NPR had a bizarre piece on the Labor Department’s new overtime rules which seemed intended to undermine support for them. These rules would increase from $23,660 to $50,440, the floor under which salaried workers would automatically qualify for overtime regardless of their work responsibilities.
While the piece does present the views on the new rules of Vicki Shabo, the vice-president of the National Partnership for Women and Families, the bulk of the piece is devoted to presenting the views of employers. No workers who will be affected by this rule were interviewed.
The discussion of the employers’ perspective begins with this little exercise in mind reading:
“But employers do not believe it would be a windfall for workers. They say they will be forced to cut costs in other ways if the proposed rules take effect as written — and that workers may not like those changes.”
Of course NPR reporters don’t know what employers “believe,” they know what they say. And it is understandable that they would tell a reporter that they don’t like the rules because they hurt workers, as opposed to the possibility that the new rules may hurt profits or force a cut in their own pay. Remarkably, two of the three employers whose views are presented in this piece work at non-profits, even though the vast majority of the workers affected are employed by for profit businesses.
The first employer is at the Michigan Health and Hospital Association which reportedly employs 107 workers.
“‘It only takes one bus accident, or one fire or something like the Ebola crisis,’ says Nancy McKeague, chief of human resources.
“She says her nonprofit can’t afford overtime, but it also can’t forgo having people work as needed.”
In effect, Ms. McKeague is saying that she is not paying workers for the time they work in an emergency, forcing them to work for free under such circumstances. This would be like having a lease with a landlord where the rent would be cut in half in the event of one bus accident or one fire or something like the Ebola crisis. No one would expect a landlord to agree to such a lease, but apparently Ms. McKeague believes that her workers should accept this sort of labor contract.
The piece also wrongly asserts:
“The rules will also require her to review tasks associated with every job to see whether the position qualifies for overtime.”
In fact, the opposite is true. She should have already been reviewing the tasks associated with every job to see whether the position qualifies for overtime. She apparently assumed that the positions in question did not qualify for overtime, but this actually requires an assessment of job duties to determine whether workers have enough supervisory responsibilities to be exempt from overtime requirements. Under the new rules no such review is necessary, if they earn less than the pay cutoff, workers qualify for overtime regardless of what tasks they perform.
Next we get Cecilia Boudreaux, the human resources director for the Regina Coeli Child Development Center, a Head Start program in Robert, La.The piece tells us:
“Under the new rules, Boudreaux says, 26 of her 35 salaried employees would qualify for overtime pay, in the event of a building emergency or if a parent is late for pickup. But increasing salaries would cost at least $74,000 extra a year — meaning she’d have to cut costs elsewhere.”
Actually, nothing about the new rules requires Ms. Boudreaux to increase salaries by a dime. She can simply rewrite contracts so that workers have a lower normal pay rate. Then if they work a normal amount of overtime they would end up with the same pay as they get now. If they work less than normal, they would get paid less and if they work more than normal they would get paid more. There is no reason that the change in rules would necessarily add to the center’s cost, it just removes the risk for workers that they would be forced to work unpaid overtime or risk losing their job.
Then we hear from Tony Murray, HR director for Diamond B Construction. According to the piece, Murray says many workers would consider going from salaried to hourly a demotion.
“‘”When I was younger, all I [wanted] to do was get to a salaried position just simply because you knew what was going to be coming in each week and you did have the flexibility,” he says, including the ability to go to soccer tournaments or work late to make up for doctor’s appointments. Murray says under the new rules, those converted back to hourly status wouldn’t be able to do that.
“‘Millennials take into account more than anything workplace flexibility,’ he says. ‘And of course who do you think is in that entry-level management … millennials more than anything.’”
It might have been helpful to talk to some of Mr. Murray’s workers to see if his assessment of their view of the new overtime rules is correct.
This blog originally appeared on CEPRE.net on September 15, 2014. Reprinted with permission.
About the Author: Dean Baker is an American economist whose books have been published by the University of Chicago Press, MIT Press, and Cambridge University Press.