Tuesday, April 20, 2004

The Bush administration is backing off its initial proposal to reorganize overtime pay. While the administration has said that the timing has nothing to do with the election, the new proposal increases from the previous proposal the number of workers elligible for overtime pay.

While it may seem like a good policy for the administration, something guaranteed to get some votes, there is a passage in the New York Times story that seems to run counter to the administrations arguments about taxation and wealth.

The revisions, made after the Labor Department received more than 75,000 comments, would deny overtime pay to white-collar workers who earn more than $100,000 annually and perform some professional, administrative or executive duties, the department said. The initial plan put the salary ceiling at $65,000 annually.

The changes also would guarantee premium pay to about 1.3 million white-collar workers earning less than $23,660 a year at a cost to employers of $375 million annually, the department said. The salary tests in the regulations will not be adjusted for inflation.

So, if a worker makes too much money, because he works too many hours, he is suddenly no longer elligible for the fruits of his labor. A principle that would seem to run counter to many Republican and conservative arguments that company executives who make 250 times what the average worker make, earned every penny. In addition, by not allowing the salary test to adjust with inflation, they will be unable to ask for more if inflation causes the value of their salary to drop down the road. While this may not seem like much, the last major revision of overtime standards was in 1949. At that point, the dollar bought a lot more than it does now.

There are also worries that employers will attempt to reclassify workers as performing administrative, professional or executive duties. Such classifications could serve as grounds to deny overtime pay.

Much of the late-90's boom rode on the backs of rapidly increasing productivity. Commentators and administration officials have constantly pointed to increased productivity as both a sign of a recovering economy and as one of the driving forces. Much of that productivity has been the result of layoffs forcing the remaining workers to take up a great deal of slack. In addition, the simple act of layoffs is seen by investors as being a positive sign, often leading to an uptick in their stock prices.

The slow squeeze of these workers is being used to prop up an image of a recovering economy. The administration tempts a backlash by first forcing workers to work more and work harder, and then to attmept to deny them adequete compensation.

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