Obama works overtime on executive overreach

President Obama infamously vowed last year to use his “pen and phone” to push his divisive and controversial agenda forward, declaring his intention to unilaterally sidestep Congress and pushing the limits of executive authority.  And in recent months, the President has made good on his threat, issuing edicts affecting everything from energy policy, health care and even labor rules.  Last week, Obama took out his pen once again, ordering an increase in the threshold for overtime pay – once again without consulting lawmakers or seeking the approval of Congress. 

Under the president’s sweeping proposal, all salaried workers earning under $50,400 would be eligible for overtime pay if they work more than 40 hours a week.  While Obama has predictably touted his proposal as a way to ensure “fair pay,” workers and the small businesses that employ them will be among the most negatively impacted. 

{mosads}While backers of Obama’s proposal suggest his executive action will result in pay increases for 5 million workers, his own Labor Department (the agency charged with implementing the new rules) estimates that only about one-fifth that number will see any tangible benefit – and even that could be an overestimate. 

Moreover, mandating higher overtime pay carries with it serious economic risks.  The most likely response by employers to Obama’s order, as seen in a recent study examining the effects of 2004 regulatory changes in overtime pay, are pay cuts. Since many employers are in no position to simply absorb the costs of these artificially-mandated higher wages, they will be forced to consider more draconian options to comply – such as scaling back compensation levels, or simply closing up shop. In lower paying jobs, employers may simply slash hours instead of reducing wages — leaving less in the pockets of those who can least afford pay cuts. Even Obama’s own Department of Labor projects reduced wages and hours as the most likely outcome. 

In short, the potential result of Obama’s latest overreach will be cutbacks in employee schedules, greater pressure on struggling small businesses, and shrinking paychecks for some of America’s most vulnerable workers. 

Another looming question surrounding the controversial order is if Obama will exempt the White House and Congress from this expensive mandate. It’s well known around Washington that recent graduates and often unpaid interns make significant contributions to the day-to-day operations of the West Wing and Capitol Hill.  

While senators make a robust $174,000 plus benefits, most Hill staffers make substantially less than the new threshold despite toiling long hours – a lifestyle most are nonetheless happy to embrace. The same goes for those who work in the White House, with roughly a quarter of White House employees earning less than the proposed threshold of $50,400 – with many of those likely putting in more than 40 hours a week as well. 

The reality of the 21st century economy is many Americans choose to work in excess of 40 hours a week, whether at the office, at home, online or some combination of all three.  They do so for a variety of reasons –to pursue their passions, to develop skills that will pay off in the long run, or to jump at an opening with opportunities for advancement. Rather than attempting to turn back the clock on the American economy, or to use the coercive power of government to inject bureaucracy between workers and employers, Obama should pursue pro-growth policies that promote economic expansion and real wage growth – the kind that isn’t dependent on executive fiat. 

Peterson is a policy analyst for Americans for Prosperity, a conservative advocacy organization.