Policy: Labor

Obama's overtime-pay proposal is really a bid for votes

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Opinion,Op-Eds,Barack Obama,Labor,2014 Elections,Income Inequality

Imperial president? Moi?

In announcing a contentious overtime-pay proposal on Thursday, President Obama seems to have shed any pretense of willingness to work with Republicans, whose theme of an “imperial presidency” is resonating ever louder. However, this proposal may be more smoke than fire.

The administration acknowledges its overtime proposal, which would circumvent Congress, is unilateral and would anger business groups. It is also bad policy, an encore of Obamacare -- from which, ironically, the overtime proposal is meant as a distraction. Republicans should call his bluff and bring the story back to Obamacare. Here's why.

Under the proposal, millions of executives and professionals would see their salaries eliminated. They would be shoved into hourly work. Their time would be micromanaged. Hours would be cut to part-time and below 40 per week to avoid overtime. By turning salaried workers into part-time, hourly workers, the Obama proposal would be catastrophic for Middle America.

If it were to take effect -- and that's a big if. The New York Times called Obama's plan, “part of a broader election-year effort by the White House to try to convince voters that Democrats are looking out for the middle class.” Indeed, Democrats have made clear they want to make income inequality their election-year theme.

A the Times notes, Obama and his fellow Democrats are after the votes of “several million additional fast-food managers, loan officers, computer technicians and others whom many businesses currently classify as ‘executive or professional’ employees.” But do these executives and professionals want to become part-time, hourly workers?

That the proposal was announced after a Florida special election loss for the Democratic candidate, in a district Obama won in 2012, further underscored its political nature. And skepticism about its seriousness extends to professionals familiar with its enforcement.

Paul DeCamp, former administrator of the Labor Department’s Wage and Hour Division, which would administer the policy, told me an interview, “If the administration has its way and makes it significantly more difficult to classify workers as exempt [from overtime], the result will be to convert a whole lot of salaried employees into hourly workers who punch a clock and have their time micromanaged by others. ... [T]o prevent workers from exceeding 40 hours and getting into a 'premium pay' situation. … This would be the Affordable Care Act all over again, with employers cutting employee hours.” And we all know how well the ACA has played for Obama.

DeCamp adds, “I think it is very unlikely that these contemplated changes to the Part 541 [overtime] regulations will become law. If DOL goes forward with this type of regulatory package, it will be 2004 all over again, when there was a very intense battle in Congress.”

Is the White House itching for a fight? Most likely, yes, so it can pitch class warfare against Republicans. And as with Obamacare, when it blamed insurers for people being dropped from their policies, the administration will seek to pin job losses and reduced hours on employers.

Alex Passantino, former Wage and Hour Division acting administrator, is also skeptical. He told me in an interview, “If some of the salary levels [more than doubling] mentioned in the Times article were actually implemented, this proposal would have a dramatic impact on the [overtime] exemption landscape. I can't imagine that they would open the regs just to tinker with salary levels and primary duty.”

But again, actually finalizing the rule may not be the real goal. Furthermore, average rulemaking times of more than a year indicate this proposal likely would not become a final regulation before November, leaving it an open issue with which to attack Republicans during campaigns, pushing the proposal’s political aims.

Aloysius Hogan is a Competitive Enterprise Institute senior fellow specializing in labor and employment policy. Thinking of submitting an op-ed to the Washington Examiner? Be sure to read our guidelines on submissions for editorials, available at this link.
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