President Obama is expected to sign a new Labor Department regulation which compels many businesses to pay overtime to millions of new workers. This is no small change.
Is it time for more overtime?
President Obama is expected to sign a new Labor Department regulation which compels many businesses to pay overtime to millions of new workers.
This regulation will raise the income ceiling for workers who qualify for overtime. Most salaried employees who earn over $24,000 per year are now exempt from being paid “time and a half” for a work week of over 40 hours. President Obama wants to double the threshold for government-mandated overtime to $50,000.
This is no small change. Though the Labor Department hasn’t increased the income ceiling since 2004, we all know too well that incomes have been stagnant since then. With the average household income at about $50,000, this regulation will qualify individual workers for overtime who are already in the top half of American earners. The aim of this regulation is not to keep up with inflation, but to expand the types of workers who qualify for overtime.
Economists differ on how this will play out. Will an increased threshold for overtime mean that more workers earn more money? Or will employers create more jobs to avoid paying overtime? Will employers cut base pay to offset overtime pay? Or will we see a combination of the above?
A blow to work ethic
While the economics are certainly important, an equally important question hasn’t been explored. What will happen to the work ethos of salaried employees who are suddenly “on the clock?”
Certainly, many employees, such as factory workers, construction workers, and auto mechanics, should be paid an hourly wage, with overtime provisions. Workers who do physical labor need reasonable limitations to their workday to avoid the fatigue that could lead to injuries and other costly errors.
But what about the white collar employee — the professional whose work product is largely creative, administrative, or managerial? The expectations for workers in these positions are quite different. They work extra hours not necessarily to earn more money, but to do a good job better, to earn a promotion, or because of dedication to their careers.
It’s hard to build a better mouse trap, hard to invent that “new new thing,” if you’re trained to watch the clock. In most white-collar professions, it’s considered unprofessional to count the hours in your work week. You are there to do the best job you can, period.
This work ethos has remained constant across professions and generations. My dad, an engineer, would grouse about the contract workers who were hired for short term projects. They’d line up at the time clock 10 minutes before their shift ended, just waiting to punch out. Dad was salaried; they were “clock watchers.” To him, those guys were just not as committed to their work.
A question of commitment
At my first job, at a small college, it was a point of pride to come in early and work late. My boss and I often took long road trips to New York. Our college couldn’t afford hotels, so we’d drive up to midtown Manhattan, run our college event, and straggle home around 2 a.m. My boss would drop me off and say wryly, “No need to come in tomorrow before 9.” I knew that if I slept in, I’d be considered a lightweight. So, despite my measly salary, I always tried to beat him in the next morning.
Today my daughter is a law clerk. Her salary is as modest as mine was, and her hours just as long. After a 10-hour day, she often calls to chat. She doesn’t get overtime, but she is passionate about her work. She describes her day so vividly that, even though I’ll never know their names, I find myself asking about the teenager whose foster parents want to adopt her, the woman who came to court in pajamas, the dad so distraught when he lost custody of his son that three sheriffs had to restrain him.
My daughter is “all in.” Like her mother and grandfather, being paid overtime would not affect her career choice or her commitment to her job.
In an April 8, 2016, Wall Street Journal opinion piece, Donald Boudreaux and Liya Palagashvili state, “Among the perks of a salaried job are greater job security, a consistent paycheck, work flexibility, and the ability to telecommute.” But there are other benefits as well.
The salaried employee is a professional whose job is never far from her thoughts. Whether commuting, checking e-mail at home, or standing in line at the Acme, her mind is often still at work. He is a problem-solver well beyond “9 to 5,” making to-do lists, thinking about tomorrow’s client meeting, or reading office reports.
Steve Jobs could not have created Apple while counting the minutes to clock out. There are many effective ways to improve worker compensation. But encouraging more employees to watch the clock isn’t one of them.