Editor’s Note: Obama overtime rule will cost colleges
The Obama administration’s new overtime rule, issued last week, is an unwelcome interference to businesses around the U.S. It’s also going to have a negative impact on universities.
The White House wanted to wave its magic wand and create higher salaries for many Americans who don’t qualify for overtime pay.
Such pronouncements, however, often create unintended consequences. That includes the possibility of higher tuition — an impact that goes against President Barack Obama’s mission to make college more affordable.
The new rule doubles the salary threshold at which employers can withhold overtime to $47,500 from $23,660, meaning 4 million salaried workers could become eligible for overtime.
Fast food and retail employers will be most impacted.
But as Andrea Fischer Newman, a regent at the University of Michigan, has pointed out, higher education institutions will feel it, too. Newman says about 2,500 UM employees are affected.
The costs of compliance with the new rule could lead to tuition increases, employee layoffs and employee reclassification to hourly workers. “The rule is going to cost colleges more,” Newman observes.
Newman also referred to a blog post from Peter McPherson, president of the Association of Public and Land-Grant Universities. McPherson wrote, “the overtime rule represents a major new expense for public universities” and that “there is simply no way for universities to absorb costs of this magnitude without an impact on our academic, research, and outreach missions.”
That’s not good news for universities or the students they serve.