Obama Overtime Rule = Truth In Advertising
The Obama Administration is proposing to raise the income threshold under which employers are required to pay overtime from $23600 to $50400 and predictably the economic right has started to squeal. And in so doing have tried to advance two cases: one this change will cost jobs, and two nobody will actually get a raise. The first case is fallacious, the second is at best deceptive. And to show that you don’t have to use fancy economic theory (a good thing because I don’t have the chops), instead you just have to just simple logic. But rather than try to lay out every possible branch on that logic tree I propose to let Angry Bear readers give either the affirmative or negative argument their best shot even as I through in some logic snippets of my own.
(For those unaware of the basic issue, under current law employers have to pay overtime to most hourly workers after 40 hours on the job. And also to salaried workers who don’t meet one or more of many exceptions. But the biggest and broadest exception is based on total salary, if you make more than $23,600 and are not protected via some specific contract (for example if, cough, cough, you are in a union) your hours are not limited to 40 hours per week, instead you may be routinely expected to work 50 even 60 hours a week for the same base pay. The Obama Administration proposes to raise that to $50400.)
Let the Games Begin!
One line of argumentation would hold that employers can get around this simply by taking folks earning in the high $40k range to $50401 and continue to work them like rented mules. Well okay, nobody is forcing anybody to take a job that nominally pays $25 an hour but in hour adjusted terms only pays $21. Throw me in that Briar Patch.
A second line is that employers will just lower the base wage to the mid $20ks and pay time and a half to get that person right back to the same paycheck. Which gets to Truth in Advertising. Because many people, perhaps most calculate their compensation based on a 40 hour week. If instead of just drawing people in with a $40k salary ‘promotion’ from their hourly job the employer is forced to reveal the formula Base Salary plus Mandatory Overtime = Gross Salary then people can make their own work/life balance choices.
That is if you want to hire for a 50 or 60 hour a week job then say so upfront.
According to some clone at the Heritage foundation, this will make it harder for workers to get flexible schedules and achieve ‘work-life balance’
‘This will strongly discourage employers from giving these employees flexible schedules. Businesses can easily track hours that are worked in the office. It is much harder to track hours worked at home. But if they don’t, they risk getting sued. Trial lawyers have brought thousands of suits against companies for improperly tracking hours worked remotely.
Businesses have responded by sharply limiting workplace flexibility for employees eligible for overtime. As the head of human resources for Pitney Bowes explained, the company turned down overtime-eligible employees’ requests to work from home because: “You just don’t take the [legal] risk.”’
http://www.nationalreview.com/article/420571/obama-overtime-regulations-cut-worker-pay-scheduling-flexibility
Why is Obama trying to force workers to slave away at the office instead of being able to spend time with their families?
They are flailing here.
How many people currently making under $50k are actually offered the opportunity to work from home? And how many people whether hourly or salaried but under a contract that allows for overtime or comp time work outside the office in sales or construction or doing field work of all sorts? Any system can be gamed, hell I had co-workers who had in office assignments that routinely took two hour lunches and ran their real estate business on company time.
Pay these people $51000 a year and then let them do flex-time. Or monitor their production like companies do with people who work outside sales. Or make them turn in detailed timesheets that can be checked against VPN or e-mail logs.
But in any event I am not sure why we should just allow companies to work everybody 50-60 hours a week for a base salary because a handful of white collar workers have the opportunity of working from home. This is what I call in the context of minimum wage the “Jimmy the Stockboy Fallacy”: if a policy requires raising wages for 99 people but requires laying off poor Jimmy the Stockboy is that really the responsibility of the co-workers? Or should they just take the operational attitude of bosses and seek to maximize their own welfare even if that means cutting costs. Because sure as shit management would cut Jimmy’s job in a second if they found a way to eliminate the stockroom via Just In Time delivery.
