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“The ‘Depends’ Defense”: Republicans Will Hate Obama’s New Overtime Rule, But They Can’t Do Anything About It

Last night President Obama announced — in an article on the Huffington Post — that he will raise the threshold for overtime pay in American workplaces. The new regulations are substantively important for the millions of workers who will be affected, and they’re politically important as well. Republicans are going to squawk, saying that this change will cost jobs and is another example of Obama’s tyrannical rule. But they can’t stop it, and they’re going to lose the argument as well.

Under the Fair Labor Standards Act, employers have to provide overtime pay (usually time and a half) to employees who work more than 40 hours a week, but executives and managers are exempt from the requirement, as are those who make higher salaries. The trouble is that the rules don’t account for inflation, and so over time, what constituted a higher salary became absurdly low. The threshold has been raised only once since 1975, when it covered nearly half of U.S. workers; today it stands at less than $24,000, or lower than the poverty level for a family of four. (This document from the Economic Policy Institute offers some background on the regulation if you’re interested.) Here’s how Obama described the change he will be making:

We’ve got to keep making sure hard work is rewarded. Right now, too many Americans are working long days for less pay than they deserve. That’s partly because we’ve failed to update overtime regulations for years — and an exemption meant for highly paid, white collar employees now leaves out workers making as little as $23,660 a year — no matter how many hours they work.

This week, I’ll head to Wisconsin to discuss my plan to extend overtime protections to nearly 5 million workers in 2016, covering all salaried workers making up to about $50,400 next year. That’s good for workers who want fair pay, and it’s good for business owners who are already paying their employees what they deserve — since those who are doing right by their employees are undercut by competitors who aren’t.

That’s how America should do business. In this country, a hard day’s work deserves a fair day’s pay. That’s at the heart of what it means to be middle class in America.

We should note that Obama could have gone higher than $50,400. Earlier this year, some Democrats on Capitol Hill worried that the administration was going to propose a lower overtime threshold, something like $42,000 a year. A group of liberal senators urged Obama to set the threshold at $54,000. They also argued that it should be pegged to increase with inflation going forward, an absolutely critical provision that would give the measure lasting effect. So Obama didn’t raise the threshold as far as they wanted, but he is accounting for future inflation, by pegging the overtime threshold to the 40th percentile of incomes.

As much as Republicans will object, they can’t expect that their next president will undo this action. There are some regulations that we can expect to change whenever the White House changes hands. For instance, the Mexico City Policy, also known as the “global gag rule,” prohibits the funding of any organization anywhere in the world that even discusses abortion with a woman; when a Republican president takes office, he institutes it, and when a Democratic president takes office, he revokes it. But rules such as this one almost certainly won’t fall into that category. Try to imagine a President Rubio or Walker announcing that he was taking overtime pay away from millions of lower-middle-class U.S. workers. It won’t happen. They may argue against the rule when it is proposed, but once it’s in place, undoing it becomes politically impossible.

The more immediate political impact of this rule change lies in its place among a constellation of proposals Democrats will be offering on things such as the minimum wage and paid sick leave, proposals that are aimed at arresting the growing cruelty of the American workplace. As I’ve argued before, one way to think about the contrast between what Republicans and Democrats offer on the economy is that Republicans say they’ll get you as far as your employer’s door, while Democrats want to walk inside with you. Republicans argue that their preferred policies, mostly tax cuts and light regulation on businesses, will accelerate growth so that new jobs will be created. But once you’ve got the job, you’re on your own. The Democratic argument is that government has to come inside the workplace, to make sure people are being treated fairly. So they want to increase pay, provide family and sick leave, allow workers to bargain collectively, make sure no one is discriminated against and generally establish a structure that guarantees that people are treated well and can maintain some measure of dignity.

The Republican counter, of course, is that all those things increase costs to employers and therefore cost jobs. But their argument presumes that there’s nothing fundamentally wrong with the American workplace, which most of us know just isn’t true. Yes, many employers already treat their employers well. But millions of others don’t and would treat their workers even worse if they could get away with it.

