Proposal to Expand Eligibility for Overtime Pay May Add to Number of Low-Paid Workers
Under a proposal by the Obama administration, salaried employees earning less that $50,400 annually would be eligible for time and a half pay when they work more than 40 hours a week. However, some experts predict that the current proposal to expand eligibility for overtime, which is intended to boost what workers earn, may in fact have the opposite of its intended effect and instead add to the number of low-paid workers. Experts predict that instead of operating businesses with smaller numbers of more experienced employees, employers may instead limit the hours of higher paid employees by using more part-time workers. The proposal is still in public comment period and implementation is not expected until next year.
Figures Showing Low United States Inflation are Slightly Deceptive
The low U.S. inflation, as reported by Federal Reserve officials, has been well below the central bank’s target for 3 years. However, this figure may be deceptive. The overall inflation rate has been measured as below 2% per year, but this number may obscure what is actually happening in the market. Although prices of goods have been falling, the cost of services has increased. For example, over the last 12 months the prices of goods fell 3.3% while the prices of services were up 2%. One of the factors influencing the increase in cost of services includes the rising labor costs in service industries, a factor which may increase further in importance given the mandatory increases in minimum wage.
Consumer Reviews Increasingly Important in Business Ratings
The “sharing economy” is becoming increasingly present in the American marketplace as companies like Airbnb (posting of spare rooms) Lyft, Uber, Sidecar (ride sharing), RelayRides, Getaround (car rental) DogVacay, Rover (pet boarding) allow individuals to provide services independently from the traditionally regulated marketplace. These sharing services are reputation-based systems that rely on consumer reviews and ratings to police both bad service providers and bad users. For example, those posting rooms for rent on Airbnb are rated by guests that stay at the property. Likewise the guests that stay at the property are in turn rated by their host. Users of Airbnb can view other users’ ratings and use this information to decide whether to rent from or to a given individual.
The “sharing economy” has the benefit for small businesses of existing outside government regulations and the licensing laws that are different in every state. The rising importance of consumer reviews will change the likely reshape the economy as we know it. While consumer reviews and reputational mechanisms will not ever completely replace governmental regulation and consumer protection regulations, it is likely that these reputation based ratings will have an impact on other business realms and may eventually replace some aspects of business regulation that are currently under governmental regulation. Additionally, some experts predict reputation systems may play increasing importance in dealing with problems in the health care industry.
Business owners even outside of these burgeoning service sharing companies should be aware of the emergence of these reputation based systems in order to anticipate the effect such rating systems may potentially have on their own businesses in the near future.