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Harrisburg chamber leader: OT rule overlooks regional differences

Could harm job growth in rural areas with lower costs of living, David Black warns

David O'Connor//July 18, 2016//

Harrisburg chamber leader: OT rule overlooks regional differences

Could harm job growth in rural areas with lower costs of living, David Black warns

David O'Connor//July 18, 2016//

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And milk and other day-to-day staples are going to set you back a bit more in Hawaii than they would in many parts of the mainland.

But did federal regulators account for regional differences in the cost of living when they devised changes to overtime rules? The leader of a local business group doesn’t think so.

Businesses must comply by Dec. 1 with the new federal overtime regulations. The rules, among other changes, will double the salary threshold, from $23,660 to $47,476, under which employees working more than 40 hours a week must be paid overtime.

“Because this is a national threshold, it fails to take into account markets and variations in pay in various markets,” said David Black, president and CEO of the Harrisburg Regional Chamber and Capital Region Economic Development Corp.

“In the southcentral Pennsylvania market, that threshold is likely a bit high,” he said, adding that “in more rural areas of the country, the threshold will be much too high.

“Establishing a threshold like this is seen as government overreach by many, but it has been around for some time, so few are complaining the threshold was raised,” Black continued. “It was the rate of raise, and the fact that it is national and does not account for pay in various markets around the country.

“I would think that in rural areas with lower costs of living, this could be very damaging to employment.”

What’s a better recommendation for the threshold level? “There are various widely-accepted cost-of-living calculation tools comparing cost of living in various places throughout the country that could be used to set a standard to various market conditions,” he said.

“Respectfully, the folks who did this are bureaucrats, not elected officials, and they have always done it this way. They probably haven’t thought about the need or ability to make market-by-market adjustments,” Black said.

Overall, businesses are expected to adjust to the rules. Most predict they will do so by having fewer employees or fewer full-time ones, by increasing the salaries of some just below the $47,476 level, or by reclassifying those who are now salaried and putting them on an hourly basis, and closely monitoring hours.

The sectors most likely to be impacted, experts predict, include fast-food and service industries, nonprofits and higher education.

Black, who has worked in his field for roughly 30 years, has a prediction.

“A number of entry-level professional jobs may be impacted, particularly in smaller businesses and the not-for-profit sector. With these types of organizations, the ability to pay more simply does not exist,” so they must monitor hours within a 40-hour work week, have fewer employees and/or transition from traditional salary to hourly positions, he said.

Asked if he is getting a lot of calls from chamber members, Black said most are still finding out about the upcoming changes: “We have been getting some calls, but expect more in November and December.”

Many law firms with expertise in human resources issues, and human resource consulting firms, are providing information online and via seminars, he noted.