As for this measure, we know exactly what employers will say: This will cost us money, which means fewer jobs. We know that’s what they will say, because that’s what they say about every marginal improvement in working conditions, benefits or pay. And in the short term, they’re right: It will cost them some money.

But let’s turn it around. What if employers said, “We could save money by removing the employee bathrooms and just telling our workers to wear Depends to the job. And that would mean we’d be able to hire more people.” Would we respond, “Well, if it would save you money and produce a few more jobs, then that sounds great”? Of course not. The short-term cost to employers of a regulation is certainly something to consider, but it’s not the only thing to consider.

The change to overtime regulations isn’t some kind of dramatic transformation. Like increasing the minimum wage, it’s nothing more than taking an existing rule and updating it for inflation. But it’s built on the assumption that the government should come into the workplace and make sure that what happens there is fair. Republicans don’t believe that’s government’s job. But it isn’t going to be easy for them to make that case to a population that feels increasingly insecure at work. And even if they could win the argument, they won’t be able to change the policy.

 

By: Paul Waldman, Senior Writer, The American Prospect; Contributor, The Plum Line Blog, The Washington Post, June 30, 2015

July 2, 2015 Posted by | Fair Labor Standards Act, Middle Class, Salaried Workers | , , , , , , , | Leave a comment

Quality Vs Quantity: Yes, We Need Jobs. But What Kind?

On Thursday, President Obama will deliver a major speech on America’s employment crisis. But too often, what is lost in the call for job creation is a clear idea of what jobs we want to create.

I recently led a research team to the Rio Grande Valley in Texas, where Gov. Rick Perry, a contender for the Republican presidential nomination, has advertised his track record of creating jobs. From January 2000 to January 2010, employment in the Valley grew by a remarkable 42 percent, compared with our nation’s anemic 1 percent job growth.

But the median wage for adults in the Valley between 2005 and 2008 was a stunningly low $8.14 an hour (in 2008 dollars). One in four employed adults earned less than $6.19 an hour. The Federal Reserve Bank of Dallas reported that the per capita income in the two metropolitan statistical areas spanning the Valley ranked lowest and second lowest in the nation.

These workers aren’t alone. Last year, one in five American adults worked in jobs that paid poverty-level wages. Worker displacement contributes to the problem. People who are laid off from previously stable employment, if they are lucky enough to find work, take a median wage hit of over 20 percent, which can persist for decades.

To understand the impact of low wages, in the Valley and elsewhere, we interviewed a wide range of people, including two directors of public health clinics, three priests, a school principal and four focus groups of residents. Everyone described a life of constantly trying to scrape by. One month they might pay for the phone, another, for utilities. Everyone knew how long each company would carry unpaid bills before cutting service. People spoke not only of their fear of an unexpected crisis — an illness, a broken car — but also of the challenge of paying for basic needs like school supplies. Many used the phrase “one paycheck away from homelessness.”

Because their parents cannot afford child care, children move among relatives and neighbors. They watch too much TV. They don’t finish their homework. Older children grow up too fast from parenting their younger siblings. As one person observed, “All you think about is which bill is more important.”

Economic stress strains marriages. Parents cannot afford quinceañeras for their daughters. In church youth groups, teenagers ask why they should stay in school if all they can get are low wages.

Many children are latchkey kids. Accidents are frequent; we heard of an elementary school student who badly burned himself in a science experiment, with his older brother watching. Their father couldn’t take time off from work to visit his son in the hospital. Children come to school sick. Parents miss teacher conferences because they can’t afford time off. Type 2 diabetes is a scourge in the Valley. Since Type 2 diabetics can be asymptomatic for years, many don’t buy medicine; as time passes, they become severely ill, often losing sight or a limb.

The director at one clinic, with nearly 70,000 visits a year, estimated that half of its patients had anxiety or depression. Often people can’t get to the clinic because they cannot afford to lose work time or because gas costs too much. When they go, they take their families, because they have no child care.

And yet the Valley is not hopeless. Teachers stay late to help with homework. They make home visits to meet parents. Health clinic employees work overtime. The community organization Valley Interfaith has pushed for training opportunities and living-wage jobs. There is no “culture of poverty,” but the low-wage economy has corrosive and tragic consequences.

