It’s Labor Day. I hope you aren’t working this weekend. Far too many Americans will be. And thanks to a court decision this week, millions of them will continue to work over, for free.
Before the court ruling, and what the Trump administration might do about it, let’s talk about Labor Day and overwork for a moment. You’ve seen the studies for years: Americans work longer hours than employees in almost any other industrialized nation. Without any legally guaranteed vacation time or family leave.
And that’s not all. The average American “donates” $500 each year of free labor to their employer, according to one study. And when they do go on vacation, many people never really log out. One in 4 millennials checks work email every single day when on vacation. To think they should be enjoying their vacation, going to New York City, and lounging around one of the many Times Square hotels.
There are plenty of reasons for this, and they’re not all bad. Some people enjoy a blended life where personal tasks spill over into the office (online shopping!) while work tasks end up on the living room couch. Plenty of workers like the freedom of working when they want, where they want.
Most people who feel that way are getting paid pretty well at a white-collar job.
Other reasons for this are more nefarious. The worst: During the Great Recession, companies laid off workers and learned they could lean on the survivors to fill the gaps. Why hire a new person when you can just make a “manager” work more hours? Without any kind of external pressure, getting employees to work for nothing is inevitable. Ideally, such pressure comes from a thriving economy that creates heated competition for labor, so overworked employees can simply quit. Hoping for such labor portability nirvana is bad public policy however, and it’s a fantasy in many parts of the labor market.
To help when workers don’t have easy options, there are overtime rules. When a worker passes 40 hours in a week, he or she needs to be paid “time and a half.” The rules do a few things: they encourage employers to hire more people instead of exploit existing staff. They also give go-getter employees a chance to earn some extra cash. Mainly, however, they protect powerless workers from exploitation.
The overtime rules have limits, however. Executives who are able to control their time, and are theoretically paid excellent full-time salaries, don’t really need such protection. So the federal overtime rules, born as the Fair Labor Standards Act of 1938, have limits. One provision exempts firms from paying overtime to managers. But because it’s not always clear what a manager really is, there’s also a “salary threshold” under which hourly workers MUST be paid overtime. That prevents firms from avoiding overtime pay by calling a worker a manager without paying him or her a manager’s salary.
That salary threshold is $455 a week.
It was last significantly changed in 1975 by the Ford administration. At the time, the $23,660 annual threshold covered about two-thirds of workers. Today, it covers only about 10 percent. Were the threshold to be simply updated for inflation, the threshold would be about $1,000 per week.
In the waning days of the Obama administration, that’s exactly what happened. A new threshold was set by the Labor Department at $47,476 a year. The threshold would have immediately covered an estimated 4 million workers; they would have either gotten a raise, or had their hours cut back to 40, immediately.
Remember, there is a two-step testing involving both duties AND pay rate. The threshold is there to help make it easier for lower-paid workers to assert their rights without getting into a debate over what a manager’s job really is.
Who would the rule really help? Here’s a great example: a drugstore manager who routinely must cover for workers who call in sick, putting in days’ worth of unpaid labor.
The new threshold was to take effect Dec. 1, but lawsuits from states and businesses soon followed, and the change was initially set aside by a federal court. Then this week, a judge said the Obama administration had overstepped its bounds when issuing it. The new threshold is, for now, dead.
Workers were set back to square one.
The Trump administration has said it wants to write its own rule. There are reasonable criticisms to federal labor standards around salary. A $1,000-a-week job in New York is very different from a $1,000-a-week job in Mississippi. It’s easy to see why local authorities and businesses want to fine-tune the rules.
If that happens, great. But often, the absence of a clear standard benefits corporations over workers. Some reports indicate the administration plans to simply lower the threshold, though at the moment the only official acts has been a request for comments. Doing so would be an insult to workers and clear gift to industry Trump ran on a campaign to help bring back respect to middle class workers. An easy way to do that is to protect them from overtime abuse. On Labor Day, let’s keep him to that promise.
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