Tag: Department of Labor

The Overtime Follies

Good:

In a stunning blow to the Obama administration’s economic legacy, a federal judge in Texas granted a preliminary injunction Tuesday delaying implementation of a regulation that would extend overtime eligibility to an estimated 4.2 million workers.

The ruling puts in serious jeopardy the most significant wage intervention by President Barack Obama, who has been unable to persuade Congress to increase the minimum wage from $7.25 per hour. The Labor Department regulation, previously set to take effect Dec. 1, effectively restored overtime pay to the middle class after decades of erosion had reduced it to a benefit available only to low-wage workers.

Putting aside Politico’s liberal spin, the overtime rule is looking like a bad idea and a massive executive overreach.

But let’s back up a second and review the argument in favor of the changes in overtime rules. The Department of Labor raised the threshold for exemption from overtime pay from $23,660 to $47,120. At the same time, they made changes to what workers are exempt even if their income is below that threshold. This means that approximately four million workers who were previously on salary will not be getting paid hourly and thus eligible for overtime pay if they exceed 40 hours a week.

Ostensibly, the reason for this change is to curb abuses by businesses that give employees a slight bump over the $23,660 threshold and then require them to work 50-60 hours a week. When the President put the rule into place, he said that $30,000 a year did not constitute “management” and therefore should be eligible for overtime instead of being paid as straight salary.

The problem with this logic is that while $30,000 doesn’t sound like a lot to big time lawyers, government civil servants or Vice Presidents for Community and External Affairs, it is a reasonable income for many people who live outside of Washington, D.C. Warren Meyer, over at Coyote Blog, has been doing yeoman’s work cataloging why the increase in overtime exempt income is a bad thing:

The Obama Administration and its supporters (and apparently Politico, by how they wrote the headline) are smoking something if they think employers are going to react by raising salaries of current exempt employees being paid 23,660 or 30,000 or 40,000 to $52,000. Absolutely no way. There may be a few just under the $52,000 threshold that get a bump, but that will be a minor effect.

Everyone else is going to suddenly find themselves converted from a junior manager back to a wage earner. Companies are not going to allow these newly minted wage earners to earn overtime, and so I suppose one good outcome is that we may see a new boost in productivity as companies find ways to automate or eliminate junior management tasks to get all these folks down to 40 hours a week.

There are important differences between hourly and salaried work in the relationship with employers. Some are psychological — for better or worse, management [thinks] of salaried workers differently than hourly workers. And some are real — salaried workers can try to demonstrate that they are worthy of promotion by working extra hours and taking on extra tasks, things that hourly workers really can’t do.

Furthermore, he notes, thew new overtime rules are unlikely to deliver real benefits to employees. It may, in fact, hurt them:

Further, when someone gets switched from salary to hourly, they lose a minimum pay guarantee. When I get a $3,500 a month offer, I know that no matter how slow things are, until I am fired I get $3500 a month. There is a floor on my earnings. As an hourly worker, my hours can be adjusted up or down constantly. There is no floor at all

He also points out that the Department of Labor’s own study concluded that this would not increase the pay of workers. It would just lead to cuts in hours.

The thing is, none of this is theoretical to me. It’s all very real because it’s impacting my family.

After my son was born, my wife left her good-paying but long-commuting job to take a part time job in town at our school’s main campus. Her income was above the exempt threshold. But now it is below it. Under the old rules, she would still have been exempt because she was a skilled professional — a PhD biochemist and molecular biologist managing a lab and doing scientific research. But the new overtime rules, for some strange reason, removed that exemption. So skilled professionals with decades of training are now considered no different than clock-punching temps.

(Ironically, the exemption is being kept in place for two of the most downtrodden classes of workers in higher education — graduate students and adjuncts.)

