How Obama Could Help 6.1 Million Workers With a Stroke of His Pen

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Barack Obama speaks on the phone in the Oval Office. (Image: Whitehouse.gov)
Barack Obama speaks on the phone in the Oval Office. (Image: Whitehouse.gov)

The Fair Labor Standards Act (FLSA) of 1938 established some of the New Deal’s most important protections for workers. It gave us the 40-hour work week and mandated that working people be paid overtime — at least time and a half — for putting in more than 40 hours a week. Today, FLSA covers about 75 million Americans.

The rationale behind the legislation was that most hourly wage-earners don’t have a lot of bargaining power with their bosses. But it was also assumed that management and skilled professionals did have the clout necessary to protect themselves from being exploited, so the act exempted those groups. But exactly who is or is not exempt from the overtime requirement has been a point of contention ever since.

There are various tests built into federal labor law to determine who’s covered by the law according to their professional responsibilities. But those standards can be complicated and difficult to enforce. Then there’s a simple cutoff — regardless of what you do for a living and what your exact responsibilities are, if you’re a salaried employee making less than $455 per week (or $23,660 for someone who works year-round), then you’re automatically covered.

The problem is that this cutoff isn’t tied to the cost of living, and since 1975 it has only been increased once. That was in 2004, when a person making just $5.15 per hour could be considered a manager or skilled professional. (And, as economists Ross Eisenbrey and Jared Bernstein pointed out in a paper released by the Economic Policy Institute (EPI) in March, that one adjustment, under George W. Bush, included other changes that “led to more confusion and ambiguity, and, even worse, to the unjustified exemption of salaried workers who, under the spirit of the law, should be covered.”)

If the $455 cutoff had kept pace with inflation since 1975, it would now be $984 per week — more than twice what it is today.

Last year, Eisenbrey and Bernstein called on Barack Obama to use his executive authority to raise the threshold to the 1975 level of $984 per week. Stymied by Congress, Obama vowed to use his “pen and phone” to do what he could for working people without going through the legislature. Since then, Obama has issued executive orders mandating that (most) federal contractors pay their workers at least $10.10 per hour, prohibiting contractors from retaliating against workers who discuss their salaries with their colleagues — and compelling them to release information about how much they pay workers according to sex and race. He recently signed additional orders barring contractors from discriminating on the basis of sexual preference and preventing contractors from forcing their workers into arbitration, rather than seeking remedy for workplace abuses in the courts.

Because it’s up to the Department of Labor to determine these rules, the cutoff for workers to be guaranteed overtime protections can be increased with a stroke of Obama’s pen — and for all workers, not just those employed by federal contractors. In March, the Obama administration announced that it intended to do just that, along with enacting additional rules that would make it harder for businesses to misclassify employees as managers. At the time, the top job at the Labor Department’s Wage and Hour Division, which sets the rules, had been vacant for some time. But in June, David Weil was miraculously confirmed to lead the division by the Senate, and he has since shown every inclination to do what he can to protect vulnerable workers.

On Wednesday, EPI’s Heidi Schierholz published a paper analyzing who would benefit from this proposed order. She found that, broadly speaking, “women, blacks, Hispanics, workers under age 35, and workers with lower levels of education are at the low end of the salary scale for managerial and professional workers and would therefore disproportionately benefit from an increase in the salary threshold.” Of the 21.7 million wage-earners who are currently exempt as managers, Schierholz concludes that 6.1 million would be automatically covered by the FLSA if the cutoff were raised to $984 per week.

Like Obama’s other executive actions, this proposal wouldn’t be a magic bullet for what ails our increasingly lopsided economy. But with a Congress that’s so polarized it barely can maintain the most basic functions of government, these small efforts at least represent a step in the right direction.

Joshua Holland is a senior digital producer for BillMoyers.com. He’s the author of The Fifteen Biggest Lies About the Economy (and Everything Else the Right Doesn’t Want You to Know about Taxes, Jobs and Corporate America) (Wiley: 2010), and host of Politics and Reality Radio. Follow him on Twitter or drop him an email at hollandj [at] moyersmedia [dot] com.
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  • Tony Martarella

    Not too many years ago, maybe 20 or so, because of a weakening economy, or a company’s downsizing or off-shoring their work, and with the resulting increase in unemployment, there was lots of talk about “job sharing.” Some companies, in conjunction with their work forces did this voluntarily; some workers agreed to a 30 hour work week rather than see their coworker get laid off. This is a concept that should be revived and promoted.
    I also think ALL overtime should either be outlawed or the overtime rate increased to four-times that of straight time, that would serve as an incentive to hire additional people and “spread the joy” of having gainful employment. This would open opportunities for millions of unemployed workers, who no longer qualify for unemployment benefits, to at least have some decent part time work.

