“Promise Zones” should be exempt from proposed new federal rule

Jay Nolan
Jay Nolan

Everyone agrees it’s a tough economic landscape in Eastern Kentucky. Times are so desperate for many counties like ours that President Obama included Knox and seven other counties in the only rural federal “promise zone” in the nation. The goal is to help foster a positive environment for businesses that create jobs in an area that clearly and desperately needs them.

Consider this fact. The median household income for Knox County is just $22,364.00 per year. (Median = right dead in the middle, half are above and half below.)

So, any employee making just $12.00 per hour is raising the economic standard, since they are making more than half of our entire households!

Lets say a local business hires between 10 and 20 employees. It pays all them more than the minimum wage. Most of the employees earn $12.00 to $14.00 per hour. Some are at or above $15.00 per hour. Plus, the business offers benefits like health care, retirement, and pays unemployment insurance and workers compensation premiums. You would think the federal government would be thrilled to have this company in business in Eastern Kentucky.

But NO! Now the government wants to make it more expensive for a small business like this. Here’s what they are proposing: any salaried employee not making at least $55,000.00 per year must be paid overtime pay. That is more than double today’s rate.

Say a manager in the above business comes in an hour early or stays an hour late after work to schedule employees, balance books, or any other ‘administrative’ task, (things that can be tough to do while actively supervising employees, assisting customers and working in the business). The manager makes over $30,000 per year, definitely a “living wage” by almost any standard, and a good wage for this area.

Now, the President and Department of Labor want to make that small business pay about $22.50 per hour for every hour over 40 that manager works!

Remember, half the households in our area only have $22,364 or less to spend!

So, where does a business that is struggling to keep its doors open in an area so economically depressed come up with that extra money? Based on over 25 years of managing small businesses in this area, I say it will come from cutting out or reducing other employee hours! This rule will cause companies to hire fewer employees in our area, not more.

I think if the rule is implemented, at least the “Promise Zone” businesses should get tax credit for any increased salary cost, such salaried overtime payments, cost them. Otherwise, you are “promising” jobs with one hand, while actively eliminating them with the other!

What do you think?