By Stephen Herzenberg
Remember that guy who got elected president in 2016 by talking about the economy being rigged against ordinary hard-working Americans? People could be forgiven for thinking that he planned to change that.
But in March, when no one was paying attention because of the Mueller report, President Donald Trump continued his efforts to keep the economy rigged against regular people: he advanced a proposal that would deny most salaried Americans fair access to overtime pay and a 40-hour work week.
Thankfully, on overtime, Pennsylvanians don’t depend on President Trump. Governor Wolf is already unrigging the economy by phasing in starting January 2020 his plan to make salaried employees earning less than about $48,000 automatically eligible for overtime pay.
Here’s the back story.
Federal law requires that people working more than 40 hours per week be paid 1.5 times their pay rate for the extra hours, but allows employers to exempt salaried workers who make above a certain salary level and have significant executive, administrative, or professional duties. The threshold is supposed to protect workers with little bargaining power—think of modestly paid shift or department managers at fast-food restaurants or discount stores—from being forced to work unpaid overtime.
The problem is the federal overtime salary threshold has been frozen at less than $24,000 for years, causing the share of salaried workers guaranteed overtime pay to plummet from six in 10 (63 percent) in 1975 to less than one in 10 (7 percent) today.
Under President Barack Obama in 2016, the U.S. Department of Labor sought to remedy this situation by raising the pay level under which salaried workers automatically get overtime pay to $47,476. T
he 2016 rule, however, was held up in court following a challenge by business trade associations and Republican-led states.
With federal action stalled, several states quickly stepped up, moving to establish overtime thresholds similar to the 2016 USDOL proposal. On overtime,
Gov.Tom Wolf can act through regulations and Pennsylvania has been a leader, starting the process to raise the salary threshold last June. (On the minimum wage, where our state legislature must step up in the face of federal inaction, Pennsylvania remains a laggard.)
We estimate that a total of 465,000 Pennsylvania workers would benefit from Wolf’s proposed overtime threshold—about 275,000 more than would benefit from Trump’s threshold (which only grants automatic overtime pay up to salaries of $35,308).
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The Pennsylvanians who would benefit from the Wolf proposal include several who submitted personal stories during a public comment period last summer.
Sharyn from Philadelphia, for example, a “Lead Health Assistant” at Accolade Inc., and Tawilla from Glenolden, Pa., who often worked more than 60 hours per week for Public Health Management Corporation as a salaried “Case Manager.”
Justin from Pittsburgh, another example, was a salaried assistant manager at a retail bank, earning under $40,000 per year while often working 50-plus hours per week and spending his time “performing the same customer service tasks that hourly bank tellers performed.”
The exploitation of lower-paid salaried employees that don’t perform bona fide executive, managerial, or professional duties has become so commonplace that many employers submitting comments on the Wolf rule, including higher education institutions, seemed to think they can avoid overtime pay simply by labelling someone “salaried.” This is wrong—and a form of wage theft—but commonplace.
It is also why we need the Wolf rule. It is the only to protect all Pennsylvania salaried employees who don’t have responsibilities, market leverage, and good pay to ensure that they get a fair shake without overtime pay.
The new overtime threshold proposal by the Trump administration would not restore this fair shake. Salaried employees could still be made to work 50, 60, or even 70 hours a week while earning less than $36,000—reducing their effective hourly wage to as little as $10 per hour and missing time with their families.
The president will doubtless trumpet his inadequate increase in the overtime threshold as “huge” and a sign of him delivering for people who think the economy is rigged against them. But we in Pennsylvania know better—we know that his proposal unmasks his failure to deliver.
Most important, Pennsylvanians can, and will, do better thanks to Wolf’s increase in the overtime threshold.
Stephen Herzenberg is an economist and the executive director of the Keystone Research Center, a progressive think-tank in Harrisburg. His work appears frequently on The Capital-Star’s Commentary Page.