Today the Labor Department announced that millions of Americans could be eligible
for overtime pay if their proposal does, in fact, become the law of the land.
Now, big businesses have already stopped one attempt by a Democratic
president to extend overtime pay to more Americans, and it's all but
certain that they'll try to do so again.
But nonetheless, let's talk about what the Labor Department is to accomplish and
why it's a good thing, and then we'll see whether or
not it will end up getting implemented.
So, right now, almost all hourly workers in the United States, luckily,
do in fact get overtime pay if they've worked more than 40 hours in a week, okay?
And it's at no less than a time and a half their current pay.
However, salaried workers who perform executive, administrative, or
professional roles are exempt from receiving overtime
pay if they are paid over a certain threshold.
So prior to 2019, that threshold was just $23,660.
But the Trump administration, to their credit, did increase that threshold.
Still incredibly low, if you ask me, $35,568.
Now, the Labor Department is hoping to increase that threshold further.
So if you're a salaried worker who's making $55,000,
you would essentially be able to get paid overtime pay if you
end up working more than 40 hours a week.
The Department also plans to raise that threshold every three years in
line with earnings data.
So this change would affect a lot of Americans, 3.6 million,
to be exact, a massive number.
And so the left-leaning Economic Policy Institute has estimated that about 15% of
full-time salaried workers are entitled to overtime pay under the Trump-era policy.
That's compared to more than 60% in the 1970s.
Now, under the new rule, 27% of salaried workers would be entitled to overtime pay
because they make less than the threshold, according to the Labor Department.
So I'm gonna pause for comment, Wos, because I'm not sure if you've
experienced the salaried worker situation where you earn a salary, but
you're expected to work more than 8 hours a day, way more than 8 hours a day, and
then you don't get paid for all that overtime because you're a salaried worker.
>> Speaker 2: Yeah, I've experienced it sort of indirectly, right?
And I've talked about working at UPS before.
Oftentimes when management tries to recruit you from an hourly
worker to a salaried employee, the idea being that as an hourly guy,
your hours can get jerked around from week to week.
You don't know, theoretically, how much work is gonna be available, so therefore,
you don't know how much money you're going to make.
The enticement of becoming, say, a supervisor and
then maybe if you climb the ladder, Anna, you become a manager,
is that you will have a consistent salary all the time, right?
You know how much you're gonna get paid all the time.
However, yes, those same supervisors were expected to work long ass hours,
that's just the freaking case.
And they weren't eligible for overtime.
And ,say, some of the busiest seasons, like when it comes to November, December,
January, which is UPS's busiest seasons, you might spend 10,12 hours
in that warehouse, and these supervisors are not getting paid extra to do so.
Essentially, management is extracting free labor from these folks for nothing.
It's completely unfair.
Well, the idea, of course, Anna, being, well,
if you make $110,000 in your salaried position, you don't need overtime.
Okay, I might be willing to grant you that.
But if you make 36,000 or $37,000, the idea that you can work a 12-hour day and
not get paid any OT for it, that makes absolutely no sense whatsoever.
>> Speaker 1: Yeah, I totally agree with you on that.
And look, there's also this little trick that's played in some
companies where they'll give workers like, these kind of phony
management titles in order to essentially make them salaried workers and
then overwork them and not give them their due pay for
all the work they put in and all the hours they put in.
Higher thresholds might also benefit, by the way,
historically disadvantaged populations,
including women who earn a median of $993 a week, and median black and
Hispanic workers who both earn below the new $1,059 proposed threshold.
I think that threshold is still so low.
Anyway, but before the rule can become law,
there are gonna be some bumps along the way, some obstacles along the way.
It first needs to go through a public commentary period,
after which it could be challenged through the courts.
And it is very likely that it will be challenged
in court if history is any guide.
So, one example is back in 2016 when Biden was actually serving as vice president, he
announced a similar rule that would have raised the threshold to around $47,500.
Remember, this is years ago in 2016, that was challenged by not that many people,
just 21 states, the Chamber of Commerce, and 50 other business groups.
So, just a little bit of a bump in the road.
Eventually a federal judge overturned the proposal.
And unfortunately, even if the rule is not challenged,
it's likely that businesses will do whatever they can to get around it.
So, referencing what I had mentioned earlier,
researchers at Harvard Business School and
the University of Texas at Dallas found that from 2010 to 2018,
there was a 485% increase in managerial titles for
workers just over the overtime threshold.
All told, that adds up to over 151,000,000 hours that companies
don't have to pay for, costing workers 4 billion in dodged overtime pay annually.
So, they will fight this.
I don't know if this is actually gonna go anywhere, but
I do give the Labor Department credit because it's clear to me
that in the context of pretty awful administrations with terrible labor
departments that didn't actually look out for labor, Biden's doing something.
I mean, I feel like the Biden administration has been the most
labor friendly in my lifetime, at least.
What are your thoughts, Wos?
>> Speaker 2: Yeah, it's interesting.
Every now and again, sleepy Joe wakes up, it seems, and this is one of those times
where the administration has gotten off of their butts and done something.
And again, this is the type of thing you can campaign on.
It's very simple to explain to voters how this is beneficial to
the vast majority of them.
Let's face it, most people aren't in jobs that pay them nice six-figure salaries.
This is incredible.
And make no mistake, how they're gonna fight this, guys,
the managerial class is gonna be like, we're gonna have to dump employees.
We can't incur these costs.
And they're gonna scare people, try to scare people and
say, we can't have workers who get paid for their work.
Trust me, this is not gonna result in a guy or girl making $40,000
now getting bumped up to 57 so that they don't reach the threshold for overtime.
That's not what's gonna happen.
It's gonna be people who are way closer to the threshold getting minor bumps and
then getting worked into the ground again.
And yes, they are gonna go on an anti-wage increase campaign crying and
saying that they can't afford to pay workers for the work that they do.
>> Right, despite record corporate profits.
Of course they're gonna say that.
They got that fiduciary responsibility to their shareholders.
They reign supreme, they're the most important.
So