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Overtime And the Real Value Of Work

Category: Labor
Posted: 07/13/15 02:17

by Dave Mindeman

In a Strib Commentary, James Sherk offers reasons why Obama's overtime rules will be a "bad" thing. He tells us that employers will simply drop the salary status for these workers, force them to log in their actual hours, and then lower their pay, so that they end up with the same assigned salary anyway.

Well, Mr. Sherk's name is an appropriate one to put on this theory because what he is saying is that business will try to "shirk" its responsibility to its employees.

Whenever something is proposed that could be a benefit to workers, there always seems to be some conservative analyst with an all too convenient "work around" the rule that magically benefits the employer.

Does business think so little about its employees that it really strives to take advantage of every opportunity to forego as much compensation as possible?

That is what Mr. Sherk seems to be suggesting....

So when the government requires employers to pay extra for overtime hours, they do -- and reduce base wages by about the same amount. Workers' weekly take-home pay changes little.

Employers seem to be getting the advantage either way. They can give an employee a salaried position and then guilt them into working an insane number of weekly hours....or they can pay by the hour, make them work over 40 anyway, but at a reduced hourly salary.

Really? Have employee-employer relationships become that cynical?

I will admit that in this union diminished work environment, a number of employers will take advantage of their "options" to always keep employee salaries to the employer's advantage. But you would think that a hard working valuable employee would be worthy of a reward for their labors.

At least that's what they tell you when you get hired on.

Mr. Sherk works for the Heritage Foundation - the think tank that only the Chamber of Commerce could love.

If employers truly act like Mr. Sherk is contending, then the value of work has been greatly diminished and the need for unions has been proven beyond all doubt.

Let's just ponder that for a moment.
comments (5) permalink
01/13/17 15:31

09/20/16 06:32

07/14/15 12:56
Focus on what can work!

My resistance to the current path of political rhetoric stems from what can actually work. Imposing wage rates is known to not work. Has everybody forgotten about the failed wage and price controls imposed back in the 70s? Short memories. The misery was plentiful!


An interesting approach to full employment has rolled out in other progressive countries. Minimum paid holiday. So-called "leave entitlements" are everywhere. The link shows, on page 3, a table that describes the federal imposed minimum leave entitlements in 21 countries. The most notable is the far right column, showing United States as 0 days.

Australia gets 4 weeks and 5 for shift workers, adding an additional 7 paid holidays makes it 6 weeks! Imposing this here in America would send employers into convulsions if done overnight.

Moving down this path is a very slippery slope indeed. The cultural shift would be overwhelming for small business. But if the norm today is 2 weeks, and the "norm" goes to 6, suggests that would impose artificial demand for more workers.

Remember the 32 week fiasco with the ACA? The unintended consequence of that move was highly disruptive to family income. Many were mandated a reduction in hours that imposed a 20% cut in wages! That didn't work well for those displaced, but did work well for those who found 32 hour/week jobs because of it.

Maybe it is time for the discussion here?

Wes Volkenant
07/13/15 23:36
The L.A. Times wrote an analysis of the implications of the President's proposed changes, and shared the arguments of both sides. http://www.latimes.com/business/la-fi-obama-overtime-rules-explainer-20150630-htmlstory.html

I hold little sympathy for Mr. Ford and his concerns, reflecting that of Mr. Sherk and the spokespersons of the National Retail Federation. I hold little charity for the victimization of the rich, the powerful, and the business owners who feel umbrage at this decision.

This proposed change will not help only a few. Whether this helps the 5 million low-wage "managers" the Administration projects, or only a million, it will significantly improve the lot of families across America. In our State alone, this should impact between 40-100,000 workers.

I thought it telling how much life has changed since I graduated from high school in the mid-1970s. Today, less than 10% of these "salaried employees" can earn overtime under our current rules. Back then, about 60% would meet the standards. It's been more than 40 years - this is barely an appropriate adjustment to the wage standards... at $40,000 a year - a salaried retail manager, or ice arena superintendent, or food market supervisor, or fast food restaurant manager earns the equivalent wage of $19.23 an hour for 40-hour weeks... that same salaried employee who works 48-hour weeks (6 days a week or regular 10-hour days 5 days a week) earns only the equivalent of $16.02 an hour. These are not fine wages... they are little more than a livable wage for a family of four these days.

