When President Obama stages a photo op to publicize signing a measure he claims will “help” American workers, you can be almost certain that “unintended consequences” will outweigh ay intended benefits. Lacking even an elementary understanding of how a market economy works, he only makes things worse.
In an effort to avoid the Obamacare mandate, many companies reduced workers to fewer than 30 hours per week. This reduction of employees to part-time status continues to cause endless difficulties. Employees have fewer hours and less income than they want, and employers have a harder time staffing their companies. But the Obama administration continues to expand its grip on all aspects of American life.
In 2014, the Labor Department proposed that under the Fair Labor Standards Act, about five million U.S. workers [would be] newly eligible for overtime pay by more than doubling the salary threshold. This change is already being felt by many companies and now it will extend to colleges and universities.
How do businesses react? In some cases, “employers may attempt to convert these workers to an hourly wage, lowering their pay in the process so that their total weekly compensation, including overtime, remains constant. Other workers, whose salaries are just under the exemption threshold (expected to be $970/week in 2016), might see a small bump in their weekly pay to raise them above the new threshold.”
Some employers are apt to restrict workers to 40 hours per week in order to reduce overtime costs. Since the cost of compensation for regular (non-overtime) work should not change significantly as a result of these rules, employers would have an incentive to hire more part-time or full-time employees to make up for the lost overtime hours. Furthermore, because of the “duties test” managers may “be robbed of their flexibility” to assist with non-managerial parts of a job, thus impacting business operations.