The New Rule
In May 2016, the Department of Labor, under the direction of President Obama, issued a final rule updating the overtime provisions of the Fair Labor Standards Act. The Department raised the minimum annual salary for employees exempt from overtime pay from $23,660 to $47,476. The Department set December 1, 2016 as the effective date for the new rule, implementation of which would have affected over 4 million employees.
Underlying the new overtime rule is the desire to protect workers from being over-worked and under-paid. As the United Food and Commercial Workers union stated in 2015, the previous threshold of $23,660 is below the poverty line, and reflects only one salary threshold increase since 1975. As long as employers could classify their workers as “managers,” they could avoid paying them overtime. The new rule would have required employers to either raise the salaries of low-level managers to meet the $47,476 threshold, or reclassify them as hourly employees entitled to overtime pay. It was intended to encourage employers to spread employment, and hire multiple workers to perform a job rather than forcing a single worker to work 70 hours a week. Critics argue the rule would hurt small businesses and reduce jobs.
As many employers were making changes to come into compliance with the new rule by the approaching December 1 deadline, a federal judge in Texas ordered a preliminary injunction barring nationwide enforcement of the rule. A number of private business groups and 21 states had challenged the rule as an overreach of executive power. The district judge agreed, claiming Congress, not the Department of Labor, should be responsible for making changes to the minimum salary requirement.
USA Today has a survey of what will happen to worker pay and benefits in 2017. The short version: States may continue to raise minimum wages, and there’s a small chance the federal minimum wage will rise to $10 an hour. Regarding overtime pay, a federal judge’s potential overturning of the Obama Administration’s mandate may have a dampened effect: “Many businesses already have increased managers’ salaries to the $47,476 threshold to avoid paying overtime or converted salaried staffers to hourly employees so their hours can be tracked for overtime.” The article goes on to predict the future of the joint employer rule, paid family and sick leave, and subsidized child care.
CNBC explores this “staying power” of the overtime rule in some more detail. Despite the lawsuit, the article notes, the rule’s effects were already underway. Compensation information and research company PayScale analyzed over 500 jobs that offered salaries between the new and old thresholds and “found that the number making in between those two numbers dropped sharply over the past two quarters.” Furthermore, 40 percent of the corporate clients of Salary.com, a compensation and software analytics firm, had made raises over the threshold or had reclassified workers.
For those of you into “very wonkish” economics, Paul Krugman at the New York Times has an analysis of trade deficits’ effects on manufacturing jobs. For those of us who are not, his bottom line: “yes, trade deficits reduce manufacturing production and jobs. They played a significant although far from dominant role in manufacturing job losses after 2000.”
In the wake of the recent election, unions — which spent over $100 million campaigning against Donald Trump — now have some tough questions to face. Republicans are eager to build momentum on right-to-work legislation (a conservative Supreme Court pick will no doubt help), and President-elect Trump is expected to roll back much of the Obama administration’s labor-related reforms — including the Department of Labor’s overtime rule, which a federal court blocked earlier this week with a nationwide injunction (read more here). Steven Greenhouse, writing for The New York Times, speculates that with a White House that is more hostile to labor, unions will have to focus on local battles (for example, state minimum-wage referendums) while workers experiment with new methods of organizing (taking their cue, perhaps, from the Fight for 15 movement).
Meanwhile, President-elect Trump has not forgotten his campaign promises to keep American jobs from moving overseas. Over Thanksgiving he reached out to air conditioner manufacturer Carrier, which plans on shuttering two factories in Indiana and moving over 2,000 jobs to Mexico. “I am working hard, even on Thanksgiving, trying to get Carrier . . . to stay in the U.S.,” Trump tweeted (“MAKING PROGRESS,” he added). If negotiations succeed, it’ll be a big political win for the President-elect. Read more here.
Local governments are stepping up efforts to give part-time workers more predictable, more remunerative schedules. Seattle, New York City, and other cities are considering “fair scheduling” legislation that will provide workers with more notice of their schedules, The Wall Street Journal reports.
Since the Presidential election was so close, it’s very tempting to engage in thought experiments about how different actions might have changed the outcome. And for all of Hillary Clinton’s flaws as a candidate, exit polls suggest that the election can be viewed as a referendum on the Obama Administration. For instance, 63% of the electorate said that the condition of the national economy was either “not good,” or “poor,” and Trump carried this group by a 63% to 31% margin. In addition, only 31% of voters said that their financial situation was better now than it was four years ago.
