Here’s some advice for advocates of new overtime rules intended to raise earnings for millions of American workers: beware the law of unintended consequences.
On Wednesday, the Labor Department released requirements stating that most salaried workers earning up to $47,476 a year must receive time-and-a-half pay when their workweek extends beyond 40 hours. That’s more than double the previous benchmark of $23,660. The White House giddily predicts the adjustment will raise pay by $1.2 billion a year in the decade to come.
“It’s really restoring rights that people had for decades and lost,” said Ross Eisenbrey of the Economic Policy Institute. So the overtime pay increase is a good thing, right? Not so fast.
In fact, many workers in the senior living field might easily find themselves financially worse off.
It’s very possible many will end up working fewer hours. Others may see their guaranteed salaries converted to less-predictable hourly pay. Moreover, some operators may increase salaries for a limited number of workers above the cutoff, but refuse to take on additional help when it’s needed. Think you are putting in a ton of unpaid time now? Just wait.
Frankly, it’s hard to see the lot of workers getting better under any of these scenarios.
“These regulations are full of false promises. Most of the people impacted by this change will not see any additional pay. Instead, this sudden and extraordinary increase will mean more red tape and fewer advancement opportunities for salaried professionals,” said David French, a senior vice president for the National Retail Federation.
What we may have here are good intentions fueling a bad outcome. That would seem to be especially the case for senior living, where every dollar paid out is one less dollar dropping to the bottom line.
That’s not to say that a push for higher earnings is without merit. Let’s face it; few of us could get by on $23,600 a year. To be earning such a paltry sum and still not be eligible for overtime? That’s cold.
Yet if you are running a community, labor costs are far-and-away your greatest cost of doing business. The inescapable reality is that the economics of this field can make for a very ugly fiscal tug of war.
Sadly, many operators will find themselves needing to adjust in ways that translate to less money for their lowest earners. I doubt this is the sort of outcome that the people drafting the new regulations had in mind.
So at the very least, they ought to quit bragging about what has been achieved here. These new mandates are going to be a bad deal, for everyone.
John O’Connor is editorial director of McKnight’s Senior Living. Email him at firstname.lastname@example.org.