FacebookTwitterGoogle+RedditEmail

When Wages Flatline

It’s not news that the pay of middle-class workers has been virtually flat for more than three decades. Since 1979, the productivity of American workers — what they produce in an hour — has increased by 65 percent. Meanwhile, the inflation-adjusted hourly pay of workers in the middle of the earnings distribution — what they can purchase with what they are paid for an hour’s work — has gone up just over 6 percent. Much of this productivity increase has been captured by companies that are sitting on large cash cushions while middle-class families struggle to make ends meet. Ambitious proposals to address this disparity have been proposed. A government program to make much-needed investments in our crumbling infrastructure, for example, would provide opportunities for numerous private companies to expand employment in good-paying jobs and make investments in new equipment and technology. But such a program would require Congress to act, and consequently it’s on nobody’s agenda.

That doesn’t mean, however, that nothing can be done to raise the earnings of middle-class Americans. Here’s a modest proposal that could help do the trick: Let’s pay these workers fairly for every hour they work. Everyone knows that employers can ask salaried employees — supervisors, customer service representatives, social workers, counselors, support staff in law firms, insurance sales agents, food service managers — to work well past the 40-hour workweek without having to pay them for their time. Only salaried workers earning an annual income less than $23,660 ($455 a week) are eligible for overtime pay when their workweek exceeds 40 hours. This salary threshold has been raised to adjust for inflation — in 1975 by the Ford administration and again 10 years ago during the George W. Bush administration. In both instances, the presidents asked the Department of Labor to adjust the salary cutoff for overtime pay to take into account the effects of inflation. While the increases in the cutoff were welcome when they occurred, they failed to fully account for the effects of inflation. And the problem has only worsened in the last 10 years. Today, just 11 percent of salaried workers are eligible for overtime pay when they work more than 40 hours a week, down dramatically from the more than 65 percent of salaried workers who were eligible for such pay in 1975.

In March 2014, President Obama, like his Republican predecessors, asked the Department of Labor to update the rules governing overtime pay to take into account the effects of inflation and make sure that salaried employees who lack bargaining power vis a vis their employer are fairly paid for the hours they work. If the Department of Labor adjusts the salary cutoff for eligibility for overtime pay to bring it back to its 1975 level adjusted for inflation, salaried workers earning up to $984 a week ($51,168 a year) would have access to overtime pay for hours above 40 in a week. About 6.1 million white collar workers would be eligible to earn time-and-a-half pay for every hour worked over 40 hours a week. This guarantees that these employees are fairly paid for the extra hours they work, and could provide a meaningful boost to their income.

Of course, employers could choose to expand the hours of part-time workers who would prefer longer hours or hire additional workers and avoid paying overtime wages to current employees. While that would not raise the pay of middle-income workers, it would guarantee that these workers were actually paid for every hour they work. And it would increase the time they could spend with their families. It would also boost the earnings of a different group of middle-class workers who currently lack the hours they want or may even be unemployed.

While far from a complete answer to the stagnant wages of middle-income workers, raising the salary threshold, adjusted for inflation, to where it was in 1975 is an indispensable part of the solution.

Eileen Appelbaum is a senior economist at the Center for Economic and Policy Research.

This column originally appeared on The Hill.

More articles by:
June 25, 2018
Daniel Falcone
A Reporter’s Reporter: a Conversation With Seymour Hersh
Gerald Sussman
America’s Cold War “Tugboat”
Jonathan Cook
The Defiance that Launched Gaza’s Flaming Kites Cannot be Extinguished
P. Sainath
A Long March of the Dispossessed to Delhi 
Sheldon Richman
What Does Trump Have Against Children?
Lance Olsen
Caught in a Trap of Our Own Making: Climate Change, Blame, and Denial
Seth Sandronsky
A Safe Black Space
Kary Love
Crying Children and Due Process of Law
Gary Leupp
Why It Just Makes Sense for the U.S. to Withdraw from the UNHRC
John Laforge
Kings Bay Plowshares Action Names the Trident with Blood
Mel Gurtov
After Singapore, Is Iran the Next US Target?
Kent D. Shifferd
A Different Perspective on Peace
Uri Avnery
Two Souls
Laura Flanders
National Suicide Point?
Ludwig Watzal
The Death of Felicia Langer
Weekend Edition
June 22, 2018
Friday - Sunday
Karl Grossman
Star Wars Redux: Trump’s Space Force
Andrew Levine
Strange Bedfellows
Jeffrey St. Clair
Intolerable Opinions in an Intolerant Time
Paul Street
None of Us are Free, One of Us is Chained
Edward Curtin
Slow Suicide and the Abandonment of the World
Celina Stien-della Croce
The ‘Soft Coup’ and the Attack on the Brazilian People 
James Bovard
Pro-War Media Deserve Slamming, Not Sainthood
Louisa Willcox
My Friend Margot Kidder: Sharing a Love of Dogs, the Wild, and Speaking Truth to Power
David Rosen
Trump’s War on Sex
Mir Alikhan
Trump, North Korea, and the Death of IR Theory
Christopher Jones
Neoliberalism, Pipelines, and Canadian Political Economy
Barbara Nimri Aziz
Why is Tariq Ramadan Imprisoned?
Robert Fantina
MAGA, Trump Style
Linn Washington Jr.
Justice System Abuses Mothers with No Apologies
Martha Rosenberg
Questions About a Popular Antibiotic Class
Ida Audeh
A Watershed Moment in Palestinian History: Interview with Jamal Juma’
Edward Hunt
The Afghan War is Killing More People Than Ever
Geoff Dutton
Electrocuting Oral Tradition
Don Fitz
When Cuban Polyclinics Were Born
Ramzy Baroud
End the Wars to Halt the Refugee Crisis
Ralph Nader
The Unsurpassed Power trip by an Insuperable Control Freak
Lara Merling
The Pain of Puerto Ricans is a Profit Source for Creditors
James Jordan
Struggle and Defiance at Colombia’s Feast of Pestilence
Tamara Pearson
Indifference to a Hellish World
Kathy Kelly
Hungering for Nuclear Disarmament
Jessicah Pierre
Celebrating the End of Slavery, With One Big Asterisk
Rohullah Naderi
The Ever-Shrinking Space for Hazara Ethnic Group
Binoy Kampmark
Leaving the UN Human Rights Council
Nomi Prins 
How Trump’s Trade Wars Could Lead to a Great Depression
Robert Fisk
Can Former Lebanese MP Mustafa Alloush Turn Even the Coldest of Middle Eastern Sceptics into an Optimist?
FacebookTwitterGoogle+RedditEmail