Earlier this year, the Obama administration announced new rules that would significantly increase the number of workers eligible for overtime. Previously, the only salaried workers who could receive overtime, that is, one and a half times their salary for any hours worked over forty in a given week, made $23,660 per year or less. Needless to say, very few salaried workers qualified.
That’s about to change. Starting next year, overtime pay will apply to salaried workers making up to $47,476. Whereas only salaried workers making $455 or less per week qualified for overtime in the past, now salaried workers making up to $913 will qualify. This move is the first in decades to try to redress the fact that companies expect many salaried workers to work well over forty hours per week with no additional compensation. In fact, back in 1975, nearly 2 in 3 workers qualified for overtime. Currently, fewer than 1 in 12 qualify.
I find this change heartening in helping to better protect some salaried workers from exploitatively long hours. But I actually have a different exemption, an even more critical one, to focus on in today’s post.
In my first post in this series, I discussed the need for a higher minimum wage, which has been stalled out at $7.25 per hour since 2009. But for some workers, even this bare minimum does not apply. In fact, the Pew Research Center found that more people are exempt from minimum wage, meaning that can legally be paid less than the minimum wage, than earn it. In 2012, 1.5 million people earned a minimum wage of $7.25 per hour. Nearly two million people earned less.
The rules and exemptions are complex, but they stem from discrepancies and deliberate prohibitions rooted in the Fair Labor Standards Act of 1938. Lawmakers and others conspired to prohibit some jobs in large part due to who occupied those jobs; specifically, southern lawmakers successfully excluded jobs like agricultural workers and domestic workers, work then done primarily by African Americans and work still done in large part by people of color.
Some of those gaps have been closed, at least legally. But domestic workers and agricultural workers both are still likely to be paid under the table at rates often far below established minimums. Legal exemptions are a problem as well. Tipped workers, for example, can be paid as little as $2.13 per hour. Sure, the legal requirement is that businesses make up the difference if tips don’t boost workers’ hourly wage to $7.25. But ask most anyone who has spent any time as a restaurant server, and you’ll quickly find this often isn’t the case.
Employers can apply to pay workers with disabilities “whose earning or productive capacity is impaired by a physical or mental disability, including those relating to age or injury” less than minimum wage. The reasoning is that this exemption will incentivize businesses to hire people with disabilities, therefore increasing employment possibilities for these workers. One of our local grocery store chains used to employ workers with disabilities to bag and take groceries to customers’ cars. I have no idea what these employees received in terms of pay, but I know they worked hard, executed their jobs well, and offered no less in terms of service than other stores that employed workers without disabilities to carry out this same work. They certainly deserved a wage larger than the current federal minimum, not a diminished wage based on a federal exemption. And if this exemption is truly meant to increase the ability of workers with disabilities to find work, it has failed miserably. People with disabilities are often considered the “least employable” by employers and face abysmally high unemployment rates. According to the Bureau of Labor Statistics, only 17.5% of people who have a disability were employed in 2015.
Workers providing “companionship” service became exempt from the minimum wage when federal minimum wage laws were first extended to domestic workers in 1974. The number of in-home caregivers will continue to grow rapidly as Baby Boomers age, and employers will legally be allowed to pay those caring for our elderly parents and uncles and aunts and friends below the federal minimum wage as a result of these policies.
Increasing the nation’s minimum wage to a livable wage is important. A parent with one child working full-time year round will not make enough to lift her family out of poverty. But it is even more critical that we end exemptions to the minimum wage for everyone. An hourly wage of $7.25 keeps families in poverty; an hourly wage of $2.13 in one of the world’s richest nations is, quite frankly, morally deplorable.
In my third and final post in this series, I’ll discuss how current movements for increased minimum and living wages link to broader social justice movements like #BlackLivesMatter.
-Martha White, “Your Explainer for Obama’s New Overtime Rules,” June 1, 2016. Money.com
-Fredrickson, Under the Bus: How Working Women are Being Run Over.
-John Light, “The Minimum Wage Doesn’t Apply to Everyone” July 26, 2013, Moyers and Company