OPINION:
Barack Obama is worried about the legacy he’ll bequeath to history in just three months. Like all presidents he wants to be remembered as a good president if not a great president, but he keeps doing things that will render the memory of his presidency as something forgettable between the work of Chester Alan Arthur and Jimmy Carter. He’ll be remembered as a regulator, armed with executive orders, not a president armed with powers of persuasion.
A group of state attorneys general, led by Adam Paul Laxalt of Nevada, has sued to overturn Mr. Obama’s new overtime rule that if not overturned will cost thousands of jobs, threaten to bankrupt hundreds of small businesses and keep the attempted recovery of the U.S. economy doomed to fits, starts and finally failure. The new rule, if not overturned by the federal courts, becomes effective December 1.
The new rule, which Congress refused to enact, would more than double the minimum salary level under which employers must pay overtime. The level of pay will double from $23,660 annually to $47,476, vastly expanding the eligibility pool. For hundreds of small businesses, it’s a budget breaker. That was enough to block it on Capitol Hill. The new rule will lead to a reclassification of countless employees, turning them into hourly workers, and reality will require cutting the hours they can work.
“Once again, President Obama attempts to obtain by executive fiat what he could not gain through the legitimate political process provided by our Constitution,” Mr. Laxalt says. “Through this unlawful rule, the federal executive is attempting to dictate how state and local governments allocate their budgets and provide service to their citizens and constituents. In short, this federal administration has decided that it knows better than the states how state employees should be paid. Respectfully, this is not the president’s decision to make. State budgeting and employee pay are decisions best left to the states and their locally elected officials.”
In addition to doubling the minimum salary requirement for an employee to be considered eligible for overtime pay, it does not take into account whether the tasks they are assigned to perform fall into executive, administration or professional categories. This new Obama rule includes “an automatic pilot clause” that raises the minimum pay every three years, bypassing the standard administrative rule-making process required by federal law. It’s the kind of thing only a central planner could love.
If allowed to go into effect as scheduled in December it will likely require layoffs in both the public and private sector. For an administration whose chief economic “accomplishment” so far is expanding the number of Americans who have given up finding a job. “I will have to convert exempt employees to hourly,” one employer tells the National Federation of Independent Business, an industry advocacy group. “I will have to hire more employees and reduce benefits. My ability to compete will be virtually destroyed.”
The additional labor costs could cause the Canam Steel Corp. of Maryland, for example, to hold off on hiring new workers while restricting schedules for existing employees, Ron Peppe, a company vice president, tells The Wall Street Journal. “The money has got to come from somewhere.”
Recognizing that the money has to come from somewhere is basic economics, usually learned in junior high school, but it’s the reality that eludes the economists at Mr. Obama’s White House. Some legacy.
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