Regulatory Relief for Small Businesses, Schools, and Nonprofits Act
Floor Speech
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Mr. ELLISON. I thank the ranking member for the time and for his advocacy for working people.
Mr. Speaker, I include in the Record two articles which talk about how the overtime rule is likely to add 100,000 jobs to the economy; one from Goldman Sachs, and the other from the National Retail Federation.
[From the National Retail Federation, Sept. 28, 2016]
How Expanding Overtime Could Affect Retailers
The Department of Labor has proposed a major change in federal regulations governing overtime pay that could have a significant impact on the retail industry.
Under current rules, workers making up to $455 a week are automatically entitled to overtime if they work more than 40 hours a week. Managers and professionals who make more can be declared exempt, but only if they meet certain conditions such as having supervision of other workers as their primary duty. Under the proposed changes, the wage threshold would be increased to $970 a week, and the administration is asking whether additional restrictions should be placed on non- supervisory duties managers can perform and still be considered exempt.
To better understand the effects of the proposal, NRF commissioned the research firm Oxford Economics to conduct a study. While raising the threshold would mandate overtime pay for many workers, the analysis found that most employees would not actually see a change in net pay. Instead, many employees would see their hours reduced so that overtime would not be worked, while others would see their base wages, benefits or bonus pay decreased in order to offset the added payroll expense.
The study also found that updating payroll systems, establishing ways to track employee hours and other administrative expenses would cost the restaurant and retail industries alone an estimated $745 million even if workers saw no additional take-home pay.
(The original study was prepared before the Labor Department proposal was released, and was conducted with projected wage thresholds that might have been proposed. An update has been prepared based on the actual proposal.)
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[From Business Insider.com, Sept. 27, 2016]
Goldman Sachs: New Obama Rule on Overtime Likely To Add 100,000 Jobs to Economy
(By Lucy Nicholson, REUTERS)
A new rule from the Obama administration--which will increase the fraction of workers entitled to time-and-a-half overtime pay--is likely to increase total employment in the US in 2017 by about 100,000 jobs, according to Goldman Sachs.
The idea is this: Companies whose workers are covered by the rule will try to avoid paying overtime, and they'll hire additional workers to do this. The point is to keep from asking their existing employees to work more than 40 hours a week.
The rule change affects salaried ``executive, administrative and professional'' workers, who can currently be exempt from overtime pay if they make as little as $23,660 a year.
Following implementation of the rule (expected in December) the overtime exemption will apply only to salaried workers making at least $47,476--making 4.2 million additional Americans eligible for time-and-a-half.
Of those, in any given week about 1 million actually work more than 40 hours.
There are four ways employers may respond to this rule change:
Simply making the overtime payments.
Reducing employees' base pay, in an effort to leave their total compensation unchanged after the new overtime payments--though this can be complicated, especially because the employers don't always know in advance how much overtime each employee will work.
Increasing employees' base pay to exceed the new threshold so they remain exempt from overtime payments. Goldman thinks this is most likely for employees who already earn a salary very close to $47,476.
Employing more workers and have them work fewer hours, so they do not run afoul of the 40-hour limit.
By examining employer behavior from the last time the overtime threshold was changed, in 2004, Goldman economist Alec Phillips developed a ``central'' estimate that 100,000 additional jobs will be created in 2017 as employers choose the third option--not a huge amount in an economy creating between 2 and 3 million jobs a year, but not trivial either.
It's important to note that employers who respond to the new overtime pay rule by reducing overtime hours will not be ``cheating'' or skirting the intent of the rule. The point of the rule is to ensure that lower-income salaried workers get compensated if they have to work extra hours, allowing those workers to collect their salaries without working uncompensated overtime is a meaningful gain for those workers.
The new time-and-a-half payments would also increase some workers' hourly pay, but not for enough workers to show up in the statistics of average hourly earnings, according to the Goldman analysis--so don't expect this rule to drive a boost in wages that can be felt at the economy-wide level.
Mr. ELLISON. Mr. Speaker, one wonders if there could possibly ever have been any small businesses only a few years ago. At its peak, 62 percent of workers were eligible for overtime pay. Today, only 7 percent are eligible. What did they do then? They hired people.
This idea that making it fair for working people who work overtime is somehow going to bring doom and gloom and destruction on small businesses is absolutely nonsense.
It is typical. We hear it all the time. Anything we are going to do for working people just can't possibly be done, or little people themselves will be hurt. This is a constant refrain.
If big, big, big agriculture wants something, they say, oh, we are here for the family farm.
If big, big banks want something, they say, oh, we are here for the community banks.
And if big, big, big businesses want something, and they don't want to pay their overtime, they say, oh, what about the small businesses.
In fact, this bill named for small businesses, folks out there listening should know that the title of this legislation is misleading.
The legislation delays the rule for all employers, including small businesses.
But here's the fact. Walmart, are they--do they benefit from the fact that this overtime rule hasn't kept pace?
McDonald's, Burger King, all types of huge businesses which absolutely have the capacity to pay people fairly simply haven't done so.
It is interesting to me that our Republican friends have had the gavels in their hands since 2010 now. They haven't stepped up to improve and update this particular overtime rule.
The administration has done what they have failed to do. And now what do they have to say about it? Oh, it can't possibly happen, can't possibly work, and it is going to make everything worse.
How discouraging it must be to an American worker today. This Congress won't look at increasing the Federal minimum wage of $7.25.
And the tip wage of $2.13, a national disgrace, they won't do that.
They don't take that up.
They are constantly attacking the Consumer Financial Protection Bureau, which has brought consumers over $12 billion. And they are constantly trying to cut taxes for the rich, and they don't want to invest in anything for the working people. Yet, they always justify everything they are doing by saying, oh, it would hurt the working people themselves.
This is ridiculous. This argument has no merit. It has to be rejected.
Over the past 35 years, we have failed to meaningfully update our overtime pay regulations. Now is the right time.
As I said, at its peak, 62 percent of workers were eligible for overtime pay. Today, only 7 percent are eligible because we have let the working people down. We have delayed action to help working families long enough, and we can't ask them to wait any longer. I urge a very strong ``no.''
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Mr. ELLISON. I want to say this. It is about real people. One of those real people is Jodi T. from Minneapolis. She said:
I work more than 40 hours a week regularly, and this will make a great deal of difference for me and my family. Lately, I find that businesses will eliminate positions and put more work on existing staff regardless of whether they can handle it within the time and the workday. If they pay overtime, they will bear some of the real costs of these decisions.
Vote ``no'' on this bill. It is a bad thing.
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