Overtime rule and other government regulations bring negative impact on both business and workers, Chamber says on KET

In a discussion about jobs and wages on KET’s Kentucky Tonight on Monday, the Kentucky Chamber explained that federal and state regulations are putting pressure on Kentucky businesses that will likely not result in more pay for workers as they are intended.

Kentucky Chamber of Commerce Vice President of Public Affairs Ashli Watts appeared on the KET program Monday night alongside Julia Crigler from Americans for Prosperity, Anna Baumann from the Kentucky Center for Economic Policy, and Caitlin Lally from United Food and Commercial Workers Local 227 to talk about the impact of state and federal initiatives on both employers and employees.

Overtime Rule

In May, the Obama administration finalized a new overtime rule for workers that increases the threshold by which an employee is exempt from being paid overtime.  The rule doubles the previous threshold of $23,660 to $47,476 beginning on Dec. 1, 2016.

In the KET discussion Monday, Watts noted the Kentucky Chamber wrote letters on the issue acknowledging that some updating to the threshold was likely needed and suggested that there be an incremental increase to help businesses adjust to the change.

However, because the rule doubles the eligibility and gives no time to ease in to compliance, Watts said the Chamber sees complications for the business community which could result in employees being hurt in the process.

“Now businesses have six months to comply with this new rule which drastically affects their workforce. Now, these middle class workers who make under about $48,000 per year are going to be changed to hourly employees,” Watts said (at 5:30 in the video). “And I think the work-life balance is important. But now these professional employees are now going to be punching a clock. So when you need to leave a little early because your child is sick or you’re running a little behind because you need to stop at the bank, the professionalism of your career is really going to change.”

The panelists discussed who the rule is meant to help, with Anna Baumann from the Kentucky Center for Economic Policy stating that middle class workers will be helped by getting paid for the additional hours they work. However, Watts said, some employees may see their hours cut or their pay structure change to accommodate the rule without those workers seeing any more in their paychecks.

“Our businesses are telling us that to simply stay in business during this tepid economy, they are going to keep compensation the same. So you are either going to work more hours and perhaps get time and a half but you may lose benefits overall. There is going to have to be some balance,” Watts said.

In the discussion on the overtime rule, it was noted that there are sectors exempted from the regulation including education while many others like public sector jobs and nonprofits will be impacted. But AFP Director Julia Crigler said the fact that some areas are untouched makes a statement about the rule.

“We talked about the fact that public schools are exempt. Why do you think they are exempt? There is a bill right now in Congress to also exempt Puerto Rico, why do you think Puerto Rico would be exempt? To me, all these exemptions are an admission that this is going to have harmful economic impact,” Crigler said (at 18:00 in the video). “If we are exempting some employers and not all, why? Are those employers just better able to afford the lobbying capacity to exempt them? And if it is bad for some employers, wouldn’t it be bad for all employers?”

Minimum Wage

An issue that is debated at the state level each year but does not see passage is an increase in the minimum wage.

When asked about the issue, which the Kentucky Chamber has traditionally opposed, Watts stated that the attitude of the business community is beginning to shift on whether or not the wage should be increased.

“Our membership’s view is shifting a little bit. And I think this occurs because most of our members pay above the minimum wage. But what they are concerned about, which stems from this, is wage creep. So if the minimum wage was to be raised to $10.10 per hour, then those people making $10, $11, $12 an hour—which would affect manufacturing for example—those wages would have to go up as well. So the issue of wage creep is a huge concern of our membership. But I would say the view is shifting among many in the business community on the issue of minimum wage and our membership is fairly split right now,” Watts said (in the discussion starting at the 40:00 mark in the video).

Right to Work

Watts said the business community’s view is not changing on right-to-work legislation, though, noting that the Kentucky’s Chamber’s membership is more supportive each year of the initiative to allow workers to choose whether or not they want to be a member of a union.

Watts and Crigler of AFP both stated that the lack of a right-to-work law in the state is holding Kentucky back from being able to recruit business to the state while all surrounding states have become right to work states. (Watch the discussion on right to work beginning at 44:00 in the video).

Tax Reform

The panelists also discussed the adverse impact that a lack of comprehensive tax reform is having on the state. While the members of the panel disagreed on the correct approach to tax reforms, each noted ways that the state can become more competitive by doing so (at 50:00 in the video).

Access the full video on KET’s website here to view the entire discussion between the panelists on issues impacting the state.

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Jacqueline Pitts
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