Jul 13, 2015 - 9:00am

Overtime Rule Would Hurt More Than Help

Advisor and Former Chief Executive Officer, U.S. Chamber of Commerce

President Ronald Reagan once said that the nine most terrifying words in the English language are “I’m from the government, and I’m here to help.”

Indeed, what the government may see as a helping hand often winds up being a ham-handed effort to impose its will on America’s job creators, resulting in more harm than good. Such is the case with the Department of Labor’s proposed overtime rule, which the administration claims will extend eligibility for overtime pay to some 5 million workers.

Under current regulations, a worker qualifies for overtime pay if his or her wages for 40 hours of work per week fall below a $23,660 threshold. The proposed rule would more than double that threshold, making employees earning up to $50,440 eligible for overtime when the regulation takes effect in 2016. In addition, this threshold is scheduled to go up each year so that it continues to reflect the 40th percentile of earners.

In this arbitrary and intrusive way, the administration has decided that Washington knows best when it comes to how each job should be classified and how much employees should be paid. And, as usual, the administration fails to consider the impact on employers and the potentially harmful consequences for workers.

Many employers—especially small and midsize businesses—wouldn’t be able to absorb the increased labor and litigation costs. These added costs would mean fewer opportunities for growth and could even result in a curb on hiring. And employees—those who the rule purports to “help”—may gain overtime eligibility, but they are likely to lose hours, health care and retirement benefits, opportunities for advancement, flexible work schedules, and actual income earned. Members of the U.S. Chamber are already saying that to stay in business they will be keeping overall employee compensation at the same level.  

Government wage mandates are no substitute for economic growth, and contrary to the administration’s assertions, they do little to lift the middle class. If our leaders want to see hiring accelerate and incomes climb, they should pursue pro-growth policies that enable employers to expand, invest, and create more high-paying opportunities for workers.

That’s why the U.S. Chamber continues to advocate for commonsense regulatory and legal reform, a simplified tax code that lowers rates for businesses and individuals, long-term investment in infrastructure, and policies that will allow the United States to capitalize on its vast energy resources.

In the meantime, we’ll use every tool at our disposal to fight onerous rules and regulations that hurt workers and employers more than they help them.

About the Author

About the Author

Thomas J. Donohue
Advisor and Former Chief Executive Officer, U.S. Chamber of Commerce

Thomas J. Donohue is advisor and former chief executive officer of the U.S. Chamber of Commerce.