New Overtime Rules a Big Middle Class Economic Initiative

If indeed Democrats intend to go into the 2016 cycle championing middle class economic interests, the Obama administration today will give them one important plank on which to stand. The Labor Department’s long-awaited new rules for overtime pay will reclassify as many as five million Americans as eligible for such pay by raising the cap on salaries for “non-exempt” employees from $23,660 to $50,440. Think about that for a moment. Five million was roughly the number of people expected to be affected directly by a ruling for the plaintiffs in King v. Burwell. Yet there’s much less excitement–or anger–swirling around today’s development.

Aside from its specific terms, the new overtime rules represent a major pushback against one of the mechanisms employers have used to slowly but surely erode the protections for workers achieved during the New Deal era. Another is the treatment of employees as “independent contractors” who do not qualify for employee benefits. Millions of “managers” and “contractors” have been “promoted” or “transferred” beyond the reach of laws designed to protect them.

And make no mistake, employers will attempt new strategems to get around today’s rule as well, as AP’s Christopher Rugaber notes:

The National Retail Federation, a business group, says its members would probably respond by converting many salaried workers to hourly status, which could cost them benefits such as paid vacation. Other salaried workers would have their hours cut and wouldn’t receive higher pay.

Businesses might hire additional workers to avoid paying overtime or extend the hours they give part-timers.

Hire additional workers? That’s not a bad unintended consequence, is it?

Truth is this is a chess game in which it’s critical to keep one’s eyes on the prize of broad-based economic gains for low-to-medium income workers, whether they are paid wages or salaries or are considered “managers” because they have limited supervisory responsibilities. Just as conservatives can’t help themselves in expressing their loyalty to owners of capital as the prime beneficiary of nearly every policy proposal they offer, progressives need a reflexive and relentless willingness to honor their belief that the hard work and talents of people who work for a living is the fundamental source of growth and prosperity.

Ed Kilgore

Ed Kilgore, a Monthly contributing editor, is a columnist for the Daily Intelligencer, New York magazine’s politics blog, and the managing editor for the Democratic Strategist.