‘Executives’ Making $23,660 Will See a Raise From Obama Rule

Daniel Hamermesh, a University of Texas economics professor who has studied the impact of changes in overtime rules in Japan and South Korea, said the likely impact of stricter overtime standards would be higher overall pay for affected workers.

Larger businesses would probably hire additional workers to reduce the amount of overtime paid, he added. In some cases salaried workers would see their hours reduced to avoid any overtime payment, he said.

Labor union officials and leaders of the Democratic Party’s progressive wing have been pressing for a stricter standard and higher threshold.

Democratic donor Nicolas Hanauer, a wealthy Seattle-based venture capitalist and early investor in Amazon.com Inc., has taken up the cause for a stricter standard, personally lobbying members of Congress and White House advisers.

Hanauer, co-founder of Second Avenue Partners, argues that the erosion of legal protections for overtime pay has been a key contributor to a decades-long transfer of income from workers to corporations.

“It’s this super-corrosive feedback loop,” Hanauer said, adding that if employers can get two people to work 60 hours a week without overtime, they wind up doing the jobs of three people, which means less employment for others.

“The more I soften the labor market, the more leverage I have over you,” he said.

The administration’s deliberations on the rule have stretched on longer than anticipated. After Obama announced last March he had asked the Labor Department to revise the overtime rules, the department forecast it would act by last November, then moved date back to February of this year.

Obama has promised action “relatively soon.”