Want More Overtime? Raise Pay in the South and in Retail!

Little Rock       The Department of Labor has issued its revised rulemaking proposal on overtime eligibility for nonexempt workers.  A federal judge in Texas had halted the Obama administration’s efforts to move the number from $23,660 to double that amount at $47,476 annually.  Instead, the current proposal would move the number to $35,308 based on 2017 figures, and, reading the DOL proposal more closely, perhaps higher based on 2018 figures after the comment period, if this proposal passes muster.

Did they pull the $35,308 figure out of their ear or what?  Although I had somehow never realized this previously, their justification this time, as it has been in 2004 at the time of the last increase in overtime pay, was tagging the rate at 20% of the average wage of salaried employees in the South as well as retail workers nationally.  The Obama Administration had come up with the $47,476 figure by trying to scale the benchmark up to 40% of the average wage of salaried employees in the South.

Hopefully, you’re starting to get the picture.  It’s not a question of “the South shall rise again,” so to speak, but that everyone cannot rise again without the South.  There’s a certain cruel justice in this, as I write from deep in the South.  It’s a reminder that we have a national workforce rather than a regional one, even if Congress’ stubborn refusal since the George W. Bush administration to raise the federal minimum wage has increasingly forced local and state efforts to raise wages as politicians continue to ignore the economic reality of workers widening the gap for workers in the USA based on location.

The DOL this time around claims this bump will benefit 1.1 million workers, which is significant.  Others point out that the Obama DOL claimed 4 million workers would become eligible for overtime.  In a footnote in the current proposal, the DOL estimates that an additional two million workers would likely benefit who have been “nonexempt” (which means in English that they were not exempt) but were making over the 2004 allowable minimum weekly level of $455, but less than the newly proposed level of $679 per week, because they would “now fail both the salary levels and duty tests.”  The DOL in this footnote says that such workers would “have their overtime-eligible status strengthened in 2020” when this new rule would go into effect, which in non-legalese, plain English would mean that another 2 million workers would be able to collect overtime.   The proposal also adds another 200,000 workers who were making over $100,000 under the old rule and would now be eligible with the threshold moved up over $140,000.  Another point worth making is that the new proposal also mandates a review and adjustment every four years, which means that workers will not be stuck for a full fifteen years in the future, and that’s very important.  In short, the wage level is lower, but the number of potential beneficiaries is not as wide it would seem as reports are making it.

Everything being equal, and, frankly, it never is, this is not a bad deal.  If anyone wants better, the new rule is pointing out a clear path for future organizing.  If we can organize enough workers in the South or in retail nationally to move the average wages up, then all the benefits will trickle up from the bottom.

To me that sounds like a plan, though I doubt if many will be lining up to make it happen.

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Raising the Minimum Wage and Lowering the Maximum Wage

Parade through the streets upon the strikers’ victory, 1912, Lawrence, Mass. (Bread & Roses Strike)

Kawakawa, New Zealand   After decades of organizing to raise the minimum wage at the local, state, federal, and international level and winning more battles than losing, it is still frustrating to see the inequality gap increasing in country after country, as we continue to be ignored in Congress with a frozen national minimum wage and are outflanked by the rich and corporations larding one tax break after another.  All of which made me a prime suspect to be won over by an argument that we need to couple a rising minimum wage with an effort to lower the maximum wage.

Sam Pizzigati makes a heckuva of an argument for just that in The Case for a Maximum Wage. After marshalling an array of facts and figures reminding us how out of control wealth and inequality have become he takes on redistribution, not because he’s against it in principle, just that it isn’t enough to get the job done of achieving greater economic and social equality.  Partially, he states flatly that redistribution, including fair tax rates, will always be targeted politically, powerfully, and effectively by the rich. There was a time, a long time ago, mainly during the periods of war and recession, when tax rates ranged as high as 90% for the rich. In the boring and maligned 1950s, coming out of the war and recession, we were a more equal society, as was the case in other countries as well, because of the growing middle-class in the wake of more aggressive tax rates.

If redistribution isn’t enough to get the job done, something Pizzigati called pre-distribution might be worth a shot, but the real proposal he makes is that the maximum wage should be capped at no more than 100 times the federal minimum wage at roughly $1.5 million USD given the current frozen level of $7.25 per hour.  He does that while gritting his teeth, because he likes other proposals that cap the wage at ten times, but he’s trying to be reasonable.  The minimums won’t be raised more equally until the maximum’s have a fixed self-interest in assuring that is the case.

Not that there’s a chance in hell in the current political climate.  Pizzigati argues the path forward starts with corporations, given the current power of the rich.  He finds hope in various proposals in the UK and USA that force disclosure of pay ratios between top executives and hourly workers.  He wants to incentivize corporations by rewarding those on the equity team with preference for federal contracts and other state benefits, among other things.

Yes, that’s a stretch of the imagination, too, but Portland, Oregon has stepped up with an ordinance that will raise $3.5 million for the city by jacking the tax rate for corporations persisting in their commitment to enriching the executives compared to the workforce.  Initiatives in Switzerland, policy pronouncements by the Labour Party, and other cities in the USA debating following Portland’s lead are all grounds for optimism.

Inarguably, Pizzigati argues that over the last generation we have made progress on raising the minimum wages closer to living wages, but it’s a fight that is ongoing, so now is a good time to start the long march to achieving a maximum wage as well in order to achieve equality and make our society sustainable in the future.

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