Business interest groups and their allies engaged in hyperbolic rhetoric about the supposed negative impact of overtime regulations before they were announced last week. By changing a salary threshold, the new rules will make millions of workers newly eligible to be paid for their overtime hours.
“Businesses will be forced to look for cuts in the face of such massive costs,” Competitive Enterprise Institute policy analyst Trey Kovacs predicted. Right-wing economics analyst Michael Carr even worried that the overtime rules could help start another recession.
House Speaker Paul Ryan warned that they would “cause people to lose their livelihoods.”
“You just can’t do this!” said a former McDonald’s CEO.
But in investor calls over the past week, executives at some leading American retailers quietly admitted that the rule will only have a modest impact on their bottom lines, if any at all.
“We’ve looked at it and any impact at all would be non-material and we’re comfortable with our guidance as we go forward,” Ross Stores CEO Michael Hartshorn said during an earnings call on May 19.
“We don’t see it as a material impact in either … 2016 or 2017 as we go forward,” Dick’s Sporting Goods CEO Andre Hawaux said. “The regs just got published the other day, and we’re going through that. But we don’t see that as a meaningful cost increase year over year.”
Scott Bowman, chief financial officer at Hibbett Sports, told investors that while it is a “little bit too early to have all of the details” on the new rule, he doesn’t “think it is going to be a significant impact on SG&A,” an accounting acronym for selling, general, and administrative expenses.
Staples CEO Ron Sargent pointed out to analysts that his company operates a lot of stores in California, which already had aggressive overtime rules. “Several years ago, we re-classified some of those assistant managers to hourly just because of this issue. So I think we’re pretty far ahead on the issue,” he said. “You know, most of our managers, our assistant managers, are kind of working similar to our store managers. We don’t have a whole lot of 80 hour a week manager types like you may have heard about in the press.”
Home Depot’s president of U.S. retail, Craig Menear, said he does not view the rule as overly difficult to adjust to. “We look at all factors when we put together our plans. Clearly we were aware that this was possible to come,” he said.
Top photo: President Obama signing a memorandum directing the Department of Labor to draw up new overtime rules in 2014.
Obama attempts to create wealth through executive action
https://youtu.be/JuJsrM4hro4
Of course it won’t hurt business. It’s Obama man.
Only an idiot would think that.
https://therulingclassobserver.wordpress.com/2016/05/24/religious-capitalists-vs-common-sense-capitalists/
The solution for our bedeviled economy is less taxation, not more regulation! You don’t need to know econ to look at these unprecedented acts of paper pushing and realize it’s not helpful to society as a whole.
I wonder who the new president will hire to stand and smile while he/she signs things?
So you’re saying someone making $23k in 2016 isn’t a white collar professional? Why couldn’t the free market take care of this?
I guess the real “takers” in society will have to go to the for-profit prisons for their labor needs.
The key fact about this change is that it is for SALARIED workers.
How many “salaried” workers make less than $47,476. 00 ?
This is a way to further separate hourly workers from those
who oversee them. It is an encouragement of separation
and reinforces the desire of those who want to be bosses.
wow Clark, you think few salaried managers make less than 47 grand? I take it you know zero regular working people.
“How many “salaried” workers make less than $47,476. 00 ?”
Well if you look at the reaction last year when this was announced, you would have thought the economy was going to collapse once implemented, so it has a big impact on businesses that use free labor after they pay for the first 40hrs.
Reagan’s economic advisor, David Stockman, discredited the “Trickle Down” theory – it doesn’t work as advertised! Paying overtime and raising the minimum wage boosts the economy.
Consumers with extra cash in their pockets drive the economy because working class Americans spend that extra cash on clothes, food, restaurants, hotels, furniture, cars and homes.
Cash circulating is taxed several times as it changes hands, which increase tax revenue to local, state and federal governments.
Why is unemployment rate highest at the margins? Inner city and young workers. Because cost of labor is higher than expected productivity. Trickle down and giving people a chance are two different things. David Stockman would not support your conflation. I read his website Contra Corner everyday.
“cost of labor is higher than expected productivity”
American productivity levels have outpaced wages for almost 40 years. The lack of employment is caused from decreased velocity of money along with decreased demand. If there is demand, there will be supply with a profit margin to be made.
Thanks Paul “Hack” Krugman. Of course productivity is greater than increased labor cost: that is the profit margin. Explain why at the margins these new rules cause problems.
Right RB! Also, increased earned income tax credits & SNAP benefits for poor working people (people without jobs actually don’t tend to qualify for SNAP) frees up their cash for more purposes. I know from personal experience — the only times our family could afford any serious expenditures on my salaries as a low-paid teacher or teaching assistant (or for that matter office worker) was with these extras. They help make the economy go around.
What you’re describing is the velocity of money. It is a measure of how fast $1 moves through our economy.
With $2 trillion stashed overseas in illegal tax havens, it is easy to see why the decrease in velocity has been a drag on the economy over the past 40yrs.
House Speaker Paul Ryan warned that it would “cause people to lose their livelihoods.”
Like he cares as he is bought and paid for by the corporatocracy that has an interest in shipping jobs to low cost union forbidding totalitarian nations, and driving down wages as low as possible domestically to deliver profits to his funders resulting in oppressive inequality for the masses.
Ryan worships at the dark altar of trickle down and austerity, which is only falsely justified by R&R’s Harvard study based on faulty math calculations on their Excel spread sheets.
