George Gibbs Center for Economic Prosperity

Pres⁠i⁠den⁠t⁠’s OT Law W⁠i⁠ll Cos⁠t⁠ Jobs

By: Sal Nuzzo / 2016

This opinion editorial originally ran in Pensacola News Journal on May 23, 2016.

Every week another job-killing, economy-stifling, Constitution-trampling regulation seems to come out from on high. The Obama Administration just doesn’t seem to get it. That or they don’t actually care about the people they’re purporting to help. After all, it sure is easy to propose solutions to “income inequality” when you personally don’t have to suffer the consequences when things don’t go as planned. You get to look like the hero and blame someone else for the resulting fallout from your decisions.

This week’s entry in the “anti-solution in search of a problem” log is the U.S. Department of Labor’s new rule governing eligibility for overtime pay. The labor groups are (of course) cheering this move (and will almost certainly seek an exclusion to it), while hard-working Americans have to lap up the union Kool Aid just to find out it tastes a bit funny going down.

Rather than allow labor markets to function properly and individuals to enter into mutually beneficial compensation agreements with their employers, the benevolent leaders in Washington, D.C., see themselves as knowing more than the 158 million people in the labor force. The rule more than doubles the threshold level of pay for overtime – from the current $23,660 to $47,476.

If you’re considering celebrating, we urge you to hold the applause and read the fine print. Lost in the seemingly good-will gesture will be the “unintended” consequences – job growth will continue to sag, wages will continue to stagnate, and labor force participation will remain depressed in 1970’s figures.

Americans are rightly frustrated — look no further than the presidential rallies. Whether people want to earn a better wage, or just find a job at all, their pain and anger are both understandable and warranted. Unfortunately, dictates such as the new overtime rule are part of the problem, masking themselves as part of the solution.

It is an economic certainty that this particular rule will impact nearly every sector of the U.S. economy. Hotels and restaurants, retail companies, and nonprofits will feel much of the burn. Businesses have already vocalized their concerns, saying this rule will slow their hiring processes, force them to cut hours and pay, and limit benefits packages.

If you’re mad about all of this, make sure the finger is pointed in the right direction.

We want entrepreneurs to take risks, invest in innovative ideas, and experience success. All of this (we call it the free market) results in the creation of innovative products and services that make our lives better, and you guessed it, create more job opportunities and higher paying positions. This is why capitalism and the free market has been the single greatest anti-poverty program in human history, lifting more than two billion out of poverty globally since 1970.

Over the past seven years, the policies of this Administration have kept GDP growth to under 3 percent in every single year, and overall job growth to levels well below both Ronald Reagan and Bill Clinton – two -residents also elected in the aftermath of recessions. The Obama Administration continues to tie the hands of employers. Consequently, employers have adjusted the sails to weather the storm. Why? Because the point is to survive and their survival benefits us all.

Overbearing government will destroy the American dream – just Google current events in countries like Venezuela and Brazil. Hurting the employer hurts the current and potential employee. It’s simple common sense. When will government officials learn this tug-o-war isn’t working?


Sal Nuzzo is vice president of policy for The James Madison Institute.