The Trump administration expanded mandatory overtime pay rules to include 1.3 million U.S. workers. The new rules increase the annual salary threshold used to determine which employees qualify for time-and-a-half pay if they work longer than 40 hours a week.
This change, albeit less drastic, is similar to a rule President Barack Obama tried to implement that would have benefited an additional 4 million U.S. workers.
At the time, the Labor Department doubled the salary threshold to $47,000. However, a federal judge in Texas struck down Obama’s rules, claiming that the high ceiling would hurt workers in management positions.
Business groups came against Obama then, saying that the changes were going to force them to demote salaried workers and have them work in exchange for hourly wages instead. Because of the heavily regulated world of overtime pay, business owners already pay millions to settle overtime-related class-action lawsuits. By raising the salary threshold, the Trump administration is, once again, making more workers likely to sue their employers, since more of them will be eligible to receive overtime pay.
While talking to the press, Acting Secretary of Labor Patrick Pizzella said the agency “believes there will be a broad consensus that more overtime pay for America’s workers is a positive step forward.” But critics say rule changes don’t go far enough, with Public Citizen regulatory policy advocate Amit Narang saying that Trump is “weakening the overtime rule.”
“President Trump is literally taking money from the pockets of workers to please corporate interests,” Narang said.
However, there might be more to this rule than meets the eye. Especially if we look at any government interference in the wage system for what it produces instead of what politicians claim.
Wage Manipulation: Bad for Workers
Wages don’t rely on the government. They are but the product of a contract between worker and employer.
When the government sets rules such as minimum wage and overtime pay requirements, bureaucrats directly interfere with people’s ability to negotiate, undermining their freedom and rights over their own labor. To the low-skilled and poor individuals looking for work out there, this may prove fatal.
Businesses are also impacted by these rules in more than one way, and smaller companies such as mom-and-pop shops are the ones that get hurt the most.
Because of their limited capital and earnings, they can’t afford to follow these rules without letting go of many of their employees. Sometimes, they are forced to close their doors because they simply cannot hire the number of employees their businesses require. Needless to say, it is the large companies with enough earnings to pay their workers more that benefit in the end.
If the goal is to hurt the poor while benefiting large corporations, adding even more wage-related requirements to our labor code is the way to go.
Only big companies can afford to jump through all the hoops imposed by the government, and while Trump’s new rules pale in comparison to what Obama would have imposed in 2016, it doesn’t mean that adding even more wage requirements will do anything to help the unskilled as well as the small business owners already struggling across America.
Perhaps, the president should think twice before showing his face in working-class towns during his reelection rally. Unless he’s willing to be honest about how his policies will hurt the little guy.