Outgoing U.S. President Barack Obama's new overtime rule, which the government is saying will be beneficial to American workers, is set to take effect on December 1, 2016. Unfortunately, not all U.S. workers will benefit from the new rule, as it will actually mean fewer earnings for some.
According to The Daily Caller, the new overtime rule will raise the threshold of workers eligible to receive mandatory overtime pay from $455 per week to $913 per week. The rule will protect 4.2 million workers, or the middle-class Americans, from not receiving a time-and-a-half pay for working more than 40 hours per week.
The rule is great for employees, especially those who work more than 40 hours a week but aren't receiving any overtime pay due to being above the previous threshold. Despite the good intentions of the new rule, not everyone is convinced that the intended effect will be achieved.
Dr. Donald J. Boudreaux and Dr. Liya Palagashvili of the Mercatus Center at George Mason University are saying there's actually no evidence that the rule will meet its stated objectives. It will also change how businesses operate, turning salaried work into hourly wages instead, to make monitoring employee hours easier.
The Argus Observer reports that Ken Hart, vice president of operations at Saint Alphonsus Medical Center-Ontario, said that changing the operations from salaried to hourly may harm some of the workers the rule is intending to help. Those who work above 40 hours will benefit, but those who work below 40 hours would mean less money if they go to an hourly wage.
But the biggest impact will be on small businesses, as these companies usually don't have the means to pay higher salaries. "It will have a severe impact on small business," Hart said.
The Aiken Standard adds that the drastic changes could actually cost some jobs, or even cost some businesses to close altogether. Doubling the overtime threshold would force businesses to make drastic changes as well, such as cutting hours, reducing jobs, or other consolidation measures to compensate for the higher cost it will bring.