So I don’t buy it. Other people might want to throw this into the scales as against the extra pay that comes with overtime or the extra hours off that comes with a 40 hour week for that vast majority of workers who don’t get to work wearing a bathrobe but instead show up for work at the office or store or restaurant or who log their hours working outside the office.
To repeat I think the number of workers eligible to work from home that are not either 1) catgorically exempt under the rules and still would be or 2) already making more that $50k a year is pretty small. I don’t know what the future may bring but clearly we are not in a post-commute society – there still seem to be a lot of people on roads, bridges and buses during rush hour.
The National Review article starts with a question:
“Should salaried employees have to log their hours?”
My answer? “There is an app for that”.
Track hours or track production. Even under the current system where people do have over-time provisions you have the cases of people who screw around all day and have to actually “catch up” by working overtime. And I suspect that there is a lot of that going on with workplaces that currently don’t pay overtime but expect everyone to be on the job 50-60 hours a week. The way to impress the boss is not to actually get shit done 8-5 like the poor schlubs that have to get home to feed their kids but instead to “work” until the boss tells you “hey time to go out an have a drink, we have both put in a long day”.
But to flog that dying equine yet again I doubt that many people in that category are making under $50k even now.
I see the result being an instant and large drop in the productivity of American working people. This scam has been going on for years and with the demise of unions has only been getting worse–and it principally hits office people. With the unemployment rate down–(I know a lot of folks got discouraged and left the work force and a lot are underemployed, but it will take time and training to bring these folks up to the level that the people currently working a lot of overtime on a salary under $50K are performing) I do not think employers are going to have much leverage to ratchet down salaries. I think either they are going to have to pay overtime or hire more workers at the low end. I also think a lot of folks with salaries over $40K are going to get a raise to $51K. Now if Obama had done this in 2009 the results would have been different. With massive unemployment and a lot of recently laid off older workers with skills, employers could have pushed down salaries to end up paying the same thing as they were with the low exemption from overtime, but they did this anyway and I think a lot would have hired more workers, paid everybody less and avoided overtime. This was essentially what Germany did and while it spread the pain it resulted in less unemployment than would otherwise have been the case.
I would add that it’s an odd way of defending ‘work-life balance’ to give your employer the right to control your time at home. Work life balance is determined largely by the amount of time you spend NOT WORKING. Accepting the erosion of the distinction between ‘work time’ and ‘family time’ for the sake of being able to spend SOME working hours in close proximity to the family strikes me as rather shortsighted. And of course ripe for exploitation, which is probably the whole point.
Here’s another good one from the NRO;
‘Junior managers will become timeclock punchers, the hours they want to work being scaled back, with concomitant reduced opportunity to demonstrate their abilities to business owners.’
http://www.nationalreview.com/corner/420687/new-overtime-regulations-attempt-turn-back-clock-iain-murray
This is obviously an attack on junior managers, depriving them of the opportunity to prove their worth! What’s left unsaid, of course, is that they ‘prove their worth’ by proving they are willing to work very long hours for no extra pay.
And Frank here is more ‘prove your worth’
Goldman Sachs reduces intern day to 17 hours after death of Bank of America Corp. intern
http://www.salon.com/2015/06/18/goldman_sachs_reduces_intern_day_to_17_hours_after_death_of_bank_of_america_corp_intern/
“Goldman Sachs’ chief executive Lloyd Blankfein recently told interns that they shouldn’t devote all their time to the company.
“You have to be interesting, you have to have interests away from the narrow thing of what you do,” Blankfein said. “You have to be somebody who somebody else wants to talk to.”
Note that Blankfein had the balls to say this BEFORE they ‘reduced’ intern work days to ‘no more than 17 hours’. Apparently it is easy to have interests away from the job in the YOOOGE spare time you have after carving out commutes, dinner, and sleep from that munificent 7 hr off time.
It doesn’t take much research to find out HuffPo is one of those firms paying $35-40k a year – in NYC – salaried and working them 60+ hours a week. Well done Arianna.