President Obama’s planned move to expand the pool of the nation’s employees covered by overtime pay laws was hailed Wednesday by Democrats as key to their midterm election strategy.
And it was just as predictably criticized by conservatives as an overreach by a president who recently characterized income inequality as the “defining challenge of our time.”
The president plans to exercise his executive authority on Thursday, leapfrogging Congress to direct the Labor Department to come up with guidelines that would set a new, higher income threshold at which employers are required to pay overtime.
Under current law, only workers earning $455 per week or less are eligible for overtime pay, though two states — California and New York — have independently raised their overtime minimums.
“Working- and middle-class people are not just feeling pressed, but really squeezed,” says Mike Lux, a co-founder of Progressive Strategies, a Washington-based political consulting firm. “In that environment, populism tends to rise.”
“In terms of the fall campaign, we are building a whole message around helping middle-class folks raise their wages, raise their incomes and make their lives a little better,” Lux says. “This executive order, as well as the president’s executive order on minimum wages paid by federal contractors, makes a huge difference politically.”
Marc Freedman, who heads the labor law policy shop for the U.S. Chamber of Commerce, predicted dire consequences blooming from the wage and overtime changes — and linked the problems to the president’s health care legislation.
“Changing the rules for overtime eligibility will, just like increasing the minimum wage, make employees more expensive and will force employers to look for ways to cover these increased costs,” he said in a statement.
“Similar to minimum wage, these changes in overtime rules will fall most harshly on small and medium-sized businesses already trying to figure out the impact of Obamacare on them,” he said.
Obama in early February bypassed Congress and signed an executive order increasing to $10.10 per hour minimum wages government contractors are required to pay as of 2015.
He has also called for an increase in the national minimum wage from $7.25 to $10.10 over three years, and for indexing future increases to inflation. His executive moves are seen as part of his State of the Union promise of a “year of action” that would include vigorous use of his presidential authority.
“Wherever and whenever I can take steps without legislation to expand opportunity for more American families, that’s what I’m going to do,” he said in that January speech.
A White House official speaking on background Wednesday said the president is making his move on overtime pay at a time when “one of the linchpins of the middle class, the overtime rules that establish the 40-hour work week, have been eroded.”
The administration estimates that millions of salaried workers in lower-paying jobs, ranging from office assistants to fast food workers, can be expected to work up to 50 or 60 hours a week without seeing any overtime pay.
A $250 per week threshold for overtime pay eligibility was originally established in 1975 by the Labor Department, under the Fair Labor Standards Act, for “white collar” employees; it was increased by the Bush administration in 2004 to its current $455 level. The White House argues that, adjusted for inflation, that threshold for workers today, overwhelmingly not white collar workers, would be $553.
“This should be the central focus of the fall campaign for Democrats,” Lux says, characterizing the president’s action on income as appealing to swing voters and the party base.
“These issues play directly to the pocketbooks of white working-class voters,” he said, “and really helps us excite the base, turn out the base.”
Prominent Republican pollster Whit Ayres, who counts among his clients Florida Sen. Marco Rubio, says “playing around the edges” with wage policy “is not going to address the problem of anemic upward mobility.”
“The ticket to upward mobility is expanded middle-class jobs, expanded training for those middle-class jobs,” Ayres says, “and making changes in government policy to allow those jobs to be created and to flourish.”
At the progressive National Partnership for Women and Families, president Debra Ness hailed Obama’s move as a big step for “women and working families.”
“Coercive overtime is a huge problem in this country,” Ness said in a statement. “When this happens, workers, families, communities and, ultimately, our economy suffer.”
A new Bloomberg National Poll suggests that while Americans have decidedly mixed feelings about the president, 69 percent of those polled last week support proposals that would raise the minimum wage.
But there’s a caveat, says pollster Ann Selzer, who conducted the survey: the minimum wage is not a wedge issue for voters surveyed, at least “not at this point in the game.”
“It’s still a theoretical thing,” says the Des Moines-based Selzer. “The middle class may start feeling that the Democrats are paying attention to them and doing something if it shows up in their paycheck.”
With national minimum wage changes requiring an act of Congress, the administration, as Selzer says, is looking for “arrows in the quiver to bolster the middle class.”
The administration looks to be using the executive move on overtime as an arrow designed to potentially create a paycheck effect that will actually move voters when they head to the polls in November.
“This is consistent with the economic populist stance the Democrats are driving in a pretty unfavorable environment for them,” says Ruy Teixeira, a Democratic writer and commentator. “They realize they not only have to motivate their base but also mitigate the damage of white, noncollege voters who are going to be their weakness.”
“Whether it works or not, we’ll see,” he says.