Impact of President Obama’s Overtime Directive and Logistics Companies

By Brian Bartolotta

On July 1St, 2015 many states saw their minimum wage changes take effect with plans for annual increases coming due. While a handful of states do not hold their own minimum wage requirements, these increases, coupled with President Obama’s new rule to raise the wage cap at which salaried employees are eligible for overtime, should show an increase across the board for wages.

Warehouse employees carrying boxes down the warehouse corridor.

More classes of employees will fall under the recently announced overtime directive.

While the rule faces both support and derision from Chambers of Commerce and Labor leaders, there is undoubtedly a trail of improving economic numbers while wages remained stagnant. The increases in the state minimum wages and the new overtime rules aren’t magic bullets. Businesses have the option to cut workers hours and strip down their work forces to offset the costs involved, which negates any increase in the middle class buying power that would funnel more money into their revenues, becoming a dangerous merry-go-round of price elasticity.

For logistics professionals, many of whom are currently facing an altered workscape of automation and staff reduction, an increase in pay is welcome. However, as logistics moves rapidly toward full automation and digital, paperless work, there is already a general sense of discovery in that companies are reducing human responsibilities and work forces and unloading part of those burdens on computers and e-transmissions. Self ordering kiosks, click-and-collect lockers and autonomous vehicles for delivery have all become very real, very cost effective strategies against wage increases. It is no secret that work flows which needed a full office of staff are now done by one or two motivated individuals utilizing not-quite-state-of-the-art office/logistic technology.

The original overtime threshold was updated in 1975 and currently covers 8 percent of salaried workers, this rule would change that threshold from $23,660 to $50,440 which would cover 40 percent of salaried workers. With the TPP moving swiftly towards acceptance, former Communications Workers of America president Larry Cohen advises this is a “good step forward” and warns “we need to do much deeper things about how U.S. workers participate in the world economy and what rights they have at home.”