A harsh blow to small businesses
The Labor Department’s change to the overtime rule is a harsh blow to millions of small businesses and their employees. According to NFIB research, approximately 44% of small businesses would be affected. The department claims that 4.2 million workers could potentially benefit from the change. That’s not consistent with the department’s own analysis.
In fact, buried within the regulation, the department projects that many workers won’t receive any additional pay and that others will lose pay. According to Labor, 60% of the newly eligible employees don’t work overtime right now. The department also estimates that the average hourly pay rate will decline in 2017. The talking points say this is a raise for workers, but the economic analysis says something completely different.
Most small businesses have razor-thin margins, and they cannot simply raise prices to cover higher costs without losing customers. Moreover, the median personal income for small business owners is roughly $68,000 annually, according to NFIB research. Big corporations can trim shareholder dividends, cut CEO pay or move production facilities out of the country. Those aren’t options for most small firms.
Employees will be injured as well. Managers who haven’t punched a clock in years will have to go back to filling out a time sheet. They will even have to take into account work from home such as checking email or fielding a phone call. Essentially, they’ll be demoted from their management positions to hourly jobs.
The overtime rule is another government mandate that makes it costlier and more difficult to run a business and create jobs. NFIB surveys its members every month to identify their top concerns. Government regulations consistently rank at the top.
Every minute that business owners must devote to keeping records, filling out paperwork and dealing with government inspectors is a minute they don’t have to run their businesses. Every dollar it costs to comply with all of those rules is a dollar they cannot reinvest in new jobs, better equipment or customer service.