Judging from President Obama’s e-mail announcement that the Department of Labor would today release a final rule expanding overtime-pay regulations, you might think that he was footing the bill:
If you work more than 40 hours a week, you should get paid for it or get extra time off to spend with your family and loved ones. It’s one of most important steps we’re taking to help grow middle-class wages and put $12 billion more dollars [sic] in the pockets of hardworking Americans over the next 10 years.
But, of course, that’s not the case. Employers will have to come up with the extra billions to pay more overtime due to the new rules. That means that while some workers may earn more under the new rule, others will lose out as businesses respond by reducing base compensation, cutting back hours overall, consolidating jobs, and raising prices.
Of course, the hard costs of paying for overtime are just one of the burdens created by the new rule. They’ll also face significant new compliance costs as they have to track more workers’ hours in order to assess when they qualify for overtime. The National Retail Federation estimates the new rule will cost employers more than $9 billion per year.
Some workers may not mind having to punch a clock if it means extra dollars in their paycheck. But others will resent being transitioned from salaried positions, in which they are compensated for productivity and value added, into one where hours logged are the key metric.
As is so often the case, these workplace regulations are likely to backfire the most on women who value flexibility. Some businesses are sure to respond to these new rules by eliminating at-home and nontraditional work arrangements, since it’s tough to keep precise track of someone’s work hours when they are telecommuting or using a flexible schedule.
Policymakers could help workers more by cutting back on red tape to make it more likely that employers will create jobs, giving people a better chance to find the arrangements they prefer, whether that’s working in an hourly job with overtime potential or a salaried position.
The Independent Women’s Forum’s recently released report, Working for Women, makes that case and particularly highlights the need to modernize the Depression-era Fair Labor and Standards Act, which governs issues like overtime. Conservatives need to be prepared to dive into this debate and explain why new regulations like this one aren’t a victory for workers, but another impediment to job creation, and make the case for a new direction and real flexibility.