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About this blog: The Raucous Caucus shares the southpaw perspectives of this Boomer on the state of the nation, the world, and, sometimes, other stuff. I enjoy crafting it to keep current, and occasionally to rant on some issue I care about deeply...  (More)

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Overtime Overhaul: Toward Fair Labor Standards

Uploaded: Mar 26, 2014
Americans generally look 'up' more than they do 'sideways,' focusing on the heavens in preference to the landscape. We have always considered ourselves more Tomorrow's Success Stories than today's working class heroes. The primary time we look to the horizon is to see whether our ship's coming in.

Thus it was that unions had to fight a several-front war in their campaigns to organize American workers and improve their daily conditions. Management goons and Pinkerton militias, and the legal system's stacked-deck, were bad enough – organizers also had to contend with workers' focus on vertical mobility over side-by-side brotherhood.

That situation evolved over many years of struggle, and changed dramatically in the 1930s. With the Great Depression leaving business influence at a low ebb, FDR's New Deal legislation included the National Labor Relations Act that guaranteed workers' rights to organize, and the lesser known Fair Labor Standards Act (the FLSA). The latter law ensured certain minimum decencies for workers, whether or not they were unionized. Included among the FLSA's protections were the nation's first national minimum wage (two-bits, at the time), overtime pay and child labor limitations.

The overtime pay provision sets a national standard by requiring time-and-a-half to be paid for covered workers' hours in excess of forty in a running seven-day cycle. States are allowed to create their own rules on the subject, but only if they are more protective of workers than the federal standard – thus California uses a system based on 8 hours in a 24-hour cycle, then time-and-a-half, with double-time after 12 hours.

These are general rules; exceptions and exemptions are several, and require that attention be paid to Department of Labor (DOL) regulations that enable the law to be applied to specific circumstances, and updated without requiring an Act of Congress (a term that once was not an oxymoron).

The FLSA itself calls for exemptions for Executive, Administrative and Professional workers, but leaves it to the DOL regs to define exactly what those terms mean in practice. Those regs were last updated a decade ago, and significantly simplified the exemption criteria. In each of those cases (there are other, less popular exemptions), to be exempt from overtime, the regs called for a job to pay at least $455/week in regular salary, and included other specific requirements. If we graciously assume a 40-hour week, that would come to $11.38 per hour, or about $23,000 per full-time working year. (That's 'graciously' as in 'good gracious, does anybody really work only 40-hours/week?')

That's a pretty low wage at which to be giving-up time-and-a-half. Hours over forty per week drive down that wage, and today, it buys only about 80% of what it did in 2004 (for some reason, politicians refuse to index this stuff to maintain its purchasing power). Even the Poverty Guideline for a family of four in this country is $23,850. For comparison, the median family income in this valley is over $150,000. Six times higher.

So, in keeping with his promise to act unilaterally when he can, the Prez has directed the Department of Labor to develop new regs governing those exemptions. They are supposed to further simplify the definitions for easier application by employers, and more importantly, augment the protections afforded and intended by the FLSA – whose operative title word, after all, is "Fair."

The new regs will go through the typical approval process of publication and opportunity for comment. As always, Congress can overturn them by statute, but would have to overcome a likely veto. If past is prologue, the new rules will take effect sometime next year.

What will they be? Conjecture abounds – our own state rules kick-in the exemption at $640/week, going to $800 in 2016. Some presumed experts are thinking that $1000/week is a good round number. If the exemption moved to that point, it is said that would make eligible for overtime some 10 million new workers. That's a dramatic increase, but still far fewer in total than were covered by the law's protection in 1975.
Any redefinitions of the other criteria will also exert an influence.

None of the predictions I have seen to-date, however, have taken account of the dual purpose of the overtime law. Sure, it was intended to reward hard work, but it was also passed at a time when unemployment remained stubbornly high – far worse than the current unacceptable rate. Businesses will be significantly less impacted if they hire more workers to cover those 40-hour increments, and rely less on OT (granted, they will be actually paying for work that's now done free for them). That has the effect of bringing down unemployment, which is also a good thing.

Finally, lest anyone think the sky is falling (it's rain, actually, but I understand the confusion), context is important. Since the middle of the last century, American workers' productivity has grown more than two-times faster than their wages. That gap has accelerated in the past decade. 'Normally,' labor and capital would share in the bounty thus created, but real wages have gone up hardly-at-all since the 1980s – the entire benefit has gone to capital – to companies' bottom lines.

With bargaining power thus tilted, and with such measurable inequity in the results, I have no problem with government stepping in and commanding better minimum decencies. Corporate profits, which have grown more than 11 times the rate of wage increases in this recovery since 2007, will adjust, slightly, as will the markets. If the Dow 'corrects' as a result, then that's an actual correction.

And we will have incrementally fairer labor standards, as a result.

Comments

Posted by spcwt, a resident of Danville,
on Mar 26, 2014 at 1:50 pm

Tom continues to conflate worker productivity with worker value. He thinks people should get paid more just because they're more productive than they were in the past.

Tom needs a little help with market realities: Companies will pay employees what the market demands, no more, no less.

Government attempts to "help" employees get paid higher-than-market wages will most often end up hurting employees:

Jobs get moved overseas
Hours get cut
Jobs replaced by cheap technology
Employees become contractors with no benefits
People agree to work off the books

We now have a two-tier system of employees: (1) Employees who have traditional jobs; and (2) everyone else. Most people with traditional jobs tend to be highly skilled, who require no government assistance in order to command high wages.

Low skilled workers, on the other hand, don't have bargaining power. There are too many low-skilled workers who are willing to work for nothing.

