Yeah, baby–new OT rule is out and it’s strong!

June 29th, 2015 at 11:38 pm

I’ve got a longer piece up on PostEverything, but here are the key ‘grafs from the POTUS’s announcement on this tonight (my bold):

We’ve got to keep making sure hard work is rewarded. Right now, too many Americans are working long days for less pay than they deserve. That’s partly because we’ve failed to update overtime regulations for years — and an exemption meant for highly paid, white collar employees now leaves out workers making as little as $23,660 a year — no matter how many hours they work.

This week, I’ll head to Wisconsin to discuss my plan to extend overtime protections to nearly 5 million workers in 2016, covering all salaried workers making up to about $50,400 next year. That’s good for workers who want fair pay, and it’s good for business owners who are already paying their employees what they deserve — since those who are doing right by their employees are undercut by competitors who aren’t.

That’s how America should do business. In this country, a hard day’s work deserves a fair day’s pay. That’s at the heart of what it means to be middle class in America.

That’s the threshold Ross Eisenbrey and I thought made the most sense, as we explain here.

The WH says they expect the change to reach as many as 5 million middle-wage workers. Believe me, you’d be very hard pressed to come up with a rule change or executive order—i.e., non-legislation—to lift the pay of this many folks.

That’s important, because we live in a time when the bargaining power of many who depend on their paychecks is much diminished relative to the clout and power of those whose income derives from their wealth portfolios.

Of course, this isn’t the first time in our history when such conditions prevailed. In fact, the Fair Labor Standards Act that introduced the national OT rule was born of the notion that one role of government was to help reset the imbalance in bargaining power–to stand up for those who, absent rules like OT, risked exploitation, overwork, and inability to claim their fair share of the productivity growth they themselves were helping to generate.

President Obama just put his thumb on the scale on behalf of working people. And for that he deserves our thanks.

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11 comments in reply to "Yeah, baby–new OT rule is out and it’s strong!"

  1. Wondering says:

    Well, we’ll take it. But the larger issues prevail.

    Could I expect a president to understand an economic model that nobody has? No. Can I expect him to make policy of it? No. But if it so happens that this new model is in line with democratic desire. Then what?

    Obama, listen to your workers and ignore your investors. Investors are living better than any king of the past, and they don’t care about people. Listen to your workers. They are more aggrieved than at any time since WWII.

    Mr. Obama, you might be wrong.


  2. Blissex says:

    «listen to your workers and ignore your investors. Investors are living better than any king of the past, and they don’t care about people. Listen to your workers.»

    The problem with that is that USA is a democracy, not a platonic dictatorship of wise philosopher-kings, and in a democracy elections matter, and politicians listen to voters if they want to win elections for themselves or their party, and in particular then listen to those voters who support them with campaign donations.

    As to voting, many if not most workers don’t vote, and the workers who do vote tend to be the better off ones that are investors too; many middle class and even middle wage voters think that their jobs are fine and just want their 401k and house prices to balloon, giving them zero-effort, tax-free capital gains. They are not interested in ensuring that “a hard day’s work deserves a fair day’s pay” for those below them in pecking order.

    As to campaign donations, most workers don’t donate at all, and almost all campaign donations come from investors.

    If you want politicians to listen to workers instead of investors persuade low wage workers that they should vote, and middle wage workers that having a better wage and better pensions and better job security is preferable to dreaming of bigger effort-free and tax-free capital gains for themselves and lower wages, security and pensions for everybody else.

    As G Norquist put it very well the current situation is instead:

    «And that is, in 2002, on the investor class stuff … you could have said, just drop $7 trillion in stock market value with the collapse of the bubble … $7 trillion, trillions with a T … Americans had $7 trillion less than they used to have, you can expect them to be very irritated and in trouble. You did see the Republicans run out and agree to Sarbanes-Oxley in reaction to the Enron scandal. But going into November, what actually saved it for the Republicans was the investor vote, which went heavily R. Why? One, they didn’t blame Bush for the collapse of the bubble. They were mad at having lower stock prices and 401(k)s, but they didn’t say Bush did this and that caused this. Secondly, the Democratic solution was to sic the trial lawyers on Enron and finish it off. No no no no no. We want our market caps to go back up, not low.
    The 1930s rhetoric was bash business — only a handful of bankers thought that meant them. Now if you say we’re going to smash the big corporations, 60-plus percent of voters say “That’s my retirement you’re messing with. I don’t appreciate that”. And the Democrats have spent 50 years explaining that Republicans will pollute the earth and kill baby seals to get market caps higher. And in 2002, voters said, “We’re sorry about the seals and everything but we really got to get the stock market up.”»


