As we know, by definition buyers having more money to spend improves our economy. But can government increase the spending supply? For once, he answer appears to be “yes.” Under public pressure, states have started the ball rolling by increasing minimum wages. And public pressure has even forced corporate America including Aetna, T.J. Maxx and Walmart to poke holes in the “corporate paywall.” But now the Feds are getting close to stepping up by forcing employers to pay the overtime they’ve been legally required to pay for decades. And mercifully, Congressional approval will not be required.
The Feds’ first move will be clarifying and enforcing employee classification rules determining whether workers are exempt (from overtime) or non-exempt (overtime eligible). That alone will add lots of payroll dollars. Their second move will be raising the pay threshold below which companies MUST classify anyone (except tech workers and certain executive assistants) as non-exempt. When last adjusted in 1975 this bar was just over $23,000. Adjusting it for inflation, which business has stoutly resisted, would put today’s threshold at over $60,000. While the increase won’t go that high, speculation says the new number will exceed $50,000.
That’s a big pile of money that’s stayed in business pockets over the past 30 years, instead of continuing to go into worker pockets as during the 1950s and 60s when our economy was riding high without relying on credit card or dot.bomb or home equity bubbles to sustain spending. Plus, adding to the Feds’ initiatives customers are finally punishing sellers who continue underpaying and abusing employees. Just ask Walmart or McDonald’s.
To be sure, any full recovery will be predicated on big business finally breaking down all of the “corporate paywall.” But restoring overtime will give us a boost in the meantime.
Of course, business leaders will try demonizing the Feds’ efforts as “job killing.” Don’t listen to them. Sellers are already ramping up production employment to meet demand. While many like Target continue cutting bureaucratic fat, overall employment numbers will continue to rise.