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Americans Working More, Earning Less
Published on Wednesday, August 27, 2003 by ReclaimDemocracy.org
Americans Working More, Earning Less
by Darrell Hutchins and Jeff Milchen
 

On Monday many of us will hear standard Labor Day fare--politicians praising hard-working Americans and their role in creating our prosperity. But few of them will discuss just how hard and long we actually work or how little we are rewarded compared to our peers in other wealthy nations.

Days later, the U.S. Senate could vote on a Department of Labor (DOL) proposal that would lead to even longer work-weeks by changing federal rules that determine conditions under which employees must be paid for overtime work. The rule changes were approved by the House on a 213-210 vote in July, so it now lies with the Senate to prevent the erosion of overtime protections that were implemented in the 1938 Fair Labor Standards Act, part of Roosevelt's New Deal.

If the proposed changes are approved, private employers would gain new power to reclassify millions of workers as salaried employees who possess no legal limits to their work weeks and no entitlement to overtime pay. Presently, most hourly-wage earners must be paid 1 ˝ times their normal wage for each hour beyond 40 worked in a single week.

The proposal does include at least one positive change. Presently, only those workers making less than $250 per week must be paid overtime after 40 hours. The DOL proposal sensibly raises that pay level to $425 ($22,100 annually). The DOL claims this update would enable 1.3 million more workers to receive overtime pay, but even if their assumptions were true, the changes may remove as many or more employees from overtime coverage as it protects. Estimates range from 640,000 to 8 million.

All workers with annual earnings of $65,000 or more would become ineligible for mandatory overtime pay unless protected by a union contract. Additionally, the proposed rules greatly expand the definitions of managerial and professional employees. Employers could deprive millions of people earning between $22,100 and $65,000 per year of overtime pay simply by renaming their positions as “managers” or other salaried titles.

The pro-worker Economic Policy Institute estimates that 2.5 million salaried personnel and 5.5 million hourly workers, in just 78 occupational groups studied, would lose their legal right to overtime pay if Congress approves the proposed changes.

This DOL move would accelerate the trend of Americans working more hours at lower real (inflation- adjusted) wages over the last 30 years. The real wages of U.S. workers rose steadily following World War II, but have declined by more than 13% since peaking in 1973.

The plight of U.S. workers is partly due to U.S. labor protection laws that are much weaker than those of other industrialized countries. For example, the U.S. is the only major developed country that does not ensure a minimum number of paid vacation days. As result, American workers receive the fewest days of annual paid leave of any wealthy nation.

The Bureau of Labor Statistics reports that, even after three years at a job, Americans average just 10.2 annual vacation days. Meanwhile, our peers abroad typically enjoy 4-6 weeks of paid leave—even those employed by the same transnational corporations as U.S. workers.

In 2000, 20 million U.S. workers did not get a single day of paid vacation. Today we work, on average, a month longer each year than 20 years ago, and work more hours per year than our peers in any industrialized nation. During the last 30 years, work-weeks have become shorter and the number of days of paid leave has increased everywhere in the industrialized world, except in the U.S.

Our poor position is remarkable since the U.S. ranks near the top of the list of developed nations in worker productivity. U.S. laborers have increased their output per hour by 30% since 1973. Our average hourly wage in 1998 was $12.77 instead of the $18.40 we would have received simply by sharing in the benefits of our increased productivity.

Sharing the benefits of increased productivity could have freed us to work 3 ˝ day weeks or five-hour days without losing income, allowing us time to lead richer social and family lives and giving many of us enough time away from work to actually enjoy our time on the job. Instead we’re living less and working more. Why?

Unless the Senate gives more than lip service to all of us who earn a paycheck from private employers, millions of Americans soon will work still more hours with no additional compensation. Let’s demand better of those who espouse the virtue of American workers this Labor Day, while organizing toward working less and living more.

Darrell Hutchins (dhutcha1@lycos.com) and Jeff Milchen are a volunteer and director, respectively with ReclaimDemocracy.org, a non-profit organization devoted to restoring citizen authority over corporations.

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