Kerry Press Release: Edwards Pledges to Honor OT; Campaign Releases Study

[Skinner]

For Immediate Release
August 23, 2004

Edwards Pledges to Honor Overtime as Campaign Releases New Study on Effect of New Bush Regulations

Racine, WI – On the same day that President Bush’s new overtime regulations began to deprive over six million Americans of their right to overtime pay, Democratic Vice Presidential nominee John Edwards met with workers and families in Wisconsin to assure them that a Kerry-Edwards administration will build an economy that rewards hard work, creates good paying jobs and strengthens the middle class.

Thanks to President Bush, the right to overtime pay became a thing of the past for six million workers Monday. By changing the technical language of a few, simple rules, the Bush administration could drastically cut the pay of millions of workers and make it even more difficult for families, already squeezed by the Bush economy, to get by.

“Today, millions of workers will find out that instead of getting time and a half; they’re going to get a hard time from their government,” said Edwards. “More than sixty years of protecting overtime work have been wiped out with the stroke of this President’s pen.”

To illustrate what is happening to workers and families across America today, the Kerry-Edwards campaign released a new study examining how the Bush regulations will affect five different types of workers and their families. The case studies show just how devastating the president’s actions are for hardworking families.

The Bush rule change eliminates federally mandated time-and-a-half pay after forty hours in a week, making it even harder for America’s workers to make ends meet, and ending over sixty years of bipartisan support for the 40-hour work week. Instead of working to help Americans as they struggle to get by in this troubled economy, the current administration even went so far as to create a “How-to-Guide” for employers to advise companies on how to get out of paying workers their earned overtime pay.

As noted in today’s study, the Bush rules could take thousands of dollars away from families. A police lieutenant may see his paycheck decrease by $10,000. A computer programmer could lose $9,000 a year. A department store worker will likely lose an estimated $3,200 a year.

The changes to overtime rules are just the latest in a four year long assault on the American worker. For four years, the minimum wage has not increased, and wage growth has continued to slow. Working families in the middle-class bear a larger share of the federal tax burden, and the tax code continues to give tax breaks to companies taking jobs overseas, instead of companies creating jobs here.

“It is a fundamental and time-honored American value that hard work should be rewarded,” said Edwards. “Taking away the right overtime pay and doing nothing while paychecks shrink and jobs go overseas makes sense only to someone who does not understand American values and does not respect what work means in this country.”

While President Bush has gone out of his way to create an economy in which American workers cannot get ahead no matter how many hours they put in, Edwards today pledged that the Kerry-Edwards administration will never turn its back on America’s workers.

Kerry and Edwards have made the interests of middle-class Americans the centerpiece of their economic plan. Detailed in their book, “Our Plan for America: Stronger at Home, Respected in the World,” the Kerry-Edwards plan puts working families first, with detailed proposals to create good-paying jobs here in America, while reining in the skyrocketing costs of health care, energy and tuition. The Kerry-Edwards economic plan will create more than 200,000 jobs in Wisconsin alone.

“It is time to build an economy that values work again,” said Edwards. “With John Kerry in the White House, Americans can rest assured that their hard work will count. America’s workers deserve a president who is working overtime for them, not against them.”

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THE NEW BUSH OVERTIME RULES:
CUTTING PAY FOR WORKERS ACROSS AMERICA

NEW BUSH OVERTIME RULES: CUTTING PAY FOR WORKERS ACROSS AMERICA

In the last four years, millions of middle class Americans have been working hard - or harder - only to find they are falling further behind. Family incomes have dropped, while the cost of almost everything else – from health care to gas to college tuition – has soared. The result: more Americans are declaring bankruptcy, more are losing their health insurance, more are being priced out of college, and more are getting by with less.

When it comes to helping these squeezed families, the Bush Administration has been absent. They have done nothing to help with rising health care costs, higher college costs, or soaring energy costs.

Now, to add insult to injury, the Bush Administration Labor Department has issued a new rule that will end overtime pay for millions of workers.

On August 23rd 2004, the new Bush rule will go into effect and overtime will become a thing of the past for an estimated six million workers. By changing the technical language of a few rules under the Fair Labor Standards Act, the new Bush rule will dramatically reduce the number of workers who are eligible for overtime and makes it easier for employers to cut the overtime pay of their workers. These new rules will make it even more difficult for already squeezed families to get by in the Bush economy.

WHAT HAPPENS TO WORKERS UNDER THE NEW BUSH OVERTIME RULES

How Overtime Works Today. The Fair Labor Standards Act of 1938 (FLSA) defined an expectation that the normal workweek is 40 hours. It guaranteed, for most workers, the right to overtime pay—often referred to as “time-and-a-half”—for each hour worked beyond 40 in a week. In 1999, the Labor Department estimated that almost 80% of the nation’s 120 million wage and salary workers were entitled to overtime protection under the FLSA. There are some workers who have been exempted from this FLSA. In particular, the law does not apply those workers who work in an executive, administrative, or professional capacity.

