Retailers And Manufactures Blast Obama’s Overtime Push

Retailers And Manufactures Blast Obama’s Overtime Push

$MCD, $WMT

Retailers and manufacturers blasted US President Barack Hussein Obama’s plan to make more Americans eligible for overtime pay, saying the move would stunt workers’ careers and cost companies billions.

The National Retail Federation (NRF) says Mr. Obama’s proposed rule change to greatly increase how many salaried employees can claim overtime would force companies to use more part-time and entry- level workers.

Businesses also may offer fewer promotions and convert salaried employees to hourly to avoid raising their pay, the NRF said.

“The proposal is going to cost billions of dollars,” said a vice president for the NRF, the industry’s largest trade group. “It’s going to limit advancement opportunities, and ultimately it will reduce employee benefits.”

The NRF said the move, which would go into effect next year, would cost $9.5-B annually if retailers and restaurants implemented the change without making adjustments. Total payroll expenses for all 25-M workers in these industries was $545-B in Y 2012.

Mr. Obama’s plan would make workers who earn a salary of as much as $970 a week, or about $50,000 a year, eligible to claim overtime under the Fair Labor Standards Act. The current threshold is $455 a week, or about $24,000 a year, which is below the poverty line for a family of four. This change would benefit 4.68-M people, the White House said Tuesday.

An analysis by the Economic Policy Institute showed large increases in the percentage of workers that would be eligible for overtime if the threshold were raised to a level similar to Mr. Obama’s proposal. Among retail supervisors, about 56% would be covered, up from 8%. The group calculated comparable rises for restaurant managers, insurance clerks and customer-service representatives.

Major chains already were under pressure to boost hourly wages for their lowest-paid workers. Many, including McDonald’s Corp. (NYSE:MCD), and Wal-Mart Stores Inc.,(NYSE:WMT) have done that.

Now Mr. Obama says he wants to boost the pay of middle management. Of those affected, a majority have college degrees, are women and are older than 35, the Department of Labor said.

“A hard day’s work deserves a fair day’s pay,” Mr. Obama wrote on the White House website. “That’s at the heart of what it means to be middle class in America.”

The NRF and other trade groups do not buy it.

“The Department of Labor announced the demotion of at least 5-M Americans,” a spokesman for the National Association of Manufacturers, said in a statement. “This proposed regulation is another in a long list of regulatory roadblocks to healthy and robust economic growth and job creation.”

Stay tuned…

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Paul Ebeling

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