Bosses like me have had the power to force employees to work overtime for free. It's time to remind Americans overtime pay is a fundamental right.
Courtesy of Nick Hanauer
Samantha Lee/Business Insider
Samantha Lee/Business Insider
- Nick Hanauer is a successful Seattle-based venture capitalist and progressive civic activist.
- In this opinion piece, he argues that American workers deserve an honest day's wage for an honest day's work - and says that once again, Washington state is leading the way.
- Back in the 1970s, the federal overtime threshold covered 65 percent of salaried workers. Today, after decades of erosion, only 7 percent of workers are covered.
- Employers have been exploiting free labor for so long that most Americans have forgotten that overtime pay is both a fundamental right for workers and an economic boon for everyone.
- This article is part of Business Insider's ongoing series on Better Capitalism.
- Visit Business Insider's homepage for more stories.
American workers deserve an honest day's wage for an honest day's work, and once again Washington state is leading the way.
Under the guidance of Governor Jay Inslee, the Washington State Department of Labor & Industries has proposed new rules that would tie the state's overtime threshold to a multiple of 2.5 times the state minimum wage. When implemented, every Washington worker earning less than $70,000 per year would be eligible for time-and-a-half pay for every minute worked over 40 hours per week. When fully implemented, Washington's overtime threshold will be the highest in the nation.
This is great news - and not just for workers. Because a thriving middle class is the primary cause and source of prosperous growth, this is also great news for Washington businesses, and for our economy as a whole.
For far too long, employers like me have had the power to force employees like you to work overtime for free. For example, if I give you some meaningless title like "assistant manager" and pay you just $23,660 per year (the shamefully low current federal overtime threshold), I could work you as many hours a week as I like, while paying you absolutely nothing - zero! zip! - for your overtime. That's just plain wrong.
It wasn't always like this. Back in the 1970s, the federal overtime threshold covered 65 percent of salaried workers. Today, after decades of erosion, only 7 percent of workers are covered. In fact, employers have been exploiting your free labor for so long that most Americans have forgotten that overtime pay is both a fundamental right for workers and an economic boon for everyone.
No doubt many employers will warn that overtime is a "job-killer," but it's no coincidence that when the overtime threshold is at its highest, the middle class is at its strongest. If the overtime threshold is restored to the historic norm, employers will either have to pay you time-and-a-half for every hour you work over 40 hours a week, or they'll have to hire more employees to handle the workload, pushing up demand for - and wages of - workers. Either way, more workers will have more money to spend in the local economy, or more time to spend in their communities - volunteering, taking care of their families, taking classes, even working second jobs to fill the free hours that overtime ensures. That's why I like to say that overtime is like a minimum wage for the middle class. Without a reasonable limit on the maximum hours your employer can demand, a dignified middle-class life can never be secured.
In fact, I believe the overtime threshold should be restored to a multiple of three times the minimum wage (the average ratio workers enjoyed during the standard's first four decades), equivalent to $93,600 at a federal minimum wage of $15 an hour. And if that sounds like a lot of money, ask yourself: At what price would you sell your boss the right to force you to work unlimited hours for free?
While Washington's proposed 2.5 times minimum wage falls short of the historic norm, it would still be the best overtime standard in the nation - and a hell of a lot better than the meager bump to $35,000 the Trump administration is proposing, or even the $47,476 threshold proposed by President Obama back in 2015.
While other states pursue a race to the bottom in the hope that low wages and weak labor standards will attract more jobs, Washington has become one of the best states for business by choosing a race to the top. We know better than anyone that when workers have more money, businesses have more customers and hire more workers. It's time for the rest of America to follow our lead again by restoring overtime protections.
This is an opinion column. The thoughts expressed are those of the author.