Speaking at an event in Iowa on Tuesday, Republican presidential candidate Jeb Bush voiced his opposition to the Obama administration’s proposal to expand overtime protection to an extra five million workers.
Calling it “the wrong approach,” he argued that the plan will result in lower wages, less overtime available, fewer people working, and will also ban business owners from giving managers bonuses:
“The net effect of the overtime rule will be, if history’s any guide, there will be less overtime pay, there will be less wages earned,” Bush said. He also said it wouldn’t allow “giv[ing] a bonus to a manager in your store or your company,” and that it will also “lessen the number of people working rather than increasing.”
Currently, those who make less than $23,660 a year and/or those who can be classified as “executives” — including, for example, people who supervise a clean-up crew — are exempted from the requirement that they be paid time-and-a-half for working more than 40 hours a week. Because the salary threshold hasn’t gotten a meaningful update since 1975, it has effectively lowered as inflation rose. The administration has proposed bringing it up to $50,440 by 2016, just shy of where the threshold would be if it had risen with inflation.
If employers have to pay more when workers go over 40 hours a week, it can have one of two effects: Either those workers will end up making more for the extra time on the job, helping to combat the wage stagnation most Americans have faced for a decade, or employers will cut back on hours, giving people more time to spend at home with family and friends rather than putting in uncompensated hours at work. That would help combat a workweek that is, on average, a day longer than the supposed nine-to-five, 40-hour standard.
Some have critiqued the rule change by saying that employers could respond by lowering workers’ base wages so that their total earnings, including both what they earn for regular hours and for overtime, is equal to what they made before they were covered by overtime requirements. But as economists Jared Bernstein and Ross Eisenbrey point out, there is little research to support the idea that employers respond to such changes by lowering what workers already make.
Bush faced a wave of criticism last week when he suggested that to get to his goal of four percent steady economic growth, “people need to work longer hours and, through their productivity, gain more income for their families.” One problem with that proposal is that Americans already work very long hours compared to other developed countries.
On top of that, the link between working harder and making more money has been broken. Productivity rose nearly 25 percent between 2000 and 2012, but wages stayed flat or even declined for the bottom 60 percent of earners. In fact, productivity growth and wage growth became unlinked in the mid-1970s, as the overtime threshold started losing its bite.
One way to ensure that putting in more hours will result in higher wages for families is to require those extra hours to be compensated more with overtime pay. Another is to make sure the minimum wage is enough to live on, which it currently isn’t for a family of two. But Bush has also voiced his opposition to the minimum wage.