The government can't change the law of supply and demand. Govt. can't stop people from working for meager wages any more than it can stop prostitution, drugs, alcohol, etc. Sorry Liberals. Sometimes government is not the answer.

If people want higher wages, they should improve their skill set. By 2025, 41% of jobs in California will require a bachelor's degree or higher, but only 35% of working-age adults will be college graduates. Web Link Moving people out of the low-skill job pool and into high-skill jobs would mean less low-skilled people competing for jobs. That would drive up wages and improve the prospects for everyone.


Posted by Cholo, a resident of Livermore,
on Mar 27, 2014 at 11:33 am

Unions exist to help create a more fair work environment.

All jobs in the US economy do not require a university education/degree.

Many individuals with high paying jobs engage in criminal behavior that harms our society. Terrible!

Need proof?

I repeat anti-social behavior by the highly educated in the USA is quite common.

tee hee...


Posted by Cholo, a resident of Livermore,
on Mar 27, 2014 at 11:42 am

People with certain skill sets commit crimes: Web Link

anti-social behavior is all about crime...


Posted by Jake, a resident of Alamo,
on Mar 28, 2014 at 8:32 am

Private sector unions have had major contributions to better pay, safer work environment and equitable treatment of labor. History of labor in this country clearly demonstrates the abuses committed by business and the heroic struggle of workers to get an fair treatment. As much as I support their right to organize and strongly advocate their causes I am equally opposed to the public sector unions. The abuse of public trust and the incestuous relationship of unions and politicians have resulted in dysfunctional and corrupt system at the expense of the public. The public sector management is equally engaged in this system. While it useful to define management vs workers the public sector management has ignored it and gets overtime pay! all the way to the top! Why should we pay police chiefs, fire chiefs, school administrators overtime? One obvious result is that their retirement pay often exceeds their base pay. Let\\\'s treat the labor fairly and stop the abuse.


Posted by Peter Kluget, a resident of Danville,
on Mar 29, 2014 at 11:20 am

spcwt demonstrates the typical failing of right wing ideology: exalting theory over reality. In fact, employers can drive down wages to next to nothing, because people need jobs. That's not "the market" - that's monopoly power. The erosion of wage and hour laws, including overtime and minimum wage, have played a large role in the transfer of wealth from workers to owners of capital over the past 35 years - to the point where now 75% of the nation's wealth is now held by 10% of the people - a figure which exceeds that of any other developed nation in the world. The income of the top 1% has more than doubled since 1979, which the income of the lower 60% has actually declined.

All kinds of rationalizations for that massive redistribution of wealth and income can be spun - and the side that is winning the class war that has created that redistribution of wealth certainly has the resources to ensure that the spin will be well distributed - usually blaming the middle class for not being better people, as spcwt does.

But the fact is, the makeup of the hundreds of millions of people which make up America's middle class hasn't changed over the past 35 years. There's still the same bell curve distribution of intelligence, diligence, reliability and skills, even though individuals have aged into and out of the workforce.

The problem is that as a nation we have embraced laws and policies which are designed to erode paychecks and bloat asset sheets. Allowing basic wage and hour regulations to degrade due to inflation is one of the simplest and most obvious causes.

The rich have been getting richer, and the rising tide only lifts the yachts, not the dinghies or the Hobie cats, and that's been going on for 35 years. It's not an accident. It's not because the majority of people are lazier, stupider, clumsier, or less reliable now than the were in the good old days. It's because of changes in laws and regulations, most of which take place in obscurity and through neglect.

And all of them are helped out by ideological theories like those espoused by scpcwt. That type of spin is necessary. If the economists, judges, politicians and bureaucrats came straight out and said what they were doing and why: "We're deliberately making it easier for wealthy people to increase their wealth at the expense of workers" the success of that campaign would be imperiled.

Government is, in fact, the answer. The lessons learned in the Great Depression taught us important lessons about the behavior of real people in real life, and the fact is that we all benefit when the wealthy are not allowed to control too great a share of the nation's wealth. The right wing ignores that reality, and prattles on about how the poor and middle class don't even deserve to be as well off as they are.

The "free market" in employment gives us slavery, sweatshops, economic boom and bust cycles, and slow or negative economic growth. Sensible governmental regulations that ensure that the rising economic tide lifts all boats benefit everyone, rich and poor alike.


Posted by Cholo, a resident of Livermore,
on Mar 29, 2014 at 12:58 pm

Plus you forgot to mention that Cholo deserves more than a fair share of the coins being tossed about by the rising tide!


Posted by San Ramon Observer, a resident of San Ramon,
on Mar 29, 2014 at 4:14 pm

San Ramon Observer is a registered user.

Spcwt wrote, "If people want higher wages, they should improve their skill set. By 2025, 41% of jobs in California will require a bachelor's degree or higher, but only 35% of working-age adults will be college graduates."

That's the premise University of Phoenix markets itself on. I've been teaching online for University of Phoenix for 12 years. I'm teaching a pre-enrollment workshop this week.

Too many students starting at University of Phoenix believe all they need to qualify for one of those just-out-of-reach better paying jobs is a college degree. That's what they have been fed and too many jobs that should not require a college degree use the lack of one to filter out applicants without a degree from the pile of resumes.

The problem, and this is the real point of my diatribe, is that too many students start college classes with dreadful public educations. They don't know what they don't know or how deficient they are in written communication.

Good schools shouldn't be only for people who can afford $800,000 homes. That's where the disparity starts. We need better standards of education throughout this country so a High School diploma can mean something again.


Posted by Cholo, a resident of Livermore,
on Mar 29, 2014 at 6:53 pm

I'm unable to determine if recent posts by "Right" and "liberalism is a disease" are threats (disguised?) to kill somebody.

I've sent an email to the PPD and to Kamala Harris.


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