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Who Loses if President Bush's Plan to "Reform" Overtime Pay Is Put in Place?

"Politicians are wanted, not in council but in action!" wrote Ira Steward in 1865. Steward, a Boston machinist and trade unionist, played a vital role in organizing laborers of all types to press government for shorter working hours during the late nineteenth century. By the 1920s, most American workers labored eight hours a day thanks to decades of economic and political pressure to bring about reform.

The ultimate result of Steward's political strategy was the Fair Labor Standards Act of 1938 (FLSA). This law, which included a ban on goods produced by child labor in commerce and the first federal minimum wage, ultimately required employers to pay most employees time and a half for work over forty hours per week.

By establishing maximum hours and minimum wages, Congress had one idea in mind: to put money in the hands of workers during a Depression so that they could spend more. As Franklin Roosevelt explained when pushing for the passage of this legislation: "What does the country ultimately gain if we encourage businessmen to enlarge the capacity of American industry to produce unless we see to it that the income of our working population actually expands sufficiently to create markets to absorb that increased production?"

Today, we face another economic downturn. Yet in direct contradiction to the principles George W. Bush expressed to rally support for his tax cuts, this president is determined to take money out of the pockets of millions of working and middle-class people by ending their right to overtime pay. In March of this year, the Labor Department proposed a series of rule changes concerning who is eligible for overtime. According to the Economic Policy Institute (EPI), these changes would adversely affect eight million workers by allowing employers to extend their working day without granting overtime compensation.

Seventy-nine percent of American workers were eligible for overtime pay in 1999, explains EPI. Under the existing law, employees with "executive" and "administrative" functions are not eligible. However, under the Bush administration's new rules many employees would be reclassified to fit these categories without having their duties change.

For example, "[E]ducation levels required to be considered a professional or administrative employee are diluted" by these changes, write Ross Eisenbrey and Jared Bernstein for EPI, thereby "allowing employers to deny overtime pay to paralegals, emergency medical technicians, licensed practical nurses, draftsmen, surveyors, and many others who currently have the law's protection."

Exempt professionals will also now include anybody who learned their skills in the military. This provision led the BBC journalist Greg Palast to remark, " I just can't understand why Bush didn't announce that one when he landed on the aircraft carrier." Furthermore, all employees who make over $65,000 a year would be automatically exempt from coverage.

Granted, the new changes do open up the possibility of overtime pay for more people at the lower end of the income scale. However, EPI concludes that many more workers will lose overtime eligibility than gain it under these proposed rules. Also, this assumes that low-income workers can get the overtime to which they are entitled. Recent lawsuits against Wal-Mart and Cracker Barrel by workers denied overtime compensation by these employers suggest the problem with that assumption.

In the short term, by cutting the take home pay for reclassified workers, these rules will dampen spending by middle to high-income workers. That spending is essential to keeping the nascent economic rebound going. As the historian Lizabeth Cohen recently explained in the Denver Post , "If we are indeed moving out of the recession of the last couple of years, it hardly needs repeating that consumer spending has been — and continues to be — the key to that recovery."

From a long-term economic standpoint, one might argue that employers need these changes in order to be more flexible in how they utilize labor so that they can remain competitive in the global economy. But this is not what the Bush administration did. Recognizing the unpopularity of redistributing money from workers to businesses, the Labor Department quietly announced these reforms on page 15,576 of the Federal Register.

Eventually, the administration defended this proposal by arguing that overtime rules were out of date despite, as the Economic Policy Institute suggests, the fact that they have been reviewed by Congress at least three times since 1985. In reality, the Bush administration knew that most Americans think that ten and twelve hour days should be a thing of the past and it didn't want to let the president's desire to turn back the clock become widely known.

Congress, recognizing the best interests of the majority of its constituents, approved language that would have blocked the implementation of these rules as part of the omnibus spending bill that funds most federal government operations. Despite this response, President Bush threatened to shut down the whole government unless the language blocking the overtime changes was excluded. In the face of this threat, moderate Republicans who opposed Bush's plan, such as Senator Arlen Specter of Pennsylvania, backed down.

Even though the Republican-led House of Representatives has passed this spending bill without blocking overtime changes, Democrats have managed to delay its consideration in the Senate until January. The Democrats' problem with the bill is not just how it treats overtime, but the enormous amount of pork-barrel spending and unwise budget cuts contained therein.

Even if this bill passes without overtime protection (and that seems likely at this point), Democrats should not drop this issue. As the work day expands, many Americans will wake up to the fact that George W. Bush is not acting in their best interests, assuming Democrats and the media take the trouble to remind them. It is then that workers will likely follow Ira Steward's advice and look to see which elected officials acted on their behalf when it really counted.