  • Rita

    it would certainly put the screws to Wal-Mart, which uses the “manager” position most liberally in order to avoid fair wages for its employees.

  • Diana Reichardt

    It is Past time for a change in the minimum wage. It is time to do something to aid the working class of people. No more bull about how it is going to hurt everyone. It is time for a CHANGE!

  • http://sime0n.net sime0n

    Seriously, have you ever met an hourly worker who didn’t really want overtime for hours worked over 40?

    Which of these statements sounds fair to you:
    It would be fair to pay all hourly workers overtime.
    It would be fair to pay no hourly workers overtime.
    It would be fair to pay some hourly workers overtime, but not others.

    The first and second are different, but fair. The third is by definition unfair. The third is unfair by design. Overtime should be applied to all hourly workers fairly, otherwise we should remove Fair from the title of the law and just call it the Labor Standards Act.

  • Leave A Mark

    WE have to stop mining the labor for every penny of productivity – while companies grow fatter recording new highs in profits and income for the top. Stop investing in your self and begin examining your own greed the way you scrutinize every penny from the bottom.

    Fact: We have seen the largest transference of Americans working class wealth to the top richest 1% in history! Predatory financial industry played the greater part in dismantling America’s greatest asset – its middle class. Pulitzer journalists ‘Bartlett and Steel’ (a conservative and liberal team) reported on how the “American middle class has been systematically impoverished and its prospects thwarted in favor of a new ruling elite” for the past 30 years. Their best seller “The Betrayal of the American Dream” was an affirmation of fact that came to be, in light of their warnings, some 30 years prior and in fact grossly underestimated how much more difficult life would be for most Americans. They wrote, “Astonishingly, this has all been carried out in what is considered the world’s greatest democracy, where the will of the people is supposed to prevail. It no longer does. America is now ruled by a few – the wealthy and the powerful who have become this country’s ruling class.”

    This is how status quo wants it. “The U.S. Census Report finds that 50 million Americans are poor. Fifty million voters is a powerful block if they ever organized in an effort to pursue their common economic goals. So, it’s crucial that those in the wealthiest One Percent keep the poor fractured by distracting them with emotional issues like immigration, abortion and gun control so they never stop to wonder how they got so screwed over for so long.”

    “Ferguson is not just about systemic racism — it’s about class warfare and how America’s poor are held back” – TIME, Kareem Abdul-Jabbar

    What Cornel West refers to as “The Niggerization of America” and
    Chris Hedges proclaims as “Sacrifice Zones” expanding on American reservations, and Glenn Greenwald examines in ” With Liberty and Justice for Some: How the Law Is Used to Destroy Equality and Protect the Powerful”.

    Hard work for the master pays, not the slave. Stop incentivizing the master to voluntarily “spread the joy” of slavery.

    “This is a concept that should be” reviled and ridiculed – not “revived and promoted”.

  • Leave A Mark

    My opinion matches – with founders class. We separate on who should do the greater part of sharing, on who has the greatest responsibility and greatest wealth of capacity to share the rewards from hard labor.

    Requiring the slave to share their limited sustenance, their reward for hard work, among themselves while the master grows fatter off their labor, is nothing short of the same slippery slope of voodoo economics – ignoring the way to resolve the gravity of inequality.

    Why add to the plausible deniability – this is what encourages irresponsibility for any damnable actions committed.

  • Tony Martarella

    LAM, let me rephrase the first sentence in my previous comment: I agree with you totally, 100%… my point is/was that a solution takes time. Let us reach out to our neighbors and offer a helping hand so we have the strength and resolve, and resources, to fight back. I think more people are pissed now that ever before (except maybe for the Civil War), and I think in time they will stand up and fight back… but now doesn’t seem to be that time. That time is coming.