Wages for U.S. workers have stagnated for decades, but a lot of economic problems, like low growth, could be alleviated if workers made more. (Pew Research, Oct. 9, 2014)
The Pew conclusion is perhaps part of the explanation for the White House announcing June 29 that it was proposing to change how overtime pay is granted to salaried workers. According to the June 29 Huffington Post, “The president will recommend updating overtime rules so that salaried workers who earn less than roughly $50,400 per year would be guaranteed time-and-a-half pay when they work more than 40 hours in a week.”
Enforcing this rule would be a step forward for workers, but it must not substitute for a raise in the minimum wage.
The Post continues, “Under the current rules implemented by former President George W. Bush, salaried workers must earn less than $23,660 per year in order to be automatically eligible for overtime pay.” The law must undergo a long period of bureaucratic and legal wrangling, but this new standard could go into effect in 2016.
Secretary of Labor Tom Perez claimed that this change “could have the capacity to help millions of workers get back into the middle class.” (Huffington Post, July 3) He suggested that it would affect around five million workers currently denied overtime pay rates as proscribed by the 1938 Fair Labor Standards Act.
Using Perez’s figures, and assuming that overtime pay would be at least $200 per worker, these workers would have hundreds of millions of dollars a year more in their pockets.
The Wall Street Journal, which makes no pretense about its pro-boss bias, headlined its front-page, June 30 article on this change noting, “Companies, Business Groups Blast Overtime Proposal.” The article quotes an executive with White Castle, the burger joint chain, saying his company saves $8 to $12 million a year on overtime for its managers.
There are various subterfuges and maneuvers companies use to avoid paying overtime. They even classify people whose salary is below the $23,660 limit as supervisors, and thereby exempt from the time-and-a-half overtime rate. Or they give them a tiny raise to put them slightly over the limit.
The law addresses some of the wage shortfalls that workers classified as managers experience, but leaves many workers still working over 40-hour weeks without getting any overtime pay. There are a lot of exemptions to overtime built into law. Farmworkers, ranch hands, forest fighters, workers in the merchant marine and childcare providers are all “exempt” from getting overtime. Of course, anyone working two part-time jobs to make ends meet has to work over 40 hours at one of them to get overtime pay.
The overriding tendency of capital is to drive down the price of labor, and getting out of paying the overtime rate is one of their schemes. Even in the unionized auto industry, contract provisions to pay the overtime rate after eight hours and on weekends were gutted with the help of the state during the GM and Chrysler bankruptcies.
There are many ways hourly workers are cheated out of their wages for extra hours worked, even at the regular rate. This writer years ago worked a third-shift job, which supposedly started at 11:30 p.m. and went to 8 a.m. with a half an hour break. But the foreman insisted we punch in by 11:15 p.m. Most nights there was no break and we had to work until we were relieved. Generally, this amounted to an hour of unpaid time a day. We figured the company got between 200 and 300 unpaid hours a week from its 60 employees in the press room.
A lot of small enterprises engage in this kind of small-time chiseling. They unfairly miscalculate your time, generally to their advantage. These businesses, especially restaurants and in retail, take the attitude that, if you want overtime, sue us. Workers often win a settlement but only after years of waiting for what they were owed.
Raise minimum wage
One of the online comments to the WSJ article mentioned raising the minimum wage. While the commenter’s sneering tone — that you could hear even in the printed comment — made it clear he opposed such a step, the fact is that a $15 an hour minimum would help many more workers than expanding overtime eligibility.
Enforcing the Fair Wages Act of 1938 is a step forward, but raising the minimum wage — so workers can support themselves and their families on a 40-hour check — is what is crucially needed for the working class to survive.