New Bush Rules Change the Criteria for Overtime. The Bush overtime rules dramatically expand which workers meet the criteria of ‘executive, administrative, or professional’ thereby dramatically expanding the number of workers who are not eligible for overtime. For example, the definition of ‘executive’ is being expanded to include workers who do a minimal amount of supervision and mostly manual work and to workers who only manage a group of employees but have no real authority.

Bush’s Overtime Rule Eliminates Overtime Pay for 6 Million by Changing the Tests for Exemption. The Economic Policy Institute (EPI) issued a study that estimates six million workers will lose their overtime pay. These workers include:

- 1.4 million low-level, salaried supervisors and 548,000 hourly supervisors, who could be switched to being paid on a salary basis and thus denied overtime protection.

- More than 900,000 employees without a graduate degree or even a college degree who will be designated “professional employees.”

- As many as 2.3 million team leaders with no supervisory authority who will be exempted as “administrative employees” even if they are line or production employees (EPI, “Longer Hours, Less Pay,” 7/14/04)

Republicans and Democrats Agree Many Will Lose Overtime. As three former employees of the Labor Department under Reagan, Bush and Clinton noted in a recent report, the overtime regulation:

- “Removes existing overtime protection for large numbers of employees currently entitled to the law’s protections” (Fraser, et. al., “Observations on the Department of Labor’s Final Regulations,” 7/04)

- “Moves the line of demarcation between those employees protected by the FLSA (Fair Labor Standards Act) and those who are exempt substantially in the direction of exemption, so that more classes of workers, and a greater proportion of the workforce overall, will be exempt than we believe the Congress could have originally intended.” (Fraser, et. al., “Observations on the Department of Labor’s Final Regulations,” 7/04)

- “With the sole exception of the salary level adjustment, in every instance where the Department has made substantive changes to the existing rules…it has weakened the regulatory criteria for, and thereby expanded the reach and scope of, the (overtime) exemptions.” (Fraser, et. al., “Observations on the Department of Labor’s Final Regulations,” 7/04)

Bush Administration Advises Employers How to Cut Overtime Pay. The Bush Administration issued guidance to employers on how to cut their workers' overtime pay. The Bush Labor Department explained that even if employees technically became eligible for overtime pay under the Administration's new overtime rule, the employers could avoid paying anything extra. Specifically, the Administration said, employers could make a "payroll adjustment" that would cut workers' hourly wage and add the overtime to equal the original salary. (AP, 1/5/04)

EXAMPLES OF HOW OVERTIME WILL IMPACT FAMILIES

Overtime rules might seem like an abstract government regulation. However, millions of Americans will lose thousands of dollars under the new Bush rules. These pay cuts will drastically reduce the earnings of millions of workers placing an even greater burden on middle-class families already burdened by lower wages and higher costs for gas prices, health care, and education.

The following vignettes illustrate what will happen to five different workers who could lose their overtime under the new Bush overtime rules. Americans who work overtime work on average 12 hours of overtime a week. By eliminating time-and-a-half pay from workers for the 12 hours of overtime work, it becomes clear how much less these workers will earn a year with just basic pay.

This study estimates the weekly wages of a worker based on Bureau of Labor Statistics wage data and calculates how much a worker would previously earn with 12 hours of overtime a week. By estimating that the worker would be paid for “time” as opposed to “time-and-a-half” for those extra hours under the new regulatory system, we estimate the pay-cut these workers will endure. The study then demonstrates what this pay-cut will mean for average families by using the Consumer Expenditure Survey to demonstrate average costs for things like groceries, rent, and college tuition.

ASSISTANT MANAGER BOB
Shop Right

Bob is 29 years old and works as an assistant manager at the local department store, Shop Right. He works full-time and often has to put in a little extra to help stock the shelves and fill out some paperwork about his department. He has three employees who report to him, but most of his day he works hand-in-hand with them, doing the same duties and sharing most of the same responsibilities.

Now: Bob earns $10.46 an hour with the twelve extra hours paying $15.69 an hour. By working his normal 40-hour work week, he earns about $22,000 a year. It’s not really enough to make ends meet. So he really values that overtime that earns him an additional $9,800 a year, topping him off at over $31,000. That extra overtime makes a huge difference in what Bob can afford and makes paying the bills a whole lot easier.

Under New Bush Rules: Under the new regulations Bob will stop being paid by the hour and will become a salaried employee. By claiming that his “primary duty” is managing those three employees, Bob is no longer entitled to overtime pay. Even though the majority of his time is spent performing the same tasks as his employees, the store can claim his primary duty is management. Bob will still work the extra 12 hours but he will not be paid overtime for these hours. Under this new rule, Bob will lose an estimated $3,200.

What $3,200 Means for Bob: For Bob, this $3,200 will make a significant difference. It is the cost of over seven months of rent; nearly two years of tuition and fees for community college; over nine months of groceries.

