Today's News & Commentary — July 1, 2015

Published July 1st, 2015 -  - 07.01.152


As we reported earlier this week, President Obama announced Monday his new plan to extend overtime protections to salaried workers making up to $50,440 a year, a jump from its current level of $23,660, where it has stood since 1975.  While the $23,660 threshold rendered over 60% of full-time workers eligible for overtime in 1975, now the rate only covers 8% of workers, according to the Los Angeles Times.  Labor Secretary Thomas Perez said yesterday that this “proposed overtime rule goes to the heart of what it means to be middle-class in America,” and that “it’s no coincidence” that as the threshold for overtime pay has “atrophied,” “so too has the middle class’s ability to get ahead and stay ahead.”  The proposed rules will soon be open to public comment for a 60 day period, and the administration hopes that if the rule is adopted by the end of the year, it will be implemented in January 2016.

Many labor advocates are supportive of the proposal.  The Los Angeles Times reports Chris Tilly, director of the UCLA Institute for Research on Labor and Employment, supports the action, explaining that many in managerial roles “may hold the key to the store, but they’re mopping up spills and taking orders just like everyone else.”  Ken Jacobs, chairman of the UC Berkeley Center for Labor Research and Education lauds the plan for addressing wage issues not only for the workers at the bottom, but for workers in the middle.  The New York Times editorial board also writes that the new rules would “help remedy a severe imbalance in the economy,” and warns opposition: “No party and no politician that opposes the new overtime rules can credibly claim to care about the middle class.”

On the other hand, The Wall Street Journal reports that the proposal has drawn fire from companies and business groups, who warn that it will curtail work hours and dent job growth.  The National Restaurant Association and the National Retail Federation have also been outspoken in opposition.  They argue managers will have to give up some of the perks that come with being a manager, including bonuses and flexibility.  The U.S. Chamber of Commerce ridiculed the administration for adding burdens on employers and hurting small businesses.  Lydia DePillis at The Washington Post fleshes out some of these concerns held by small businesses, as they seek to navigate the proposed overtime rule.  The Wall Street Journal considers this new proposal a recent addition to the “complicated relationship” President Obama has had with labor since the beginning of the President’s first term.

Meanwhile, the New York Times also suggests that while this action is a step in the right direction, it really only “scratches the surface” in helping the middle class. According to the Times, there are three main categories of workers who may benefit from the change: workers in the $23,660 to $50,440 salary range who are currently legitimately exempt because their jobs are managerial in nature; workers like clerks, paid in the targeted range, who should already be eligible but have been misclassified by employers; and those who are in the range and currently receive overtime but are vulnerable to reclassification by employers.  The Obama administration estimates the three categories together amount to about 15 million workers.  Many argue that while this is a necessary step, much more needs to be done to overcome the sharp wage disparity in America and help the middle class.  Damon Silvers, policy director of the AFL-CIO, explained that the proposal will “lead to better lives for millions of working people,” but went on to say “Of course it’s necessary, but it’s not sufficient.  Not by a long shot.”  Labor advocates and other experts propose two main approaches: improve the bargaining power of workers, which is particularly vulnerable in light of right-to-work states and the Court’s recent cert grant; and limit the incomes of those at the top of the ladder.

A roundup of coverage on the Supreme Court’s cert grant to Friedrichs v. California Teachers Ass’n can be found here.

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