Last week the Department of Labor adjusted a dollar amount unchanged
in 41 years. Effective December 1, the
highest salary for which employers must pay time-and-a-half for weekly hours worked
over 40 will increase from $23,660 to $47,476.
It will now increase, algorithmically, every three years.
I do not support raising the minimum wage. As I have written before, that costs jobs,
rarely eliminates poverty, pushes demand for positions unnecessarily high, and
sticks it most often not to the likes of McDonalds and Wal-Mart but to
struggling local employers. In a country
where people’s wants and needs vary drastically, it is wrong that jobs paying
below a certain amount are illegal. Yet
I do not see requirements for overtime eligibility the same way, and here is
why.
First, requiring unpaid work is employee abuse. Below a true management level, for which
$47,000+ is a better approximation than $23,660, labor is an hourly
expense. Any requirement that production
workers, be they making hamburgers or computer programs, provide it for free, whether
they are compelled formally or informally, goes straight to the employer’s
bottom line.
Second, too much work and not enough people to do it during
their regular hours is a human resources problem, for which the business’s
management, not its workers, is responsible.
Third, over the past several decades there has been more and
more concentration of work into fewer employees, which minimizes the number of
jobs. Avoiding hiring people by getting
uncompensated hours from existing workers makes that worse.
Fourth, no longer will so many people need to choose between
being promoted or getting higher pay.
That may sound strange, but if restaurant shift managers are expected to
stay late whenever they are needed, those accepting that position may well earn
less per hour than the newest salad maker.
Fifth, the threshold adjustment will prevent the problem of
many restaurant and retail managers, ostensibly hired to supervise, putting in
unpaid extra time doing low-level tasks themselves. These situations, as dirty as water after a
manager washes dishes, will be cleared up.
Sixth, one of the few comprehensive solutions to the jobs
crisis I have seen is to reduce working hours.
I think a normal standard of 30 a week would prove to be successful, and
we are taking one step toward getting there by bringing that, in effect, down
to 40.
As for the case against the change, I don’t remember seeing
as many bad arguments on one issue as I have here. Those opposing the law claim it will make
managers punch time clocks (no need for that, and most managers fill out
timecards, to track what projects they are working on, as it is), that jobs
will become more rigid (only at the expense of volunteer work) with less
telecommuting and flexible hours (employees can contemporaneously write down
the hours they put in on paper, if recapping at the end of each week isn’t good
enough), that businesses will be damaged by the loss of unpaid work (which also
happened when slavery ended), that workers will lose “prestige” and suffer
“demotions” (nonsense and nonsense), that it will call for excessive
record-keeping (one small spreadsheet per work group?), that it will result in
pay cuts and loss of benefits (employers can do that any time they want
anyway), and, as maybe the most laughable example of false entitlement, that it
will hurt universities by requiring they pay postdoctoral fellows and adjunct
professors for the time they actually put in.
The only reasonable objection I have seen is making accounting for business
travel more complex, but the laws on pay there should, of course, be the same
for those now under the threshold.
What will be the effect of this change? Contrary to what President Obama said, it
will not raise pay for a great deal of people.
Employers will have five main ways of dealing with the higher
limit: simply paying for overtime as it
occurs, not having the extra work done, reducing base pay as to formalize the
amount of hours the employees have actually been working, giving raises to
bring workers over the maximum, and transferring work over 40 hours per week to
new employees. Only two of these would
mean more money for workers, but two would give them extra free time. As for opportunities, observers have
different views on how many jobs this new law will generate, with Goldman Sachs
economist Alec Phillips estimating 100,000 new ones next year, but California’s
similar 1980 regulation created almost none.
We will need to wait and see.
Although this threshold increase will mean change, three things
should be clear to employers and employees.
Those earning more than this $47,476 – which is only the 1970 inflation-adjusted
equivalent of $7,699 – can continue to be expressly paid for getting the job
done, no matter how many hours it takes, and can put in all the extra time they
want. Despite one complaint, networking
activities, if optional, will be unaffected.
And all workers will be as welcome as ever to advance themselves after
hours. Those things will continue to
benefit businesses, but cheating their employees out of their labor will
not. That is a good thing.