Must we choose between job quality and quantity? We have solid evidence that when employees are paid better and given more opportunities within a company, the gains outweigh the costs. For example, after a living wage ordinance took effect for employees at the San Francisco International Airport, in 1999, turnover fell and productivity rose.

Contrary to the antigovernment rhetoric, there is much that the public sector can do to improve the quality of jobs.

A recent analysis by the Economic Policy Institute reported that 20 percent of federal contract employees earned less than the poverty level for a family of four, as opposed to 8 percent of traditional federal workers. Many low-wage jobs in the private sector (notably, the health care industry) are financed by taxpayers. The government can set an example by setting and enforcing wage standards for contractors.

When states and localities use their zoning powers to approve commercial projects, or offer tax incentives to attract new employers, they can require that workers be paid living wages; research shows this will not hurt job growth.

Labor standards have to be upgraded and enforced, particularly for those employers, typically in low-wage industries, who engage in “wage theft,” by failing to pay required overtime wages or misclassifying workers as independent contractors so that they do not receive the benefits to which they are entitled.

Americans have long believed that there should be a floor below which job quality does not fall. Today, polls show widespread support for upgrading employment standards, including raising the minimum wage — which is lower, in inflation-adjusted terms, than it was in 1968. It’s time for the federal government to take the lead in creating not just more jobs, but more good jobs. The job-growth mirage of the Rio Grande Valley cannot be our model.

By:  Paul Osterman, Op-Ed Contributor, The New York Times, September 5, 2011

September 6, 2011 Posted by | Businesses, Class Warfare, Conservatives, Corporations, Economic Recovery, Economy, Education, Government, Jobs, President Obama, States, Teachers, Unemployment | , , , , , , , , , , , , , , , , , , , , , , | Leave a comment

Senate Democrats Weigh Making Big Mistake On Health-Care Reform

I’m getting some worried e-mails from Hill staffers who think Senate Democrats might rubberstamp a policy House Republicans passed to undermine the Affordable Care Act. It’s the sort of policy decision that won’t get much attention but could have some very big, and very bad, effects, so let’s take a moment and go through it.

If you’ve been paying attention to the debate over the Affordable Care Act, you’ve probably heard about the 1099 provision. Essentially, small businesses manage to avoid paying taxes on a lot of small transactions. The 1099 provision would’ve forced them to report those transactions, raising about $20 billion over 10 years. But it would’ve require a lot of paperwork. So much paperwork, in fact, that Democrats agreed to repeal it.

When the Senate repealed the provision, they paid for it by canceling other spending that Congress had authorized, but that hadn’t yet been put to a particular purpose. House Republicans took a different approach. They’re trying to sharply increase the amount of subsidies that families will have to pay back if their income increases during the course of a year. The Center on Budget and Policy Priorities has a longer explanation of how this would work, but here’s the short version:

Under their proposed policy, a family with income at 225 percent of the poverty line who needed subsidies for the first half of the year but canceled them mid-year when the husband got a better job could get a bill for more than $4,500 at the end of the year.

A more worrying example goes the other way: Imagine a family where the breadwinner makes much more than 400 percent of poverty, but loses his job late in the year. He tries to apply for subsidies so the family can keep getting health insurance but is told that he shouldn’t bother — because his total income that year will still be above 400 percent of poverty, he’ll get a bill at the end of the year forcing him to pay back the money.

The Affordable Care Act, unfortunately, already includes a “payback” policy along these lines — the House Republicans are just proposing to make it much, much worse. This will do two things: make people hate the Affordable Care Act for bait-and-switching them, and keep people from entering the exchanges because they’ve heard horror stories of huge bills. It’s clear why the GOP wouldn’t mind that outcome, but there’s no reason for Democrats to accept it. The Senate should stick with the 1099 repeal that the Senate has passed.

By: Ezra Klein, Columnist-The Washington Post, March 8, 2011

March 8, 2011 Posted by | Affordable Care Act, Health Reform | , , , , , , , , , | Leave a comment

   

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