If it feels like you’re working longer hours for less money than your parents did, it’s because you probably are. But if you’re looking to Donald Trump to make the American middle class great again, don’t hold your breath.
Last fall, Trump’s Labor Department killed an Obama administration rule that would have extended overtime protections to millions of hard-working Americans. Since then, workers have been cheated out of more than $500 million for hours they’ve worked, but will never be paid. By the end of this year, that number will climb past $1.2 billion. It’s outrageous—especially at a time when we’re handing out trillion-dollar tax breaks to wealthy corporations and rich investors like me!
But just because you can’t rely on this president or this Congress to ensure that an hour worked is an hour paid doesn’t mean you have to patiently wait for a big blue wave to set things right. Now is the time to look to the states, where the same authority to set a higher minimum wage, also gives governments the power to set higher overtime standards.
When President Obama lost control of Congress, his window to increase the federal minimum wage closed, so the battle moved to states and cities, where the Fight for $15 movement has made remarkable strides.
Governors and legislatures throughout the states can and must take similar action to restore as much of Obama’s overtime protections as they can.
It used to be that if you worked more than 40 hours a week, your employer would pay you time-and-a-half in exchange for your sacrifice. That was the social and legal contract of our parents’ generation, in the 1970s, back when 62 percent of full-time salaried workers were eligible for overtime. But over the past four decades, we’ve allowed the overtime threshold (the salary below which you are guaranteed overtime pay) to be eaten away by inflation—from a CPI-adjusted peak of $61,200 in 1975, to only $23,660 today.
According to the Department of Labor, just seven percent of salaried workers now qualify for overtime pay. For everyone else—everyone earning the salaried equivalent of just $11.38 an hour or more—every hour worked over 40 hours a week is an hour worked for free. Indeed, according to Gallup, full time salaried workers now report working an average of 49 hours a week, with little or no overtime pay to show for it. That means you’re working more for less than your 1970s counterpart—possibly even earning less an hour than the hourly minimum wage!
It’s a hell of a great deal for corporations and their shareholders who have seen their profits soar as the overtime threshold has declined, but it sucks if you’re one of the millions of overworked Americans who would rather spend more time with your friends or your spouse or with your children, or volunteering in your community—or starting up a great new business out of your garage.
Time is money, and most Americans are getting less of both.
The Obama administration rule would have raised the overtime threshold to $47,476—still below the 1975 inflation-adjusted peak, but high enough to strengthen protections for 12.5 million American workers. Then Trump went and killed it. These 12.5 million Americans will work 1.4 billion hours of overtime in 2018. And they deserve to be paid for it.
I believe a responsible overtime threshold would go even higher than the Obama standard—at least $69,000 annually—high enough to cover the same 62 percent of salaried workers who were covered back when the American middle class was at its strongest. Employers at the time understood that they had two courses of action if they didn’t want to pay overtime: they could either raise employee wages above the threshold, or they could hire more employees to make the workload manageable within a 40-hour week. Either way, employees won.
That’s why I call overtime the minimum wage for the middle class. Overtime is a fundamental labor standard necessary to protect employees from exploitative practices: like the many fast food or retail or office workers who are promoted to “assistant manager” or some other such title so that they can be worked 60-hour weeks for 40 hours of pay. An ample overtime threshold would not only curb this familiar job misclassification scheme, according to University of Texas labor economist Daniel Hamermesh, it would also grow paychecks, create new jobs, and ensure a more healthy work-life balance.
“Employees will work less but make more,” concludes Hamermesh, one of the foremost researchers on overtime and its effects. And while he acknowledges there’s a trade-off in higher labor costs for businesses, Hamermesh says the choice is easy: “The benefits far exceed the costs.”
How can this be?
It’s because in our economy, wealthy people like me aren’t the true job creators—you are. When workers have more money, businesses have more customers and hire more workers. A thriving, healthy, and growing middle class isn’t a consequence of economic growth, it is its primary source and cause. That’s why what’s good for the middle class is good for the American economy. And high overtime standards have always been damn good for the American middle class.
Paul Ryan will never deliver to workers the raise he’s been promising. Congressional Republicans would sooner eat glass than fight to get you a penny more in your paycheck. And President Trump will never develop a conscience. But the good news is, you don’t need any of them to get the raise you want, need, and deserve.
It’s time for the states to embrace their proper role in our federalist system and do what’s right by their own people. Fix overtime. Increase the threshold. And raise America’s wages one state at a time.