    • Wondering says:

      I don’t disagree with you at all. Unfortunately, I’ve tried everything you suggest.

      Many, many years ago, when I was still living in the illusion that votes were negotiable on a personal basis, that discussions could persuade people, I appealed to people on the basis you describe. I explained to a very low paid worker that he was voting wrong. Rather than attempt to fight the battle of his work, he chose to become an investor.

      It has worked out horribly for him, although he’s accumulated a significant wealth. His work is just as meaningless and demeaning as it has always been, and this dominates his mood and life.

      Much better tools are required to convince people than this blather that takes place in public arenas, where investors also dominate. Newspapers, TV, they’re all biassed.

      So we take to the streets to fight this at a different level.


  3. econ man says:

    nice post


  4. Chuck Sheketoff says:

    A friend on FB asked “So how does this work with grad students, post docs, medical interns that work 80 hours a week or more for wages below this level? Anyone?”

    Anyone got an answer I can pass along?


    • Jared Bernstein says:

      According to Ross E, medical interns are doctors and they are exempt regardless of salary. The post-docs are non-exempt so salary test applies unless they’re teaching, in which case they’re exempt without regard to salary.


  5. Wondering says:

    If you’re wondering, yes, I’m that guy. I’m the guy yelling at my representative and defending Krugman.

    That fire is still burning. It is burning for the people. I can’t be put down. Even if they tried, I’d outsmart them. We’re going to win because the truth is on our side. The truth supersedes my body.

    It is hard to find people that believe in the truth. I’ve found some. I’m profoundly grateful for that.


  6. SeattleAlex says:

    My man! Brother gonna give you a shout out for stealing your idea/target?? But you do it for the people not the praise though, no?


  7. Fred Donaldson says:

    The big business manager’s reaction to this plan is to cut workers’ hours, to pay managers less, so they won’t reach the threshold. One great answer is to maintain two levels of minimum wage – $15 for 37+ hours, and $22.50 for -37 hours. This would allow for the extra expenses of driving back and forth to work for short hours, and the usual inability to work two jobs that mesh hours. The other answer is to use hourly rates to determine exemption, which means a $20 hour employee at a full-time $50k a year rate, would not be exempt. It’s silly to use an annual formula, instead of a weekly or hourly one.

    Even when working for one of the worst NYSE companies, we never entertained shorter hours for managers so we could keep them below the exempt line. Sharper pencil pushers, however, now rule the nuthouse.


  8. Smith says:

    Did the rule change affect the special exemption for tech workers? Or update the associated hourly rate threshold? The rule was instituted in the 1990s to let employers, especially powerful corporations (IBM, Microsoft) exploit tech workers who were obviously the new factory workers, even if they were well paid and worked in an office instead of a factory.

    The whole idea of exempt status is applied anachronistically. It applies to virtually anyone who works in an office. Obama’s end around administrative move is significant and welcome, but it shouldn’t end debate. Middle and upper class workers are still exploited and forced to work unpaid hours under conditions the labor movement fought to end over 100 years ago.

    http://www.nytimes.com/2015/07/01/business/economy/obama-overtime-rule-scratches-the-surface-in-helping-the-middle-class.html
    “There are three main categories of workers who stand to benefit from the overtime change.”
    “The second category includes workers in the targeted salary range, like clerks, who should already be eligible for overtime pay because their jobs feature no bona fide managerial or supervisory component and no independent responsibility, but whom employers have misclassified and denied overtime pay.”
    This article misses a key component of exempt status, workers deemed professionals don’t require managerial or supervisory duties. Basically anyone with any skills or a college education can qualify. It used to be workers in the office were managers and everyone else were hourly workers involved in production. That concept is 50 years out of date. Office workers are the new factory worker, and yes they have professional skills, but that shouldn’t make them exempt from exploitation any more.


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