POLICE LIEUTENANT PETER
Pay Cut Police Department

Peter is a police officer who has served his community for the past twenty years. He has moved up the ranks and now serves as a lieutenant with some supervisory responsibilities. Peter is still out on the beat fighting crime but he also spends a few hours a day at his desk, filling out paperwork and leading a few fellow officers. With a wife and one kid in college, and another headed that way soon, the overtime he earns makes a big difference in getting the bills paid.

Now: Peter is proud of his service to his community and works hard for his paycheck, putting his life on the line everyday. He earns $30 an hour and brings home over $60,000 for his family. With two kids and one of them in college, this doesn’t quite go far enough so he has relied on his overtime to get by. With his 12 hours of overtime, Peter earned another $28,000 a year making life a lot more comfortable for his family.

Under New Bush Rules: With is limited management responsibility, Peter’s bosses in the police department – faced with serious budget crunches – will be able to eliminate his overtime pay by saying that his primary duty is management and not crime fighting. By describing his “most important” duty being management they can eliminate his overtime. Peter will see nearly $10,000 less in his paycheck next year because of the new regulations.

What $10,000 Means for Peter and His Family: For Peter, the new overtime regulations are going to put a real dent in his family’s budget. Nearly $10,000 less a year will make it a lot harder to put his kids through college and pay the mortgage. His family won’t be able to take that vacation to see the grandparents for Thanksgiving or make the repairs their car needs to help get through the next winter.

COMPUTER PROGRAMMER JULIE
Equity Systems, Inc.

Julie is a 40 year-old computer programmer. She lost her job in the local textile factory a few years back and took advantage of job training programs and got some basic skills with computers. With that training, she was able to gain access to the trainee program at Equity Systems, Inc., a local data processing firm. She has two kids at home, both teenagers, who will be going off to college in the next couple of years.

Now: Julie works hard and with the skills she has learned she earns nearly $30 an hour. A lot of weeks she chooses to work some overtime because she knows those college tuition bills will be high when her two girls go off to college. She earns nearly $45 an hour for the 12 extra hours she works a week. Last year she earned $61,000 before her overtime and with those extra hours took home an additional $27,000. That extra time really helped.

Under New Bush Rules: With the new overtime regulations, Julie’s bosses at Equity Systems will be able to claim that she is a trainee, eliminating her right to overtime pay. Under this new rule, Julie will lose over $9,000 a year.

What $9,000 Means for Julie: For Julie, this $9,000 is really going to cut into her family’s budget. It is $9,000 less that she would be able to save on for her kids’ college funds. Its $9,000 less that she can use for her car payments and mortgage. It’s $9,000 closer to being squeezed into bankruptcy.

CHEF GEORGE:
Hard Times Grill

George is a chef at the local bar and grill. He’s worked his way up as a line cook, learning the skills to get to the position he has now. At 35, he’s proud of having made his way up without going to culinary school or getting any professional training. He has a wife and a young daughter to support so working hard is not just a choice, it is his responsibility. That means picking up some extra shifts and helping to clean the kitchen for some crucial overtime pay.

Now: George cooks up a storm and with the skills he acquired after years in the kitchen. He earns $11.04 an hour. Most weeks he picks up overtime, because the $441 he earns a week without it just doesn’t go far enough. With twelve hours of overtime at $16.50 an hour, George earns his family an additional $10,300 a year. It makes a big difference, pushing up his earnings to $33,000 a year.

Under New Bush Rules: George’s bosses at Hard Times Grill will be able to call George a “Learned Professional” even though he’s never attended college, let alone culinary school. By describing him as a learned professional, he can be denied overtime pay. This will drastically cut back his earnings by nearly $3,500 a year.

What $3,500 Means for George: For George, this $3,500 a year is going to make a tight budget even tighter for his family. It means over 18 months of child care he can no longer afford, making it harder for his wife to get a second job. It’s going to make health care less affordable and takes away eight months of rent for his family.

NURSERY SCHOOL TEACHER LESLIE
Bootstrap Nursery

Leslie was attending state college but had to drop out to pay the bills. With the classes she had completed, she was able to get a job as a nursery school teacher. The pay is not great but she gets by and with some overtime helping to clean the building and taking care of kids whose parents need some extra time, Leslie gets by.

Now: Leslie works hard chasing those kids around everyday, dealing with feedings, lessons, nap time and teaching basic skills. She loves the job but wishes it would pay a little more. She earns $10.70 an hour, but with extra overtime manages to take home an extra $200 a week. It makes it a lot easier to make her car payments on time and get that rent check to her landlord.

Under New Bush Rules: With Bush’s new overtime regulations, nursery school teachers like Leslie will be exempted from overtime protection. Instead of the extra $10,000 she earned a year with overtime, Leslie will make only $6,500 – $3,000 less to pay for her needs.

What $3,000 Means for Leslie: For Leslie, this $3,000 is going to cut into her budget in a serious way. It is $3,000 that she won’t be able to spend on rising gas prices and the college loans she built up in the first years at school and she certainly won’t be able to go back and finish up.

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