making it difficult for employers to expand employment, and until the president’s policies get out of the way, employers are going to continue to sit on their hands.”
Mike Lux, a co-founder of Progressive Strategies, a Washington-based political consulting firm stated “Working- and middle-class people are not just feeling pressed, but really squeezed.”
He continued to add “In terms of the fall campaign, we are building a whole message around helping middle-class folks raise their wages, raise their incomes and make their lives a little better,” Lux says. “This executive order, as well as the president’s executive order on minimum wages paid by federal contractors, makes a huge difference politically.”
Many view this as being politically driven as the president and Democrats strategy for the fall mid-term elections is of class warfare and believing they are best at helping the middle-class.
Marc Freedman, who heads the labor law policy shop for the U.S. Chamber of Commerce, predicted this would have a chilling effect on job creation and would eventually lead to loss of jobs and less help for the workers it was intended to help.
“Changing the rules for overtime eligibility will, just like increasing the minimum wage, make employees more expensive, and will force employers to look for ways to cover these increased costs,” he said in a statement.
“Similar to minimum wage, these changes in overtime rules will fall most harshly on small and medium-sized businesses already trying to figure out the impact of Obamacare on them,” he said.
Last month the president signed an executive order raising the minimum wage to $10.10 per hour for all government contractors beginning in 2015.
The president has also repeatedly called for increasing the minimum wage from $7.25 to $10.10 over a period of three years. This is part of the president’s “year of action” that is stated in State of the Union Address in January.
“Wherever and whenever I can take steps without legislation to expand opportunity for more American families, that’s what I’m going to do,” he said in his annual address to the nation.
The question is, will this have its intended consequence or will this be another example of great intentions but actually hurt those it was intended to help.
Small businesses are already reeling from the unintended consequences of the Affordable Care Act and Dodd-Frank Financial overhaul reform and this could also increase job loss.
Ruy Teixeira, a Democratic writer and commentator stated, “This is consistent with the economic populist stance the Democrats are driving in a pretty unfavorable environment for them.” He continues “They realize they not only have to motivate their base but also mitigate the damage of white, non-college voters who are going to be their weakness.”
“Whether it works or not, we’ll see,” he says.
We will have to wait until the November’s mid-term election to see if this works.
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