PBS op/ed: Executive order to lift overtime threshold

This is the most simplest and elegant idea I've seen. If you're working more, then get paid your due or get your time back.

The rest of the article is pretty compelling, but I figured this would get lost in a discussion over middle class stagnancy and stock buybacks.

http://www.pbs.org/newshour/making-sense/middle-class-cant-get-ahead/

But the main point is this: These are rules that President Barack Obama has the power to change with the stroke of a pen, and with no prior congressional approval. The president could, on his own, restore federal overtime standards to where they were at their 1975 peak, covering the same 65 percent of salaried workers who were covered 40 years ago. If he did that, about 10.4 million Americans would suddenly be earning a lot more than they are now. Last March, Obama asked the Labor Department to update “outdated” regulations that mean, as the president put it in his memo, “millions of Americans lack the protections of overtime and even the right to the minimum wage.” But Obama was not specific about the changes he wanted to see.

So let me be specific. To get the country back to the same equitable standards we had in 1975, the Department of Labor would simply have to raise the overtime threshold to $69,000. In other words, if you earn $69,000 or less, the law would require that you be paid overtime when you worked more than 40 hours a week. That’s 10.4 million middle-class Americans with more money in their pockets or more time to spend with friends and family. And if corporate America didn’t want to pay you time and a half, it would need to hire hundreds of thousands of additional workers to pick up the slack—slashing the unemployment rate and forcing up wages.

The Obama administration could, on its own, go even further. Many millions of Americans are currently exempt from the overtime rules—teachers, federal employees, doctors, computer professionals, etc.—and corporate leaders are lobbying hard to expand “computer professional” to mean just about anybody who uses a computer. Which is almost everybody. But were the Labor Department instead to narrow these exemptions, millions more Americans would receive the overtime pay they deserve. Why, you might ask, are so many workers exempted from overtime? That’s a fair question. To be truthful, I have no earthly idea why. What I can tell you is that these exemptions work out very well for your employers.

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The arguments that the corporate lobbyists are making—about how badly business will be hurt—just don’t add up. What is adding up instead are the trillions of dollars in corporate profits and stock gains that corporations have made over the same decades that your hours climbed and your wages fell. From 1950 to 1980, during the good old days of U.S. economic might—the era in which the Great American Middle Class was created—corporate profits averaged a healthy 6 percent of GDP. But since then, corporate profits have doubled to more than 12 percent of GDP.

That’s about a trillion dollars more a year in profit. And since then, wages as a percentage of GDP have fallen, you guessed it, by about the same 6 percent or 7 percent of GDP. Coincidence? Probably not. What very few Americans seem to understand is that that extra trillion dollars isn’t profit because it had to be, or needs to be or should be. That extra trillion dollars is profit because powerful people like me prefer it to be. It could have been spent on your wages. Or it could have gone into discounts to you, the consumer. We capitalists will tell you that our increasing profits are the result of some complex economic force with the immutability and righteousness of divine law. But the truth is, it is simply a result of a difference in negotiating power. As in, we have it. And you don’t.
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Still, it’s hard to blame the administration for doing so little to defend middle-class workers when most middle-class workers aren’t even aware that they’re being ripped off. But I know. And a lot of other business owners know. We just don’t talk about it. You see, we capitalists will never actually ask you to work overtime. I don’t even track your hours. I just make it clear that I trust you to get your job done in the time allotted. And then I hand you twice as much work as you can reasonably do in a 40-hour week. But this downward pressure on wages doesn’t end there.

In the absence of a law requiring me to pay you overtime if you earn under a certain amount, you end up working harder—and the harder you work, the fewer employees I need. The fewer employees I need, the higher the unemployment rate. The higher the unemployment rate, the more leverage I have to “encourage” you to “do what it takes” to keep your job. And so you work even more hours, pushing unemployment up and wages down. And that, my friends, is one of the little tricks that keeps you poor and me rich.

This is why, in a recent Gallup poll, salaried Americans now report working an average of 47 hours a week, not the allegedly standard 40. And 18 percent of you report working more than 60 hours per week. Yet at the same time, you’re taking only about 77 percent of your paid time off. According to a survey commissioned by the U.S. Travel Association, U.S. workers now use an average of only 16 vacation days a year out of the nearly 21 days they earn—the lowest in more than four decades. Why? Often because they’re terrified of working fewer hours and falling short of their employers’ demands for ever more productivity. And many of these unused vacation days are forfeited: an estimated $52.4 billion worth each year that goes to owners like me.

Now obviously, take away our license to force 10.4 million Americans to work extra hours for nothing, and smart capitalists like me would try to limit overtime as much as possible. I mean, time-and-a-half pay sure adds up fast! So many of you would be unlikely to see much of an immediate bump in take-home pay. Instead, we capitalists would be forced to hire millions more people to do the work you currently do for free. That would drive down unemployment. And a tighter labor market would drive up wages for the first time in 40 years.

So you see, when I say that the overtime threshold is the minimum wage for the middle class, I’m not just playing with words. In the exact same way that the erosion of the federal minimum wage—from an inflation-adjusted peak of about $11 an hour in 1968 to only $7.25 an hour today—has held down wages for low-income Americans, the simultaneous erosion of the overtime threshold has also held down wages for the American middle class. And just like raising the minimum wage would nudge up incomes for those workers earning somewhat above it, restoring the overtime threshold would push up incomes for many workers currently earning above $69,000 too.


