Obama Can Restore Overtime Pay to 1975 Levels With a Stroke of His Pen
by Gaius Publius
Let me repeat the title, including the words I cut out:
Obama Can Restore Overtime Pay to 1975 Levels With a Stroke of His Pen — And Give an Immediate Raise to 54% of Salaried Workers
Consider that for a second. An immediate raise for 54% of salaried workers. As Nick Hanauer writes in The Hill (my emphasis):
Salaried Americans now report working an average of 47 hours a week—18 percent report working more than 60 hours per week. If it feels like you’re working more hours for less money than your parents did a generation ago, it’s probably because you are. … That’s 10.4 million middle-class Americans with more money in your pocket or more time to spend with your friends and family.
If Obama has the courage to act, every one of those extra hours would have to be compensated at the overtime rate of time-and-a-half, or the company would have to hire more workers. Either way, the “economy for the rest of us” — as opposed to the “billionaire economy” that vampires us into the poorhouse — would get a huge burst of stimulus, all of which would be almost immediately spent.
Overtime Pay Is Like the Minimum Wage For the Middle Class
This is like being able to raise the minimum wage by executive order. And the comparison to the minimum wage is appropriate. The federal minimum wage was at its peak in 1968, an inflation-adjusted $11 per hour, or about $22,000 per year. Today the minimum wage is $7.25, or about $15,000 per year. That’s a decline in spending power of 35%. Poverty wages made more meager so billionaires can live fat and happy.
In the same way that the poor have been impoverished by the rise of the billionaire class, so have the mass of workers in the middle. Hanauer again, writing in Politico (my bolding and some reparagraphing):
Whatever Happened to Overtime?
It’s one reason we’re poorer than our parents. And Obama could fix it—without Congress.
If you’re in the American middle class—or what’s left of it—here’s how you probably feel. You feel like you’re struggling harder than your parents did, working longer hours than ever before, and yet falling further and further behind. The reason you feel this way is because most of you are—falling further behind, that is. Adjusted for inflation, average salaries have actually dropped since the early 1970s, while hours for full-time workers have steadily climbed.
Meanwhile, a handful of wealthy capitalists like me [see below for “Who is Nick Hanauer?”] are growing wealthy beyond our parents’ wildest dreams, in large part because we’re able to
take advantage of your misfortune.So what’s changed since the 1960s and ’70s? Overtime pay, in part. Your parents got a lot of it, and you don’t. And it turns out that fair overtime standards are to the middle class what the minimum wage is to low-income workers: not everything, but an indispensable labor protection that is absolutely essential to creating a broad and thriving middle class.
In 1975, more than 65 percent of salaried American workers earned time-and-a-half pay for every hour worked over 40 hours a week. Not because capitalists back then were more generous, but because it was the law. It still is the law, except that the value of the threshold for overtime pay—the salary level at which employers are required to pay overtime—has been allowed to erode to less than the poverty line for a family of four today. Only workers earning an annual income of under $23,660 qualify for mandatory overtime.
Just as the threshold for the minimum wage has been eroded by inflation, so has the threshold for the mandatory minimum wage. The good news? Obama can return the threshold to its original level, by himself:
President Obama could raise the overtime threshold to $69,000—enough to cover the same 65 percent of salaried workers that it covered 40 years ago—and with no prior congressional approval. Because unlike the minimum wage, the overtime threshold is set through the Department of Labor’s existing regulatory authority.
There’s a second reason to act in the piece in The Hill, but I’ll leave you to read it for yourself. Look for the phrase “exempt from the overtime rules.”
Will the “Bolder Obama” Dare to Act?
Hanauer and others have issued a public call to act, and the perfect time to do so is now, during the gifting season. Talk about a gift; the middle class would praise him and Democrats every time they got a paycheck. The issue is clear — help restore the increasingly impoverished middle class in a way that counts, in the pocket book. The authority is clear — the Department of Labor has unchallenged regulatory authority. The benefit to both people and party is clear.
The only question is — will he dare to do it?
This could be another feather in his Better-Legacy Project. President Obama has acted on immigration reform (though too late to save senators like Mark Udall). And now there’s news of a second overdue action — restoring diplomatic relations with Cuba. This could easily be his third bold act in a row, and for a change, the money for it won’t come from the federal purse, but from the pockets of billionaires who vacuumed it out of ours in the first place, with their cleverly under-compensated overtime hours.
Will he dare to do it? (If you click, jump to line 122 and start reading.)
Speaking of billionaires …
Who Is Nick Hanauer, and Why Is He So Angry With Billionaires?
Because he is one. Nick Hanauer is this guy:
The Pitchforks Are Coming … For Us Plutocrats
Memo: From Nick Hanauer
To: My Fellow ZillionairesYou probably don’t know me, but like you I am one of those .01%ers, a
proud and unapologetic capitalist. I have founded, co-founded and funded
more than 30 companies across a range of industries—from itsy-bitsy
ones like the night club I started in my 20s to giant ones like
Amazon.com, for which I was the first nonfamily investor. Then I founded
aQuantive, an Internet advertising company that was sold to
Microsoft in 2007 for $6.4 billion. In cash. My friends and I own a
bank. I tell you all this to demonstrate that in many ways I’m no
different from you. …But let’s speak frankly to each other. I’m not the smartest guy
you’ve ever met, or the hardest-working. I was a mediocre student. I’m
not technical at all—I can’t write a word of code. What sets me apart, I
think, is a tolerance for risk and an intuition about what will happen
in the future. Seeing where things are headed is the essence of
entrepreneurship. And what do I see in our future now?I see pitchforks. …
It’s a smart fun read. Do click through. And remember, collapses happen quickly. An American Spring could happen as fast as an Arab one. Wherever they occur, they look like this:
Is that too old-fashioned? How about this?
A nihilist is a person with nothing to lose, and we’re making them by the cityful. C’mon, Mr. Obama. After all, it is the gifting season.
GP
.