NAHB CEO Howard Spars with Ex-Labor Secretary Reich on Overtime Rule

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conflictOn Aug. 4, CNBC’s Nightly Business Report aired a story on American workers and overtime pay, focusing on the Department of Labor draft regulation released June 30 that proposes updating the salary level at which certain white-collar workers would be exempt from minimum wage and overtime pay from the current $23,660 to $50,440.

NAHB CEO Jerry Howard went head to head with former Labor Secretary Robert Reich on the merits and timing of the rule, as Howard forcefully argued that it would harm small businesses, particularly small home building firms still trying to regain their footing in the aftermath of the Great Recession.

View the Nightly Business Report video.

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Comments (8)

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  1. I guess one other option is to reduce production? Mr Reich did not think of that one and it is an option although not a good one. There is a point of diminishing return for those making between 48,000 and $54,000, you col just increase them to $55000 and they can continue to work overtime with no additional penalty to the company. One other thing Mr. Reich fails to consider is that adding additional employees to reduce overtime increases payroll taxes, payroll costs, insurance costs, etc. Each employee added also geometrically increases the workload and degree of difficulty of those supervising them as well as introduces more costs for trucks equipment and personal management. It’s not like you can just increase your business in a stagnant economy to offset these additional costs and at the slim margins most builders are working with they cannot just absorb the costs either.

    Progressives are dangerous in their false premises because they make these decisions in a vacuum and have never started, run or managed a company having to answer to the shareholders. I heard the tally for the last years is 81,000 new pages or regulations from the Obama administraion, it is no wonder the economy is limping, corporations are hoarding cash, and the real unemployment rate remains in double digits.

  2. Thank you Jerry for your leadership on this important issue!
    Your attention to this issue is extremely important to the membership and the industry as we continue to recover!
    ONwards and UPwards!

  3. Mark Eisner says:

    The proposed rule adversely affects more than just the home-building industry. It decidedly harms smaller professional services providers as explained in my blog (hyperlink above). My blog is the text of formal comment I sent to the agency.

    I’m surprised there has not been more opposition.

  4. Darren suggs says:

    Managing salary from a govt ivory tower is easy. Managing real projects takes talent. Example of why a salary works for many employees is that home building or remodeling workloads vary but most employee home- personal expenses don’t change. Building business often have 6 project 1 month, 3 another month, 5, then 2. It varies but hiring experience and laying them off on a month to month basis doesn’t work for employees? Most salary employees prefer a steady and predictable paycheck knowing their hours will fluctuate. How about letting that salary versus hourly pay be between the employee and employer? Employees who don’t like arraignment are always free to seek other opportunities? Free market works, let it work?

  5. John LeNeveu says:

    First, I would say that a 113% increase in the exempt threshold rate seems to be excessive an arbitrary. All our employees earn more that the current $23,660 and those we consider nonexempt by other tests already are paid overtime. So this new proposal is a solution looking for a problem. Under the new threshold I have no idea what to do with commissioned sales people. Some in the early development of their customer base do not earn $50,400, but if successful over time earn considerably more than $50,400. By non compensation tests they are clearly exempt employees. Since they are not paid either salary or by the hour I would have no way of calculating an effective hourly rate. Since their hours are highly flexible and variable, tracking worked hours would be difficult and burdensome on the employees and force me into policing their hours. It is easy for me to manage assignment of sales territories and customer base to ensure that all successful sales personnel earn over the threshold or are terminated if they don’t produced enough to earn the threshold. It becomes difficult when we decide to expand our business and we add new sales people who need to be trained and given the time to develop an adequate sales base. I certainly do not want to take accounts from my existing team and reduce their earnings. I do not want to track hours of work and constrain hours of work on new employees who are working hard to develop sales base so they earn considerably more that $50,800. We are a small business with 6 sales people, two of whom are new and developing their sales base.

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