Expansion of overtime and minimum wage means more jobs…for robots

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Employers will be looking to the Department of Labor to see what its response is to President Obama’s new Memorandum to expand overtime pay regulations, and some have warned the changes will lead to increased hiring – of robots, that is.

Yesterday, the President formally instructed the Secretary of Labor to update regulations regarding who qualifies for overtime protection. Currently, 12% of salaried workers are guaranteed overtime and minimum wage protections, down from 65% in 1975. The threshold has only been updated twice in the past 40 years, except in the states of New York and California.

Naturally, employers’ associations from all parts of the political spectrum have raised their voices this week, one going as far as to suggest that many workers will lose their jobs to robots.

“This debate over the federal minimum wage is different than any that’s come before: Not only are proponents seeking a more radical change to labor law, but technology now exists that allows employers to rethink their business model,” says Michael Saltsman, research director at the Employment Policies Institute. “In an environment where unemployment for young adults has been above 20% for more than five years, the last thing we need is public policy that forces employers to replace employees with technology.”

Obama has continued to pressure Congress to raise the minimum wage from $7.25 to $10.10 for all workers, following his move to pay all federal government workers $10.10 just weeks ago. Following the impending exclusion of Russia from the G8, the US will have the lowest minimum wage of any member nation.

Last year, a Texas A&M University study predicted that while raising the minimum wage would reduce job creation, it would not affect employee turnover or lead to the layoffs that employer groups have been fearing.

“This makes intuitive sense: firing people is unpleasant and costly, so adjustment takes some time as employers reduce their hiring of new or replacement workers,” explains researcher Jonathan Meer, an assistant professor of economics at the university.

The Department of Labor has not confirmed what steps it will take to comply with the order, but according to reports, employers will be allowed to submit comment for guidance in coming weeks.

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