While the economy has improved significantly since the devastation caused by the 2008 financial crisis, many workers still have not caught up to where they were before the financial crisis. And for workers struggling to make ends meet in a small town in Florida, Michigan, Pennsylvania, or Wisconsin, it can be hard to see the ways in which President Obama has improved their lives. It may well be that they are benefitting from the Affordable Care Act, but if they had insurance before the ACA passed, they may feel that the law has not done enough to contain costs, and they may not notice some of the benefits the law given them. As I have thought about the concrete ways that workers stand to lose when Donald Trump replaces President Obama, one thing that has jumped out at me is the new Department of Labor overtime rule. The new rule, which goes into effect on December 1st (unless it is enjoined), will extend overtime protections to 4.2 million workers by raising the salary threshold for overtime eligibility from $23,660 a year to $47,476 a year. This means that in small towns across America, assistant managers of retail stores, low-level supervisors, and other moderate income workers who are paid on a salary basis will either experience a reduction in hours or a wage increase. These individuals can no longer be required to work a nine or ten hour day without receiving any extra compensation.
The postmortem continues, as commentators seek to understand the reasons behind Donald Trump’s win this week. Writing for The Wall Street Journal, Professor Michael Kazin argues that the decline of unions had an important role, creating an institutional vacuum that left white working-class workers vulnerable to Trump’s brand of populism. NPR breaks down the numbers, suggesting that the GOP’s huge gains in certain states — especially among uneducated white voters — are a sign of the Democrats’ “cratering with blue-collar white voters.”
Meanwhile, questions abound over what a Trump presidency will mean for workers. On the campaign trail, President-elect Trump talked tough on trade and promised to keep jobs in the United States. Now, his supporters are counting on him to keep those promises. The Christian Science Monitor takes a look at whether Trump can deliver on his promise to coal country to “bring the . . . industry back 100 percent.” And The New York Times shares the perspective of factory workers in Indiana who — having cast their ballots for Trump — now expect him to stop their plants from moving overseas.
Commentators have also started to speculate over the details of the next President’s labor policies. Fast Company offers a few predictions, including new restrictions on hiring foreign workers and a potential reshaping of the NLRB. POLITICO weighs the chances that the Labor Department’s overtime rule, set to take effect this December, will survive the Trump administration unscathed. JD Supra looks at how the Trump administration could shake up the EEOC, starting with personnel changes and a tighter budget.
And finally, lest we forget another big winner in this week’s election, The National Review discusses the renewed momentum of the right-to-work movement. Republicans who campaigned on right-to-work platforms in three states — Kentucky, Missouri, and New Hampshire — could now be in a position to pass legislation making union dues optional. Moreover, now that the GOP will be filling the vacant seat on the Supreme Court, the 4-4 split in Friedrichs could also tilt in their favor, extending right-to-work to government employees nationwide.
After a 20-day strike, Harvard University and the union representing its dining services workers have reached a tentative agreement on a new five-year contract. The strike has attracted considerable campus, local, and national attention to difficulties faced by low-wage workers facing seasonal unemployment and untenable health-care costs. According to The Harvard Crimson, to be ratified by workers the tentative agreement “must first be sent to a 30-member bargaining subcommittee Tuesday” before “the full membership of dining workers in the union vote on the deal Wednesday.” UNITE HERE Local 26 President Brian Lang told The Crimson that workers could return to work as early as Thursday, but declined to provide details about the agreement but said it “accomplished all of our goals.” In an email to the community, Harvard Executive Vice President Katie Lapp said said the new contract “represents a fair and reasonable resolution to negotiations” and addresses the core issues of wages and health care. More from The Boston Globe.
The Department of Labor’s new overtime regulations almost doubling the salary threshold below which workers must receive time-and-a-half will take effect December 1st, and commentators are already hypothesizing how employers may respond to their new responsibilities. In commentary in Time, Professor Daniel Hammermesh of the Royal Holloway University of London argues that employers “will cut weekly hours of previously exempt workers who had been working more than 40 hours per week, but that cut will be small enough so that those workers’ weekly earnings will increase” and thus “employees will work less but make more.”
At least one major union head isn’t happy with New York City Mayor Bill de Blasio, who was elected on a platform of supporting organized labor. The New York Daily News published an op-ed authored by John Samuelsen, president of the 39,000-member Transport Workers Union Local 100, criticizing Mayor de Blasio for his record on organized labor since taking office.