Would Bush Eliminate Overtime Pay for 8 Million?

Summary

The latest TV ad from the MoveOn.org Voter Fund says “George Bush wants to eliminate overtime pay for 8 million workers,” referring to new overtime rules that the Department of Labor has proposed. The 8-million figure (hotly denied by the Bush administration, of course) comes from a study by the labor-funded Economic Policy Institute.

The ad misquotes the study, however. What the study actually says is that an estimated 8 million would lose the legal right to premium overtime rates should they work more than 40 hours per week. It does not say they would actually lose pay as the ad says. In fact, the 8-million figure is inflated by many part-time workers who never get overtime work, or overtime pay, even though they now have the right to it.

Analysis

The MoveOn.org ad shows a worker in a hardhat punching a time clock as he leaves an empty factory at night, then drives home to a stack of bills and a sleeping family.

“You work overtime to make ends meet,” the announcer says, “Then you find out that George Bush wants to eliminate overtime pay for 8 million workers. . . . No overtime pay.”

This is offered as evidence for the ad’s main message — that Bush sides with “corporate values” over “family values” and “is not on our side.”

8 Million? Who Says?

The Bush administration flatly denies that its overtime proposal would affect anywhere near 8 million. In fact, the Department of Labor estimated last year when it first proposed the new rules that there would be 1.3 million low-paid workers who would gain the legal right to overtime, outnumbering what it estimated were 644,000 higher-paid, white-collar workers who would lose coverage.

That’s still the administration position. Labor Secretary Elaine Chao said at a Senate subcommittee hearing on Jan. 20, 2004:

Chao: Let me be clear. The department’s overtime proposal for white-collar workers will not eliminate overtime protection for 8 million workers as alleged. . . . We believe that 1.3 million workers will gain overtime, they’ll be guaranteed overtime, and less than about 644,000 may potentially face the prospect (of losing the legal right to overtime.)

The 8-million figure comes from the Economic Policy Institute, a nonprofit think tank whose board of directors includes the heads of several major labor unions. EPI has devoted an entire web page to defending its calculations.

Some Gain, Some Lose

Even EPI concedes that many low-income workers would be gaining the right to overtime pay. Under the proposed rules any employee making less than $425 per week would be eligible for overtime benefits, up from the present level of $155, a figure that hasn’t been changed since 1975. In its study, published in June 2003, EPI said that change “is sorely needed.”

Later, EPI estimated that fewer than 737,000 workers would gain coverage, not the 1.4 million estimated by the Department of Labor. A business-backed group, the Employment Policy Foundation, estimates that 3.4 million would gain.

Most of EPI’s criticism (and that of Democrats in Congress) focused on who would lose overtime coverage. The proposal would change the rules for determining when white-collar workers can be classified by their employers as exempt from overtime pay for extra hours. The proposed rule changes are extensive, covering executive employees who can hire and fire others, administrative employees in a “position of responsibility”, so-called “Learned Professional Employees” who have “knowledge of an advanced type,” creative professionals, outside sales workers and certain computer workers such as systems analysts or software engineers. (None of these groups look very much like the blue-collar factory hand in the MoveOn.org ad, by the way.)

EPI said the administration’s 644,000 figure was way off because it counted only those employees who were actually received overtime pay, and left out a larger group of workers who would have been legally entitled to overtime pay but didn’t work the extra hours to earn it. “DOL only counts the loss of current overtime pay, not the loss of the right to receive overtime pay,” wrote EPI’s Ross Eisenbrey.

That’s the distinction the MoveOn.org ad misses. Even EPI isn’t predicting 8 million will lose pay — only a legal right to pay. And as EPI study author Jared Bernstein confirmed to FactCheck.org, the 8 million figure includes part-time workers who don’t get overtime pay now because they never work overtime hours. That alone inflates the number by 1.5 million.

Who’s Right?

Which is closer to the truth, EPI’s 8-million figure or the Labor Department’s 644,000? In fact there are no solid figures on how many workers qualify for overtime now, so all estimates involve more than the usual amount of educated guesswork. But the MoveOn.org ad has no basis at all for suggesting that 8 million could actually lose pay — not even EPI’s figures support that.

The ad might truthfully have said, “George Bush wants to change overtime rules for millions of workers and some of them might lose pay.” That would soften the ad’s impact, but it would have the virtue of being factually correct.

 

Media

Watch MoveOn.org Ad: “Worker”

 

Sources

Press Release “U.S. Department of Labor  Proposal Will Secure Overtime for 1.3 Million More Low-Wage Workers: Department Seeks to Modernize 50-Year-Old Wage Regulations” US Department of Labor, Employment Security Administration 27 March 2003.

Testimony of Elaine Chao, US Secretary of Labor, Subcommittee on Labor, Health and Human Services, Senate Appropriations Committee 20 Jan. 2004.

Ross Eisenbrey and Jared Bernstein,“Eliminating the right to overtime pay : Department of Labor proposal means lower pay, longer hours for millions of workers” Economic Policy Institute 26 June 2003.

Ross Eisenbrey “The Truth Behind the Administration’s Numbers on Overtime Pay” Economic Policy Institute December 2003.

“Policy Backgrounder: 3.4 million gain overtime rights under proposed FSLA rule” Employment Policy Foundation 9 Sept 2003.

“The Facts Behind the EPI White-Collar Numbers,” Employment Policy Foundation 9 Sept 2003.