Like minimum wage increase, new overtime rule long overdue

July 5, 2015

Hard work should pay off. That belief is at the heart of the American dream.

It also is why the U.S. Labor Department’s plan to make more salaried workers eligible for overtime pay is good news for both workers and the overall economy.

Like an increase in the minimum wage, it is long overdue.

Since 1938, federal law has required hourly workers to be paid time-and-a-half for each hour worked beyond 40 hours per week. There is an exception for managers and professionals, who are presumed to get good pay in return for more flexibility and, often, longer work weeks.

But here’s the problem: the salary level at which that exemption kicks in has been increased only once in 40 years.

In 1975, more than 60 percent of salaried workers were eligible for overtime pay. Because of inflation, that figure has fallen to 8 percent, according to a recent analysis by the Economic Policy Institute.

As a result, salaried “managers” who earn as little as $23,660 a year often work many extra hours for no extra pay. Some end up earning less per hour than the hourly employees they manage. This happens most often in retail and service industries, such as fast food.

This antiquated threshold salary of $23,660 is below the poverty line for a family of four, which is now set at $24,250. As a result, some of these managers are eligible for public assistance, which means taxpayers are directly subsidizing business profits. That makes no sense.

President Barack Obama last year told the Labor Department to review the overtime rule. That resulted in a proposal, announced last week, to raise the salary threshold for workers exempt from overtime next year to $50,440, returning it to roughly the 1975 level, accounting for inflation.

The new rule calls for that threshold to rise over time with inflation, linking it to the 40th percentile of income, which is where it was when the Fair Labor Standards Act became law in 1938.

The White House says the rule change would increase pay for nearly 5 million workers in the first year, 56 percent of whom are women and 53 percent of whom have a college degree.

The president’s action, which does not require the approval of Congress, has drawn howls from business interests and the politicians who receive their campaign contributions and loyally push their agendas.

As with almost every regulation Obama has proposed to help average workers, expand health insurance coverage and clean up the environment, these politicians argue that it will “kill jobs” and hurt the economy. In fact, the opposite is true.

Under this rule, if businesses don’t want to pay overtime to low-salaried managers, they can hire more hourly workers at straight time. That also would give those managers more time for a second job to supplement their income or spend time with their families, as they choose.

Opponents argue that businesses can’t afford to pay workers more, that this isn’t a good time. Have you ever known them to say anything else?

The United States has had 63 straight months of job growth, with businesses creating more than 12.5 million jobs. The Labor Department reported Friday that 223,000 jobs were created in June and the unemployment level fell to a seven-year low of 5.3 percent.

But the problem is that, for nearly four decades, wages have not kept pace with improvements in worker productivity. They haven’t even come close. Middle-class pay has stagnated and been eroded by inflation.

Meanwhile, stock prices are near all-time highs. Executive compensation has soared into the stratosphere. And corporate profits have roughly doubled over the past three decades, rising from 6 percent to 12 percent of gross domestic product.

A recent study found that 90 percent of income growth since 2009 has gone to the richest 10 percent of families.

Why has recovery from an economic crash caused mostly by financial speculation been so slow and uneven? Here is a big reason: consumer spending is the largest driver of the economy, and most people don’t have much extra money to spend.

Like a minimum wage increase, this would help fix that problem and show average Americans that hard work does pay off.


Many questions remain after Democratic, Republican conventions

September 8, 2012

Presidential nominating conventions make for interesting political theater, even if you do come away from watching them as confused as ever about what either candidate would actually do if elected.

For the most part, the Democratic and Republican conventions were giant pep rallies for the converted. There was a lot of inspiring rhetoric and many tales of personal struggle, both real and imagined. Leaders of each party distorted the records and plans of the other, while glossing over and obfuscating their own.

President Obama’s acceptance speech had too few specifics; challenger Mitt Romney’s had almost none. Paul Ryan, the GOP vice presidential nominee, kept fact-checkers busy with his disregard for the truth. Vice President Joe Biden was himself.

Clint Eastwood, speaking to Republicans, had a stammering conversation with an empty chair. Comedians loved it. Have you heard the new pickup line? “Is this seat taken, or are you talking with President Obama?”

In one of the best speeches of his career, former President Bill Clinton took advantage of Republicans’ vagueness to put his own spin on their plans. Clinton summarized the GOP argument for replacing Obama this way: “We left him a total mess, he hasn’t cleaned it up fast enough, so fire him and put us back in.”

U.S. Rep. Ben Chandler, a Kentucky Democrat who is in a tight race to keep his 6th District seat, was too chicken to attend his party’s convention. His challenger, Andy Barr, got a speaking slot at the Republican convention, but he used his moment in the spotlight to push his campaign contributors’ phony “war on coal” agenda.

One of the most honest comments in a speech at either convention came from Sen. Rand Paul, the Kentucky Republican. You may have missed it, because it was mixed in with a lot of libertarian sound bites and distortions of Obama’s comment about government’s role in creating infrastructure that contributes to individual success.

“Republicans and Democrats alike, though, must slay their sacred cows,” Paul said. “Republicans must acknowledge that not every dollar spent on the military is necessary or well-spent. Democrats must admit that domestic welfare and entitlements must be reformed.”

As we hunker down for eight more weeks of slimy attack ads, funded by millions of dollars in anonymous special-interest cash, there are some questions voters should ask before election day:

What are each party’s specific plans for job-creation and economic revival? What can Obama do that he hasn’t already done — or failed to do in the face of solid Republican opposition?

What specific things would Romney and a Republican-controlled Congress do to create jobs and boost the economy? More tax cuts and deregulation won’t do it; they never have before.

Tax rates, especially for the wealthy, are already at their lowest point in decades. Do Americans really want dirtier air and water and more gambling on Wall Street? Financial deregulation, which began under Clinton, was a big cause of the 2008 crisis that tanked the economy. Bush-era tax cuts, plus two wars waged on credit, are the biggest causes of our exploding national debt.

If Obamacare is repealed, what would Republicans replace it with? So far, they haven’t offered credible proposals for either expanding insurance coverage or curbing health care costs.

While Obama’s health-care reform law has been easy to demagogue as a package, many of its individual elements are very popular, such as letting parents insure young-adult children and banning lifetime benefit caps and exclusions for pre-existing conditions. Do voters really want those reforms to go away?

If Obamacare survives, how will both parties find ways to lower health care costs? That is the reform law’s biggest shortcoming. Improving on it will require Republican as well as Democratic solutions, many tough choices and less demagoguery. Is either party up to the challenge?

More than anything, voters should ask candidates running for the White House and Congress how they will work with those in the other party to solve the nation’s problems. The past four years have clearly shown that ideological rigidity and partisan gridlock just make things worse, no matter who is in charge.