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Some of those criticisms are damn stupid... "it not gunna work...y bother". The "cons" in reclassifying salaried people to "seasonal contractors" are pretty hollow when assuming that that labor tier is truly free and fluid. If I were to be paid richly for my labors for a good harvest with the knowledge that winter is coming, then I'd rather starve a few winters as a stupid grasshopper than an overworked and underpaid hive ant without realizing it for years. The market really does adjust. Even for the overworked dummies.

I feel a little for salaried workers losing benefits as a result from being "reclassified" or higher paid middle managers who earn between 55-65k picking up the b**** work, but all those grievances would merely reflect the true state of our current work economy:

****ed up at the bottom. With no vaseline.

Overtime Pay Push Sets White House, Businesses at Odds
http://www.wsj.com/articles/overtime-pay-proposal-sets-white-house-businesses-at-odds-1434571771

The Obama administration is facing off with business groups and some economists over the wisdom of a new rule, set to come out as early as this month, that is expected to make millions more Americans eligible for overtime pay.

The proposal, meant to update long-standing regulations on who qualifies for overtime pay after working more than 40 hours a week, is a key White House policy initiative aimed at strengthening the middle class and addressing income inequality, an issue already at the center of the 2016 elections.

Debate over the rule echoes the fight over lifting the federal minimum wage, with Democrats citing the need to update worker protections and Republicans warning of another impediment to job growth.

Businesses and some economists caution that the change, which won’t require approval from Congress, won’t represent a big windfall for workers, as employers would work around the rules to keep their costs in check.

Under the current federal rules, workers who are paid by the hour or earn a salary of less than $23,660 are generally eligible for overtime pay, while those with salaries of at least that amount who work in white-collar jobs generally aren’t eligible.

The law was last updated in 2004 and its salary threshold isn’t indexed to inflation. The administration says that has eroded the benefit and left millions working extra time without added compensation. President Barack Obama issued an executive order to update the regulation last year, with the White House saying that 12% of salaried workers were below the current threshold, compared with 18% in 2004 and 65% in 1975.

The new rule is expected to raise the salary threshold and narrow the white-collar job duties that exempt certain workers from overtime pay. It is unclear how much the threshold will be raised, but lifting it to about $50,000 would bring the mandate roughly in line with the 1975 level on inflation-adjusted terms.

“Millions of salaried workers have been left without the guarantee of time and a half pay for the extra hours they spend on the job and away from their families,” Labor Secretary Tom Perez said in a blog post last month when his agency sent the proposed rule for review to the White House budget office.

Republicans have criticized the pending update. When Mr. Obama’s order was announced, Sen. Lamar Alexander of Tennessee said the directive, among other regulatory changes, “seems engineered to make it as unappealing as possible to be an employer creating jobs in this country.”

Employers warn the rule could have unanticipated consequences.

Dee Adcock, owner of the W.W. Adcock Inc. pool-supply company in Huntingdon Valley, Pa., said about two dozen of his salaried employees could become eligible for overtime pay if the threshold were doubled. As a result, he may move them to hourly positions that could be subject to seasonal layoffs.

As salaried employees, they often work long weeks during busy summer months but far less during winter. As hourly workers, they would, even though eligible for overtime pay, earn less annually and would “have to jump from job to job rather than have consistent, year-round employment,” Mr. Adcock said.

Supervisors reclassified as hourly employees might not be eligible for paid vacation and performance bonuses and could have less flexibility in setting their hours, employers say.

The left-leaning Economic Policy Institute estimates that between five million and 10 million workers could become newly eligible for overtime pay, depending upon the threshold increase and other rule changes. EPI Vice President Ross Eisenbrey forecast that the new rule would also create “several hundreds of thousands of jobs” in the year after it is implemented due to employers hiring new workers rather than paying overtime to existing employees.

The added employment represents only a fraction of the more than 3 million jobs created last year and would likely be in low-wage or part-time positions.

The latest overtime rules are rooted in the Fair Labor Standards Act of the 1930s. The law established the 40-hour workweek and rules to ensure workers receive a minimum wage and one-and-half-times their regular rate of pay for working overtime.

The broader economic impact of the pending update is difficult to quantify before the specifics of the regulation are released. Some say bringing the current regulations back in line with 1975 standards is foolhardy because the nature of the workplace has changed as more people work remotely and fewer are in jobs where they punch a time clock.

“Things are very different today,” said University of Michigan economist Donald Grimes. “Employees want higher wages, but they also value increased freedom.”

While employers will pay increased wages to retain some productive workers, those gains will largely be offset by businesses curtailing other workers’ hours or shifting duties to higher-level managers who are exempt from overtime rules, said Mr. Grimes. He expects the rule’s effect on the overall economy will be negligible.

Jamie Richardson, a vice president of White Castle System Inc., a hamburger chain with about 400 salaried general managers, is concerned that the regulation will require managers who spend a certain amount of time doing nonmanagerial duties to be paid overtime regardless of their salary level. Right now, “they’re managing but at the same time they’re going to hop in and help a customer with a register. It’s a very fluid operation,” he said.

The AFL-CIO union federation said modernizing the overtime rules is “the single most effective action the president can take to raise wages for working people.”

Angelo Amador, senior vice president of labor and workforce policy at the National Restaurant Association, disagrees. “We don’t think it’s going to have the economic impact that some think it will,” he said. “Restaurants are very good at controlling expenses. That assistant manager’s hours will be restricted and he loses his bonus.”

 

^I don't see anything wrong with that, as both cases would mean time is returned to the employee that would've otherwise been stolen.