President Barack Obama is right to want to put more money in the pockets of lower-paid workers. Issuing another government regulation, however, is not the best way to get it there.
Once a new Labor Department rule takes effect, workers earning between $23,660 and $47,476 will be entitled to overtime pay -- extending a provision that already applies to the lowest-paid. The new upper threshold will be increased every three years in line with a measure of wage growth. More than 4 million workers will be newly eligible, according to the government, boosting wages by an estimated $12 billion over the next 10 years.
Employers already contending with rising minimum wages will now be all the more likely to find ways to automate processes, cut workers’ hours, reduce other benefits and bonuses, or all of the above.
On top of any direct cost, there’s the added burden of one morecomplex layer of regulation and the overhead required to comply. Labor markets vary enormously from place to place and industry to industry. That’s why it’s best to let employers tailor their offers accordingly, according to their preferences and market conditions.