So what’s changed since the 1960s and ’70s? Overtime pay, in part. Your parents got a lot of it, and you don’t. And it turns out that fair overtime standards are to the middle class what the minimum wage is to low-income workers: not everything, but an indispensable labor protection that is absolutely essential to creating a broad and thriving middle class. In 1975, more than 65 percent of salaried American workers earned time-and-a-half pay for every hour worked over 40 hours a week. Not because capitalists back then were more generous, but because it was the law. It still is the law, except that the value of the threshold for overtime pay—the salary level at which employers are required to pay overtime—has been allowed to erode to less than the poverty line for a family of four today. Only workers earning an annual income of under $23,660 qualify for mandatory overtime. You know many people like that? Probably not. By 2013, just 11 percent of salaried workers qualified for overtime pay, according to a report published by the Economic Policy Institute. And so business owners like me have been able to make the other 89 percent of you work unlimited overtime hours for no additional pay at all.
Charlie Pierce led me to this piece. As he rightly points out, it’s a bit of a surprise to find this kind of article on economic inequality in Politico (I consider it the Morning Joe of online publications). I’ll highlight what I think are a couple of key paragraphs but the piece should be read in its entirety.
So let me be specific. To get the country back to the same equitable standards we had in 1975, the Department of Labor would simply have to raise the overtime threshold to $69,000. In other words, if you earn $69,000 or less, the law would require that you be paid overtime when you worked more than 40 hours a week. That’s 10.4 million middle-class Americans with more money in their pockets or more time to spend with friends and family. And if corporate America didn’t want to pay you time and a half, it would need to hire hundreds of thousands of additional workers to pick up the slack—slashing the unemployment rate and forcing up wages.
It is my sense, based on my conversations with government officials, that the administration is buying the line from corporate lobbyists who are arguing that such rule changes would devastate their bottom lines, forcing them to lay off workers. You know, the old trickle-down gambit—if workers earn more money, it would be bad for business, the economy and workers. The Obama team, in other words, is buying into the same discredited theories that were used to erode the threshold in the first place. Officials will very likely raise the overtime threshold just enough to say they’re doing something, without actually doing much of anything for the middle class or our demand-starved economy at all.
Now obviously, take away our license to force 10.4 million Americans to work extra hours for nothing, and smart capitalists like me would try to limit overtime as much as possible. I mean, time-and-a-half pay sure adds up fast! So many of you would be unlikely to see much of an immediate bump in take-home pay. Instead, we capitalists would be forced to hire millions more people to do the work you currently do for free. That would drive down unemployment. And a tighter labor market would drive up wages for the first time in 40 years.
So you see, when I say that the overtime threshold is the minimum wage for the middle class, I’m not just playing with words. In the exact same way that the erosion of the federal minimum wage—from an inflation-adjusted peak of about $11 an hour in 1968 to only $7.25 an hour today—has held down wages for low-income Americans, the simultaneous erosion of the overtime threshold has also held down wages for the American middle class. And just like raising the minimum wage would nudge up incomes for those workers earning somewhat above it, restoring the overtime threshold would push up incomes for many workers currently earning above $69,000 too.
Of course, capitalists like me will tell you that when we cut into profits, the entire economy is damaged. And think of all the investment that corporate profits make possible. What do executives like me do with all that extra money? Why, invest in creating good-paying jobs for middle-class Americans like you, of course.
Unfortunately, that’s not exactly true either. Mostly, we use profits to manipulate our stock price for personal gain.
Again, please go read the whole thing.
More: Whatever Happened to Overtime? - Nick Hanauer - POLITICO Magazine