The world is getting more expensive to live in. Gas prices are always fluctuating. Housing is rising by the year. Utilities could cost you an arm and a leg. Health care expenses vary with the insurance people have. Many times, these costs outnumber people's annual wages. While United States President Barack Obama has attempted to curb medical spending with the Patient Protection and Affordable Care Act, he hasn't been able to help with the cost of living until now. With his proposed changes to the Fair Labor Standards Act, he hopes to ensure that citizens are paid for the work they do.
What is the Fair Labor Standards Act?
Established in 1938, the Fair Labor Standards Act set about creating guidelines to normalize work laws. Many of the practices that people know today were created by this rule and later amendments. The legislation launched the 40-hour workweek, set minimum wage, set age limits for employment and created overtime pay for certain occupations.
Throughout the years, various changes have been made to make the FLSA more worker-friendly. The national minimum wage has increased several times since 1938, from 40 cents at the start to $7.25 as of 2009. The Equal Pay Act of 1963, the Age Discrimination in Employment Act and the Migrant and Seasonal Agricultural Worker Protection Act were added to the FLSA to protect women, older employees and farm workers from being paid less or treated differently than their younger, male counterparts.
"In the U.S., basic essentials cost nearly $60,000."
With his proposed amendments, Obama wants to take these protections a step further to aid the lower and middle classes. At the present, only people who make less than $23,660 can earn time-and-a-half for working overtime. According to USA Today, basic essentials – groceries, housing, health care, utilities, car, education and clothes – in the U.S. cost nearly $60,000. In a country where the median yearly earning is $51,000, many people can't survive on their wages.
Obama wants to raise the overtime limit to $50,440 by next year, the president announced. This will allow more American citizens to be included under FLSA. According to the statement, currently only 8 percent of people fall under the $23,660 barrier. With his amendments, nearly 5 million workers would be compensated. This limit would also change based on inflation and wage growth.
What does this mean for small businesses?
While the potential amendments have countless benefits for many American workers, some businesses may not share the opinion. The extra expenses might not be a big deal to larger corporations but smaller companies may have to alter their financial plans to fit in the extra benefits. According to Entrepreneur contributor Jonathan Segal, minimum wage may increase, various employees will need to be paid for their extra work and the use of bonuses could be adjusted.
People have until September 5 to submit their comments on the proposed changes. Some people believe that costs and benefits should be higher, while others may disagree. Obama and the rest of government will take these statements into consideration when determining the final proposal heading to Congress for approval.