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Overtime: How Obama Can Help The Middle Class Without Congress

Renegade billionaire Nick Hanauer has some advice for the president.
Overtime: How Obama Can Help The Middle Class Without Congress

Nick Hanauer is the guy who previously warned plutocrats they'd be facing pitchforks if they didn't support a more equitable society. Here he is with some practical advice for Obama, via the Politico Magazine:

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.

You know many people like that? Probably not. By 2013, just 11 percent of salaried workers qualified for overtime pay, according to a report published by the Economic Policy Institute. And so business owners like me have been able to make the other 89 percent of you work unlimited overtime hours for no additional pay at all.

In my defense, I’m only playing by the rules—rules written by and for wealthy capitalists like me. But the main point is this: These are rules that President Barack Obama has the power to change with the stroke of a pen, and with no prior congressional approval. The president could, on his own, restore federal overtime standards to where they were at their 1975 peak, covering the same 65 percent of salaried workers who were covered 40 years ago. If he did that, about 10.4 million Americans would suddenly be earning a lot more than they are now. Last March, Obama asked the Labor Department to update “outdated” regulations that mean, as the president put it in his memo, “millions of Americans lack the protections of overtime and even the right to the minimum wage.” But Obama was not specific about the changes he wanted to see.


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So let me be specific. To get the country back to the same equitable standards we had in 1975, the Department of Labor would simply have to raise the overtime threshold to $69,000. In other words, if you earn $69,000 or less, the law would require that you be paid overtime when you worked more than 40 hours a week. That’s 10.4 million middle-class Americans with more money in their pockets or more time to spend with friends and family. And if corporate America didn’t want to pay you time and a half, it would need to hire hundreds of thousands of additional workers to pick up the slack—slashing the unemployment rate and forcing up wages.

The Obama administration could, on its own, go even further. Many millions of Americans are currently exempt from the overtime rules—teachers, federal employees, doctors, computer professionals, etc.—and corporate leaders are lobbying hard to expand “computer professional” to mean just about anybody who uses a computer. Which is almost everybody. But were the Labor Department instead to narrow these exemptions, millions more Americans would receive the overtime pay they deserve. Why, you might ask, are so many workers exempted from overtime? That’s a fair question. To be truthful, I have no earthly idea why. What I can tell you is that these exemptions work out very well for your employers.
Since the Republican Party’s takeover of both houses of Congress in the midterm elections, all the talk in Washington has been about what won’t get done because of gridlock between the White House and Capitol Hill. And Obama has talked of moving things forward by making unilateral changes to immigration law and climate protections.

But what about the most basic need of all—jump-starting the real economy by giving more middle-class Americans a fair shake? You would think that for a Democratic administration, raising the threshold back to where it once was would be a no-brainer, but I have grave doubts that administration officials are heading in this direction. In fact they are likely to raise the threshold only partly, and the Obama administration has not yet grappled with the broader question of how moves such as this are critical to helping to restore America’s middle class. How do I know? Intuition. OK, I admit it, more than intuition. I’ve had conversations with administration officials about their forthcoming policy changes. And the scuttlebutt out of the Labor Department looks promising—for corporations. Not the middle class.

A good idea with an obvious flaw: in this era of Austerity, Wage and Labor has fewer enforcement personnel than ever. I suspect most companies would ignore it.

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