What others say: When people work, they should be paid for it

  • Tuesday, June 14, 2016 4:33pm
  • Opinion

The snapshot view of the US economy is, mostly, a comforting one: Unemployment has steadily fallen, inflation is almost nonexistent, consumer spending in April rose at the fastest rate since 2009, and the housing market remains solid. But the picture is missing something essential: higher wages. For many workers, a pay raise is a fading memory. Household incomes have largely been stagnant for years, exacerbating an already yawning gap between the nation’s economic elite and most everyone else.

President Obama has repeatedly railed against the injustice of income inequality, but he stands no chance of coaxing Congress into doing anything meaningful about it. Recognizing that political reality, Obama wisely exerted his executive powers last month, unveiling a change in federal rules that govern who qualifies for overtime pay. The regulations, which are scheduled to take effect Dec. 1, mark a desperately needed win for lower-level employees who are paid by salary and don’t receive a dime extra when they log more than 40 hours in a week. Under the new regulations, salaried employees earning less than $47,476 annually, or $913 weekly, will have to be paid time-and-a-half after 40 hours. That’s a significant increase from the current threshold of $23,660, which has been updated just once since the 1970s — a number so pitifully low that it doesn’t meet federal poverty guidelines for a family of four, never mind qualify as managerial-level pay.

In his weekly radio address on May 21, Obama noted that four decades ago, more than 60 percent of American workers qualified for overtime based on their salary level, compared with a mere 7 percent now. The rule change will increase that to 35 percent, according to the Department of Labor, adding 4.2 million people to the ranks of overtime-eligible — including 83,500 in Massachusetts. Obama called it “the single biggest step I can take through executive action to raise wages for the American people.”

Predictably, it didn’t take long for business groups, both locally and nationally, to start complaining that the revision creates an economic hardship for them. Some said the requirement will force them to cut employees’ base pay as a way to avoid added payroll costs. That’s nonsense — the Labor Department estimates workers collectively will earn $12 billion more over the next decade because of the revision, a big-sounding number that actually is a tiny fraction of the country’s overall wages.

The National Retail Federation had the audacity to claim that the change will limit employees’ opportunities for career advancement “by taking away their ability to use their own discretion in deciding whether to put in the extra hours sometimes needed to do their jobs.” Translation: Companies that are wrongly profiting from free labor won’t be able to do so any longer.

It may well turn out that certain salaried employees covered by the overtime expansion don’t end up taking home heftier paychecks on a regular basis — employers might sometimes decide to limit their hours instead of paying overtime. Others may opt to give workers pay raises to push them above the $47,476 overtime threshold. The new requirements might even lead to the creation of more jobs. A Goldman Sachs analysis of what happened in 2004 — the last time the overtime threshold was raised — concluded that the adjustment coming in December might compel businesses to hire about 100,000 additional workers next year instead of increasing their overtime budgets. All of this would further boost consumer spending — which accounts for a whopping 70 percent of the US economy — benefiting the very corporations that now warn Obama’s action on overtime will have dire consequences.

After years of a middle class in retreat, the president’s order is a move in the other direction that does away with an outmoded model of compensation, and acknowledges an undeniable fact — when people work, they should be paid for it.

— The Boston Globe,

June 5

More in Opinion

Alaska Department of Education and Early Development Commissioner Deena Bishop and Gov. Mike Dunleavy discuss his veto of an education bill during a press conference March 15, 2024, at the Alaska State Capitol. (Mark Sabbatini/Juneau Empire file photo)
Opinion: Strong policy, proven results

Why policy and funding go hand in hand.

Former Gov. Frank Murkowski speaks on a range of subjects during an interview with the Juneau Empire in May 2019. (Michael Penn / Juneau Empire File)
Opinion: The Jones Act — crass protectionism, but for whom?

Alaska is dependent on the few U.S.-built ships carrying supplies from Washington state to Alaska.

Cook Inlet can be seen at low tide from North Kenai Beach on June 15, 2022, in Kenai, Alaska. (Photo by Erin Thompson/Peninsula Clarion)
Opinion: Solving the Cook Inlet gas crisis

While importing LNG is necessary in the short term, the Kenai Peninsula is in dire need of a stable long-term solution.

Sockeye salmon caught in a set gillnet are dragged up onto the beach at a test site for selective harvest setnet gear in Kenai, Alaska, on Tuesday, July 25, 2023. (Jake Dye/Peninsula Clarion)
Capitol Corner: Creating opportunities with better fishery management

Sen. Jesse Bjorkman reports back from Juneau.

The ranked choice outcome for Alaska’s U.S. Senate race is shown during an Alaska Public Media broadcast on Nov. 24, 2022. (Alaska Division of Elections)
Opinion: Alaska should keep ranked choice voting, but let’s make it easier

RCV has given Alaskans a better way to express their preferences.

The Alaska State Capitol on March 1. (Ashlyn O’Hara/Peninsula Clarion)
Opinion: Keep Alaska open for business

Our job as lawmakers is to ensure that laws passed at the ballot box work effectively on the ground.

Brooke Walters. (Courtesy photo)
Opinion: A student’s letter to the governor

Our education funding is falling short by exuberant amounts.

Rep. Justin Ruffridge, R-Soldotna, speaks in support of debating an omnibus education bill in the Alaska House Chambers on Monday, Feb. 19, 2024. in Juneau, Alaska. (Ashlyn O’Hara/Peninsula Clarion)
Capitol Corner: Compromise, not games

Rep. Justin Ruffridge reports back from Juneau.

Image provided by the Office of Mayor Peter Micciche.
Opinion: Taxes, adequate education funding and putting something back into your pocket

Kenai Peninsula Borough taxpayers simply can’t make a dent in the education funding deficit by themselves, nor should they be asked to do so.

Most Read