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Cost of new overtime rules will be high

Here’s an idea: since Congress has refused to raise the minimum wage, let’s run an end around by changing the rules regarding who qualifies for overtime pay. It’s the latest philosophy coming out of the White House, a move that will ensure the U.S. can fly a regulation-nation banner.

The Obama administration is drafting new rules aimed at forcing businesses to pay time-and-a-half after 40 hours, according to reports from Bloomberg News. Moreover, the President can do it by executive order and avoid Congress altogether. The implications will be far-reaching and could directly impact boat dealers and marina operators. Here is some background:

According to the Obama administration, many employees aren’t eligible for overtime because they’re named managers. They point to examples where an employee earns $23,660 per year, which is below the federal poverty line for a family of four. Of course, they don’t cite the application to, say, a single person. Nevertheless, the Department of Labor is reportedly pushing for a threshold of $51,000 before an employee could be exempted from overtime.

Not to be left out of the fray, there’s a group of 26 senators (all Democrats) saying the President should push the envelope even more to $56,680.

As expected, Republicans have cried foul, led by Sen. Lamar Alexander of Tennessee, who called the action “engineered to make it as unappealing as possible to be an employer creating jobs on this country.”

If and when the executive order comes down, the rules will likely also change the definition of a manager’s position. For example, in 2004 the definition of a manager was established as one who supervises at least two employees as their primary duty. Meanwhile, California requires that a manager must be engaged more than half the time on “management” functions.

It’s no secret that regulations are expensive and burdensome. I dare say most marine dealers and marina operators don’t know precisely what it costs them annually to meet regulations. But there’s no doubt the costs are there.

The Office of Management and Budget says regulatory costs now exceed $102 billion annually. No way, says the Competitive Enterprise Institute: that figure is much higher, as much as $1.88 trillion, which they’ve affectionately labeled the “Costberg.” Why the difference? Countless regulatory impacts not measured by traditional estimates, according to the CEI. Moreover, businessmen spend 9 billion hours trying to comply with the paperwork fiasco.

The CEI is right on in its call for more congressional oversight of all federal agencies that are currently relishing the freedom to grind out new regulations at the speed of nightmare. To illustrate: at the end of President George W. Bush's eight years in office in 2008, the number of pages in the Code of Federal Regulations was 157,974. Contrast that with the fact that the Obama Administration, in just his first five years as president, added 17,522 pages of regulations, thus increasing in the size 11 percent or an average of 3,504 pages per year. At the end of 2013, the regs had 175,496 pages and the pace has continued.

Finally, without serious oversight, while agencies are currently required to assess the economic impact of any proposed regulations, they’re essentially free to work out and publish only numbers that support their objective.

The CEI enjoyably puts it this way:

It is hardly too strong to say that the Constitution was made to guard the people against the dangers of good intentions. There are men in all ages who mean to govern well, but they mean to govern. They promise to be good masters, but they mean to be masters — Daniel Webster



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