On this Labor Day weekend, some workers are “celebrating” by putting in unpaid hours on their jobs. Or by working without health insurance or sick time or accruing vacation days.
For them, even at a time when the jobless level is low, it will hardly be what the U.S. Department of Labor calls a holiday that “is an annual celebration of the social and economic achievements of American workers.”
America really ought to reform its more abysmal employment practices before the next Labor Day rolls around.
On Wednesday, the Biden administration took an important step forward by proposing a rule that would make 3.6 million more U.S. workers eligible for overtime pay when employers keep them toiling way for more than 40 hours in a week.
Employers have skirted the rules by giving ordinary employees titles such as “food cart manager” or “carpet shampoo manager” and not paying overtime because they are on salary, all while often requiring them to do the same work they would do if they were not managers. The scam was outlined in a January report by the National Bureau of Economic Research titled “Too Many Managers: The Strategic Use of Titles to Avoid Overtime Payments.”
A front desk clerk on hourly wages must be paid overtime, the report says. The same person on salary doing the same grunt work doesn’t have to be paid overtime if that person instead has a title of “director of first impressions,” it said.
What’s in a name? A lot less money.
It’s just one of many ways workers aren’t getting a fair share of the untold dollars they generate for their employers. Think of independent contractors (so-called “1099 employees” with no benefits), unpaid full-time interns, low-level workers in some states forced to sign non-compete agreements (so they can’t get more money by changing jobs) or people who labor for 40 hours a week but don’t get benefits because they work half their hours for one employer and half for another.
“It’s so contrary to principles of fairness and justice,” Robert Bruno, a professor of labor and employment relations at the University of Illinois at Urbana-Champaign, told us.
Under current rules, salaried “managers” don’t automatically qualify for overtime pay unless they earn less than $35,568 a year. If the Biden administration proposal is enacted, it would increase the cutoff to $55,068 a year. Unfortunately, some business groups are resisting, as they did when the Obama administration proposed an increase, which the Trump administration later refused to defend when a federal judge ruled against it. The Trump administration did increase the threshold for overtime, but by an amount less than Obama sought.
Bolstering worker protections is important at a time when artificial intelligence is poised to upend a lot of jobs, one of the issues that’s behind the Hollywood actor and writer strikes.
Effective regulations are needed because, as some employers point out, it’s hard to stay on a level playing field with competing companies that stiff their employees, a toxic state of affairs that encourages employers to take the low road.
The average work year of people in the U.S. is higher than in some other wealthy countries in part because the vacation benefits here are much less. Add hours of unpaid overtime and a low federal minimum wage, and it becomes much harder for a worker to lead a life with the money and free time, as they wrote in the Declaration of Independence, to pursue happiness.
Part of the problem is the decline of private-sector unions. According to the Pew Research Center, the share of American workers who belong to a union has fallen since 1983, when 20.1% of workers were union members. In 2022, just 10.1% of them were in a union, partly because of the proliferation of “right to work” laws.
In the last century, unions secured wage increases, the 40-hour work week, overtime pay, paid vacation, sick leave, child labor restrictions, workplace safety and other benefits, creating a stronger middle class. Now, those victories are receding.
Honoring the American worker means more than grilling at a picnic on a three-day weekend. The true way to celebrate workers is to make sure they can not only contribute to a strong economy but also lead dignified and productive personal lives.
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