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Overtime and minimum wage: Different names for the same debate

Published: Thursday, March 20 2014 10:28 p.m. MDT

President Barack Obama, center, surrounded by supporters of the president's memorandum, signs a Presidential Memorandum directing Labor Secretary Tom Perez to modernize overtime protections, Thursday, March 13, 2014, in the East Room of the White House in Washington. Obama is bypassing Congress and orders changes in overtime rules so employers would required to pay millions more for extra time they put in on the job.

Pablo Martinez Monsivais, Associated Press

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A presidential memorandum signed on March 12 by President Barack Obama has directed the Labor Department to restructure who is and is not eligible for overtime pay, officially igniting further debate over the Obama administration’s approach to handling the economy.

“Tens of millions remain out of work, economic growth is anemic, his signature health-care law is such a dog’s breakfast of policy contradictions and wishful thinking that even he himself refuses to enforce it,” the National Review said in an editorial on March 14. “Though he has a sort of reverse Midas touch on matters economic, his adventures in micromanagement continue — this time as he seeks to overhaul overtime rules that are all of 10 years past their last major overhaul.”

As exemplified by the National Review’s editorial, the new debate over overtime pay has been politically linked to the debate over raising the minimum wage. “As with the proposed minimum-wage hike,” the editorial continues, “overtime rules beget economic tradeoffs.”

The same goes for liberal supporters of the minimum wage hike. “Where’s the downside? Newly qualified workers currently being forced to work overtime without pay will now get higher wages,” Salon’s Joan Walsh also wrote on March 14. According to Walsh, the recent conservative backlash against the minimum wage hike and overtime pay reform symbolize the further shift of the Republican Party rightward.

“These became bipartisan values, with some debating around the margins, through Richard Nixon’s administration. But then a pro-business backlash put all of those gains back on the table. Republicans are now trying to repeal the 20th century.”

So who’s right?

As is the case with most economic debates, NPR says actual economists are divided. “Some say the proposed changes would give the economy just what it needs: more consumer demand. Others say it would lead to exactly what the economy doesn't need: fewer jobs.

“Sound familiar?”

If the debate over overtime pay unfolds like the debate over minimum wage, however, detractors are likely to be pushing against public opinion.

A poll released in January by Quinnipiac University said that 71 percent of Americans support raising the minimum wage, a statistic that’s also supported by a Gallup poll from last March.

Interestingly enough, 50 percent of those surveyed for the Quinnipiac University poll also believe raising the minimum wage will lead to businesses cutting jobs.

Such an outcome suggests that when it comes to economic hot topics such as these, many voters are more concerned about what they believe to be fair than what they believe to be economically beneficial, per se.

Detractors, such as Forbes' George Leef, recognize this advantage. On Tuesday, Leef called the reforms to overtime "nothing but election-year grandstanding meant to help keep alive the fiction that the Democrats are the party of 'the little guy.’ ”

In response, Leef points to various negative factors he believes will result if the overtime reforms are put in place.

"Business isn’t a monolith and the cost of dealing with new and changing government regulations tends to hit small businesses hardest," he said. "To whatever slight extent the overtime pay rules have any bite, they will probably do so at small firms struggling to stay afloat."

Talking about small businesses seems like a safe way to go, since they provide 55 percent of all jobs in America, but, again, if the minimum wage debate is any indicator, it may not be enough to turn the public against overtime reform.

To sway the court of public opinion on these matters would require critics to convince not only those who benefit most from the reforms, but those who sympathize with them, that in the long run government intervention in these matters is not in their best interest.

That is likely easier said than done.

Ben Casselman, at the newly re-launched Five Thirty Eight blog, supposes that “nearly nine million U.S. workers in any given week would become newly eligible for overtime pay” as a result of the president’s suggested reforms. And while 9 million only amounts to a small percentage of the working population (the Economic Policy Institute estimates that upping the minimum wage would affect close to 28 million workers), both detractors and supporters agree it's certainly enough to make an economic difference, whether it be for good or ill.

Casselman concedes that how much of an impact such changes will have, as well as the economic implications, is hard to tell. But “where the administration ends up drawing the line makes a big difference.”

When it comes down to it, where to draw the line seems to be at the core of most of our economic debates.

JJ Feinauer is a Web producer for Moneywise and Opinion on DeseretNews.com. Email: jfeinauer@deseretdigital.com, Twitter: @jjfeinauer.

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