This change in no way benefits my wife or any of the thousand of scientists around the country affected by this. She’s now, after twenty years of work, back to being a clock puncher, which is humiliating. As an hourly wage earner, she loses certain benefits, like maternity leave and vacation. Like many scientists, my wife is supported by grants which can not support paying massive amounts of overtime. So she’s been told not to work more than 20 hours a week. At other universities and research institutions, scientific staff are being told to only work nine to five and not answer e-mails out of hours lest they incur overtime. A few people are getting small bumps in salary to put them over the threshold. Most are being told to work a strict 40 hours (or, I suspect, lie about how much they work).

This is madness. This is what happens when people with no experience outside government start passing sweeping rules affecting millions of workers. This is what happens when you have people in charge who think businesses (and government institutions like universities) can just conjure money out of the ether.

The states and many businesses are suing, claiming that this is an unfunded mandate from the federal government (which it is). Congress is open to repealing this rule and Trump has indicated he would sign a bill repealing it. I’m not averse to raising the exempt threshold a little bit or a narrowly tailored change to prevent the abuses that supporters of the law assert exist. But this is way too far, way too fast and way too ill-considered.

Note: The judge in this case is an Obama appointee. One of the defining elements of the Obama presidency has been Democratic and liberal judges overturning his executive overreaches. I support their doing so and will continue to support it throughout the Trump Presidency and any future Administration.

This is what checks and balances looks like, folks. If you want judges and Congress to keep Trump in check, you should be applauding this decision. Today, it’s the overtime rules. Tomorrow, it might be registration of Muslims. Checks and balances are good.

Back from the Abyss?

This is somewhat good news:

Hiring accelerated in November, and the unemployment rate unexpectedly plummeted to its lowest rate in nearly three years.
Employers added 120,000 jobs in November, the Labor Department reported Friday, marking a pick-up in hiring from October.

Meanwhile, the unemployment rate fell to 8.6%, the lowest rate since March 2009 and a significant decline from 9% just a month before.

About 230,000 jobs were also added in revisions to previous months.

The reason I call this somewhat good news is that the unemployment rate is not all there is. The labor force participation rate also dropped — many people simply stopped looking for work — and is currently the lowest in about 25 years. The basic measure — the percentage of our population who have jobs — did not really move. If the labor force participation had stayed level, unemployment would only have drop to 8.9%.

On the other hand, there is good news here. The job situation is the best it has been in a couple of years and is slowly improving, not rapidly collapsing. Governments at all levels have continued to shed jobs as stimulus funds evaporate and a modicum of … well, we can’t really call it “austerity”; let’s call it “semi-sanity” — returns to spending. This shows that the private sector is gaining jobs faster than the public sector is losing them. Now you combine this with what looks to be a strong Christmas spending season and, while we’re not out of the woods, we’re at least seeing some daylight.

What to do from here? Congress is contemplating extending jobless benefits. I’m not opposed if it combined with Germany-type reforms that require people to take whatever work they can get and is balanced with spending cuts elsewhere. Extending the payroll tax cut is another proposal. It may have done some good. But I don’t want us to get into the habit of keeping this thing going every year. If we balance it with spending cuts, maybe having half the payroll tax cut remain would be a good middle ground.

In the end, however, I don’t think either of these policies have contributed much. If we let them both end, the Left will scream but I doubt it will impact the economy much in real terms. If employment is picking up, then our attention needs to be even more focused on the deficit and the negative savings its giving the economy.

That’s the key to solving this in the long term.

The Obama economic recovery!

The employment numbers for last month are abysmal. Well, here is some more salt in the wounds of the Keynesian morons running the country: half of last month’s new jobs came from McDonalds!

SG: Economists watered down expectations to 125,000 jobs created in May after a 244,000 gain in April, after several disappointing indicators, notably the ADP employment gauge and ISM manufacturing poll.

SG: McDonald’s ran a big hiring day on April 19 — after the Labor Department’s April survey for the payrolls report was conducted — in which 62,000 jobs were added. That’s not a net number, of course, and seasonal adjustment will reduce the Hamburglar impact on payrolls.

Get that? They cut the jobs added by almost half, and of that new number, half come from MCDs. Worse yet, how many of those jobs are seasonal? Great economic news! Don’t expect the MSM to point this out.