Obama seeks to increase overtime pay

US President Barack Obama is expected to issue an executive order this week to force American businesses to pay more overtime to millions of workers, according to news reports.

Obama’s decision would “potentially shift billions of dollars worth of corporate income into the pockets of workers,” said Cecilia Muñoz, the director of the White House Domestic Policy Council.

“We need to fix the system so folks working hard are getting compensated fairly,” the New York Times quoted her as saying on Tuesday evening. “That’s why we are jump-starting this effort.”

The decision is considered as a challenge to Republicans in Congress, who have already said they will fight Obama’s proposal to raise the federal minimum wage to $10.10 per hour from $7.25.

Critics say the change in the US overtime regulations might make employers to cut pay or use fewer workers.

The order could “affect a very wide cross section of employers and our members,” said Marc Freedman, the executive director of labor law policy for the US Chamber of Commerce. “I expect this is an area we will be very much engaged in.”

The Times said such actions are part of a broader election-year effort by the White House to try to convince American that Democrats are looking out for the middle class.

The Obama administration hopes the focus on lifting workers’ pay will translate into support for Democratic congressional candidates this fall, the newspaper said.

Among proponents of the action is Jared Bernstein, the former chief economic adviser to Vice President Joseph R. Biden Jr., and the former executive director of the White House Task Force on the Middle Class.

“I think the intent of the rule change is to make sure that people working overtime are fairly treated,” Bernstein said. “I think a potential side effect is that you may see more hiring in order to avoid overtime costs, which would be an awfully good thing right about now.”