Are most Americans better off if some don't get overtime?
CBO says Obama's overtime pay rule won't help that many people
As President, Donald Trump is expected to rescind all or some of Barack Obama's Executive Orders, rules Obama tried to enact in defiance of the Republican Congress.
That includes Obama's Labor Department overtime rule, which doubled the long-frozen maximum salary workers earn before the boss has to pay them time and a half after 40 hours a week, to around $50,000.
Congress says the rule would directly benefit around 900,000 U.S. workers, who would either get paid more, or have to work less. (I wrote about one big Philadelphia-area employer's reaction to the overtime rules a year ago.)
And if the next administration decides to kill the rule? Today the Congressional Budget Office issued this 36-page report arguing that:
- As you might expect, "canceling the changes would reduce employers' payroll and compliance costs and increase profits."
- And of course: "The cancellation would also decrease employees' pay..."
- But, looking at things much more broadly, cutting overtime pay "would increase real family income—that is, income adjusted to remove the effects of inflation—because an increase in firms' profits and a decrease in prices would more than offset the reduction in some workers' earnings."
Got it? CBO expects the people who own employers (wealthier people, CBO says) won't actually pay the cost, or the whole costs, of having to pay their $50,000-a-year employees overtime.
Instead, CBO expects employers would pass higher overtime costs to others, in the form of higher prices (or maybe lower share dividends).
So, CBO concludes, cancelling the overtime rule will benefit all Americans -- including the people who won't be getting a raise (or shorter hours), to the extent they're also consumers, and can now count on paying a little bit lower prices with their renewedly smaller overtime-exempt take-home pay.
It's true, some people will lose pay the government promised them (9/10 of the workers affected work for private businesses, 1/10 for local governments or nonprofits, very few for the federal government).
But overall, CBO assures us, we'll be better off as a nation if we don't force employers to pay these people more.
Looked at the CBO way, the people about to get their raises rescinded before they start are doing us all a patriotic service. Though I don't expect they'll all agree.
What other government initiatives and programs are going on the cutting board, because they benefit a relative few (though not well-paid) at the expense of the many (or especially their bosses?)