The bravest CEO in America might be restaurateur Andy Puzder, who braves the wrath of Barack (by taking him to business school);
President Obama on March 13 signed an order directing the Labor Department to expand the class of employees entitled to overtime pay. Currently, if a salaried employee makes more than $24,000 a year and is part of management—if he manages the business, directs the work of other employees, and has the authority to hire and fire—that employee is exempt from overtime coverage. The president wants to raise this salary threshold, perhaps as high as $50,000, demoting entry-level managers to glorified crew members by replacing their incentive to get results with an incentive to log more hours.Pretty clearly, Mr. Puzder thinks the POTUS has no clue what goes on in small businesses;
Mr. Obama claimed that the individuals covered by the Labor Department change in overtime coverage would include employees who "mostly [do] physical work like stocking shelves." This assertion is, at best, misleading.Managers in small businesses--Puzder states that on average one of his restaurants grosses only $1.3 million per year--not only stock shelves, but sweep the floors, empty garbage bins, wipe tables, and help out with whatever physical tasks need doing. We speak from experience.
So, why? Puzder explains;
Workers who aspire to climb the management ladder strive for the opportunity to move from hourly-wage, crew-level positions to salaried management positions with performance-based incentives. What they lose in overtime pay they gain in the stature and sense of accomplishment that comes from being a salaried manager. This is hardly oppressive. To the contrary, it can be very lucrative for those willing to invest the time and energy, which explains why so many crew employees aspire to be managers.They're so ambitious, they even.... So, by their own judgment they'd rather have opportunity than time and a half. As Puzder again makes it plain as day (unless you're a guy who grew up in a banker's family);
Perhaps this misunderstanding is what led Mr. Obama to believe that government should compel employers to pay managers hourly overtime. Unfortunately, the move would hurt the very managers he intends to help by turning them into hourly employees, depriving them of the benefits that come from moving into management. Overtime pay has to come from somewhere, most likely from reduced hours, reduced salaries or reduced bonuses. It's easy to attack businesses when they employ these cost-cutting measures. But, unlike government, businesses must generate profits to grow.
Mr. Obama did say that in pursuing the rule change the administration was "going to do this the right way" and would "consult with both workers and businesses." Maybe he should begin the process by asking managers who make below the new threshold whether they would prefer to keep their current salaries and incentive compensation or, in exchange for this overtime "opportunity," go back to being hourly employees without bonus potential or equity incentives. Their answer might surprise him.