President Barack Obama’s overtime rule is set to take effect on December 1, a proposition that will likely have many American workers excited.
It brings a host of potential benefits for employees, at least according to projections.
The Overtime Rule is expected to make 12.5 million American workers eligible for time-and-a-half overtime compensation and will extend mandatory overtime protections to 4.2 million workers across the nation. It also makes it so that every American worker making under $47,476 or less per year must be compensated with time-and-a-half overtime pay.
While this is great news for employees, it poses an obvious problem for businesses as it raises their costs substantially. Every hour past the 40 hour week threshold means a cut to their bottom-line. Some labor experts are predicting that businesses will likely skirt the ruling by capping hours for employees at 40 a week, thus rendering the ruling less effective.
One labor economist says that while businesses will cut hours back for those working over 40 per week, the cuts will be marginal enough that “those workers’ weekly earnings will increase. Employees will work less but make more.”
Not everyone believes the impending rule will achieve its intended effect.
Dr. Donald J. Boudreaux and Dr. Liya Palagashvili of the Mercatus Center at George Mason University “find no empirical support” that the rule “will meet its stated objectives.” The professors even assert the regulation could structurally change how the economy works as the rule turns salaried jobs into hourly wage jobs.
Some business owners even swear the health of their business relies on the fact that they do not let their employees work overtime.
Dr. Bonnie Schnitta banned overtime at her business years ago, and she attributes the success of her business and the health and vigor of her employees to her decision, the Post reports.
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