So, by all means, pay them for the overtime they put in to keep their companies running well and their employers more successful. It is many years overdue.

Here are some key parts of the Times article, which I think helps focus what is involved here - from both perspectives:

What are the changes the Obama administration is proposing?

The proposed changes would more than double the salary threshold for overtime eligibility to $970 a week in 2016. That means employees earning a yearly salary of $50,440 or less automatically would be eligible for overtime pay. Currently, the threshold is $455 a week, meaning a salaried worker making more than $23,660 a year does not automatically qualify for overtime pay under federal standards.

Hourly employees are automatically eligible for overtime pay. This used to be the case for most salaried workers, but not so much anymore. Currently, workers whose yearly salaries are $23,660 or less automatically qualify for overtime pay if they work more than 40 hours in a week. These rules don't apply to workers who are classified as executive, administrative or professional employees. For example, a supervisor in a fast-food restaurant may not be entitled to overtime even if he or she does much of the same work as a kitchen employee.

For workers who earn a salary higher than $23,660 a year, employers perform a "duties test": They assess whether the worker performs mostly executive, administrative or professional duties. If so, the worker is not entitled to earn overtime. This is known as the "white-collar exemption."

The Obama administration says the proposed changes would affect an estimated 5 million workers nationwide. The new overtime regulations would cover about 40% of the country's full-time salaried workforce, officials say.

Why do advocates of the change say it's necessary?

Labor Secretary Thomas Perez told reporters that too many managers are falling behind and getting caught in the "middle-class squeeze." Proponents of the change say the salary threshold, designed to exempt highly paid white-collar workers, hasn't seen meaningful change for more than 40 years. In 1975, more than 60% of salaried workers were eligible for overtime. Today, less than 8% of full-time salaried workers are covered by those regulations, according to the White House Domestic Policy Council.

Setting a "bright line" with an updated salary limit will help employees who have been routinely misclassified as managers, even though they may make as little as $25,000 a year, the Obama administration says.

What do opponents say will happen if the new rules are instated?

Industry and business groups largely denounced the proposed changes Tuesday, saying they would lead employers to reclassify salaried workers as hourly employees, thereby stripping those workers of benefits and flexibility in the workplace. In a statement, the National Retail Federation said few workers would actually see bigger paychecks. "There simply isn't any magic pot of money that lets employers pay more just because the government says so," said David Frenchon, NRF senior vice president for government relations.

A recent report released by the NRF said that employers were much more likely to cut wages and bonuses or reduce hours to avoid paying overtime. If employers made no changes to their pay and scheduling structure, an option the NRF acknowledged is highly unlikely, overtime costs would run businesses $9.5 billion under the proposed changes, the report said.

07/13/15 11:01
A huge segment of the work force are not subject to these silly rules.

What is it about Progressives that gives them the right and the moral compass to demand and force public behavior? Worse yet, impose the rules on only a fraction of that public? They want minimum wages, so the employers get robots to wait tables. Clinton wants to use government FORCE to demand higher 401K contributions. Employers will respond by eliminating the perk. Whatsupwithat?

For most Americans, employer contributions to retirement accounts, employer provided health care, minimum wage, overtime pay, union membership, means nothing. Not relevant. Does not apply.

To advocate that these silly rules would actually provide benefit anyone is hyperbole. Those employers that find advantages to offering benefits are already doing so. Those employers that find no advantage will continue to find advantages to not providing the benefits--regardless of the political rhetoric.

Start advocating real change! Like eliminating the worldwide taxation that causes major car manufacturers to move south of the border? The very same rules that caused GE to move 100% of its operations outside the US! Remember Westinghouse? GONE! Thousands of companies have left the American Terra firma. Why? Because they were sick of being pawns in politician's quiver of political rhetoric!

Advocate for the Fairtax.org approach to financing America's debts.

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