He is a prime example of those that betray the interest of “We the People” whose actions simply cannot be explained only by their ignorance.
Econ 101: The higher the price for something the less demand for it. Labor is the “something” is this equation. Just because the executives are not hurt does not mean people whose labor productivity compared to costs are at the margins aren’t (granted, no exec is worth millions, but we all know the low wage workers take it in the shorts).
Thank You for not being afraid to speak truths, when so many the eyes have been veiled, the ears deftened,and the heart and mind sealed. But there are some still receiving these important encouragement.
In many industries there is really no such thing as a “full time” person. Many companies currently do not allow workers to get to 40 hours a week and start facing various state laws around overtime and benefits. For McDonalds and other fast food companies this has been standard practice for a long time. I believe Walmart does this also.
You are lost. These same employers have long regularly put people as “salaried” so that they can be made to work more than 40 hour weeks without getting any overtime.
Sounds like slavery in Africa that needs to be abolished and prevented from ever coming back into existence.
The only difference between slavery and employment is consent.
There are already rules which govern when more lower salaried employees must be given extra if they work overtime. Obama earlier extended the salary ranges for those employees to give them more protections. This rule was about giving overtime to hourly wage workers. McDonalds doesn’t convert their workers to salaried to make them worker longer hours.
You are wrong.
This is a bump for salaried workers only.
It is one more cynical manipulation of people by the great frauds
of the ObamaReagan cult.
The executives who previously protested were doing so because
they don’t want ANY government interference with their
sadomasochistic delights. Now that this reinforcing of the
status quo is happening, those same execs are somewhat
willing to admit that it is in their favor because they know the
suckers will lap up this pablum.
again, Clark, you obviously know fuck-all about how great it is merely to be “salaried.” Many “salaried” people barely make enough to get by. Sorry about that.
Someone making $24k per year to work 70-80hrs a week is more valuable to the company than hiring 3 non-exempt, part-timers, to preform the same actions.
Please comment on how getting taxed at 40% of the overtime wage is a good thing for the worker. The only thing good about it I see, is you make 10% more than the government. Overall, this is a good deal – for the government.
Umm, hate to break it to you, but most retail employees on a salary are middle or upper management that already earn over the new threshold level. My first real job was in retail. I was being groomed for management when I decided to take another direction with my life. In the early 90’s, typical retail management made around $45,000/year their first year out of training. The few that don’t earn that much are the brand new trainees. All this will do to retail is cause those few trainees to not do as much overtime.
The one little tidbit above shows that you are cherry-picking your data.
It will, however, affect my job. I am a teacher in a private school. I am salaried and earn well under the new threshold. My pay raises are tied to how complete my job is. The most likely outcome for me is that I will be required to do all of my job without clocking overtime hours. When I am not able to do everything required, they will simply pass me (and all of my colleagues) over for future pay raises. The average teacher in my company works around 50-55 hours/week to complete our jobs. Being paid overtime would put us right at the threshold for the new overtime exemption rules–an amount that is obviously more than my employer is either willing or able to pay.
How about if we think about this for a minute? Since the two positions are inconsistent, either they were lying before when they said the additional costs imposed by the mandate would have a negative effect, or they are lying now when they say the costs will not have a negative effect.
Instead of making an assumption about which statement is a lie, the assumption of course being the option that is most compatible with your bias, why not analyze each statement to determine which is most likely to be a lie?
Since 1) it is not possible to have a situation in which additional costs that come with no additional benefits do not have a negative effect, and 2) any negative opinions shared during an earnings call can drive down the stock price, this is not a difficult question to answer.
Economist. Analyst. Economic analyst. Anything but what you wrote.
It passes spellcheck? Ship it!
Of course not. Obama has never actually made anything difficult for the rich, and never will.
Pres Obama did a good thing giving people a step up on the down escalator. The former Micky Dee ceo seemed to have forgotten the US can do anything at any time, invade a country, torture some folks, let wallstreet run wild… Perhaps he is insulted like Erdogan, he wasnt consulted first, or his political donation didnt get returned, or, he mistakenly believed he owned the presidency as part of his golden parachute.
Paul ‘lyin’ Ryan has another problem.
House Speaker Paul Ryan warned that it would “cause people to lose their livelihoods.” He fancies himself as the town crier – whom he replaced. Pauli Boi suffered the embarrasment, after having told his wealthy corporat backers that supporting his candacy was not an expense but a moneymaking investment, of conning them out of their money by that lie.
You will enjoy this video that came under Paul Krugman’s Blog in the NY Times today 5/25/16.
http://krugman.blogs.nytimes.com/2016/05/25/talking-global-inequality/
The essence of hope to be garnered from what was reviewed in the video was that those that worship at the altar of trickle down and austerity are worshiping false gods. It was clearly emphasized during the discussion that raising the minimum wage empirically will not harm workers jobs or the economy. It was also emphasized in the presentation empirically that periods of much less inequality were times of significant economic growth.
The sad thing is that so few of us will watch the video while at the same time there are all kinds of right wing propaganda sound bites being spewed by the likes of inane talk radio show hosts that never took even economics 101, which direct the masses to do their moral and civic duty and worship at the dark altar of trickle down and austerity alongside Paul Ryan and his funders, where they also pray to get their fingers into Social Security privatization.