According to the changes defined in the Bush administration's new overtime pay rules, many American workers will soon be getting promotions and doing more work...only, they'll be getting paid a lot less. What these new overtime regulations are, in effect, is another form of "tax" levied on primarily middle class people who regularly work overtime, both for the money and to keep their jobs. From Ross Eisenbrey's analysis in the Economic Policy Institute's "On the Department of Labor’s Final Overtime Regulations: Preliminary Analysis of DOL's Final Rule on Overtime Exemptions":

[T]he Department has created new exemptions that jeopardize the overtime rights of millions of employees who earn between $23,660 and $100,000 a year. The overtime rights of the nation’s 367,000 nursery school and pre-school teachers are weakened. Low-level working supervisors all throughout American industry will be reclassified as "executives" and will lose overtime rights; just as fast food assistant managers already have in some jurisdictions, even though they spend 90% or more of their time doing routine, production-line work such as flipping burgers and taking customer orders.

Such a sweet deal. Administration policywatchers will get to claim increases in the number of Americans working in higher-level jobs, while businesses and corporations get to pocket more money they'd otherwise pay out in wages. It's akin to the proposal in the February release of the 2004 Economic Report of the President [PDF file, see page 73, Box 2-2 "What is Manufacturing?"], which proposed redefining fast-food work as part of the manufacturing sector. The Gadflyer's Brian Dolber explains, in "Taking Care of Business,"

Theoretically, a manager – a real one – could name one-third of his employees "supervisors" without slowing down production and, simultaneously, cut labor costs. This gives the company more money, the employees less, and helps to divide the workforce on the bosses' terms.

In addition, the new rules create overtime exemptions for employees called "team leaders." There are as many as 2.3 million workers with that title, which, according to EPI, "usually describes a non-management employee responsible for calling meetings and directing a group of front-line employees who have been given an important task of a kind that historically was reserved to management."

...similarly, most of these workers who will lose their overtime will not truly have greater authority in their workplace than they had before their paychecks were slashed. Instead, the new rules reflect a deep need in the American psyche to feel successful – sadly, to feel better than somebody else – even if we're dirt poor.

Some will argue that workers can simply refuse to work overtime, but try that on your boss in these economically uncertain days. Certainly, workers will still receive pay for the extra hours they work, but at no greater rate of remuneration than their regularly defined work hours. The point of overtime is to increase the marginal utility of additional hours worked above and beyond one's specified wage-hours, since everyone has the same limited amount of time - 24 hours in a day - those extra work hours could be spent on other activities of value, such as time with one's family.

In the sense that it "hurts" an employer to pay overtime, it's meant as compensation for the extra hours on the job "hurting" the employee - and by the same logic, while the employee benefits from a higher rate of overtime pay, the employer gains additional productivity from an individual without incurring the additional cost of hiring more workers. Overtime "costs" employers more, but they receive additional benefits in having one worker do more work, especially if each worker receives fringe benefits like healthcare or a retirement plan.

"But how is that a tax?" It qualifies as a form of tax in a similar fashion that economist Milton Friedman (in Capitalism and Freedom) considers corporate donations to eleemosynary [charitable] causes a "tax" on stakeholders, minimizing their share dividends by redirecting funds that would otherwise go to the company's bottom line. In a corollary sense, eliminating overtime pay penalizes the employee who works longer hours, and diminishes the employee's "dividends" from their investment in their job.

As someone who once worked in a specific category of overtime-exempt labor, as a radio announcer in a small broadcasting market (some of the other exempt categories included theater employees and sheep-shearers), I feel outraged about the whole sorry patronizing affair. What justification is there for these new regulations other than catering to Big Business?

It's one thing to argue that allowing corporations to keep more money by reducing their taxes is good for the economy because it fosters growth and reinvestment through the "trickle-down" process. It's another thing to tell business it can pull that money out of employee's wages instead of the portion earmarked for the IRS. Essentially, it's a form of wholesale pay cutting without calling it so: downsizing on a smaller scale, where both companies and the goverment "win" while the frontline employee loses.

I think that not only is the administration trying to "polish a turd", but it's trying to convince us the turd is actually a chocolate bar.

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