New overtime pay rules will have 'significant impact' on economy
The new rules on overtime pay for eligible workers announced yesterday by President Barack Obama will have a major impact on the economy, according to a labor expert. Under the new rule, salaried workers earning an annual income of $47,476 or less will get paid time and a half if they work more than the standard 40 hours a week. Previously, only people who made about half of that yearly amount were automatically eligible for overtime pay.
The rule will go into effect in December and is expected to affect about 4.2 million workers. "It's expected to have a significant impact on the economy overall," said Marick F. Masters, director of Labor@Wayne at Wayne State University where he teaches business and political science. "It's anticipated that it will generate about $1.2 billion in additional income into the paychecks of people who are affected."
The rule change received a mixed reception from the business community -- many are excited that it will boost wages for the working and middle classes, but fast food and retail businesses have argued the plan could backfire and force employers to slash worker hours. "I think it's always going to be a concern, and it's an expected reaction from the business community," said Masters.
"But I think it's also important that they look at their staffing practices, that they look at rationalizing their workforce, and that you can't expect to demand an interminable amount of hours from employees and not pay for them."