July 31, 2003
By Edwin J. Feulner, Ph.D.
When she left The
Heritage Foundation more than two years ago, I felt certain Elaine
Chao was heading off to one of the loneliest jobs in the country:
Labor Secretary for a Republican president.
During her tenure, the Bush administration
has reached out to labor leaders, but it's a tough sell. Despite
her overtures, the big unions remain staunch supporters of more
liberal candidates, as they have been for decades.
But that hasn't
stopped Chao from trying to make life better for low-income
laborers. For example, the Labor Department is trying to update the
laws governing overtime -- laws first written during the Great
Depression. Clearly, the job market has changed since then. When's
the last time you saw a classified ad seeking a "leg man" or "straw
boss," terms that remain in the current law?
laws haven't kept up. Today, companies can classify employees who
make just $8,061 per year as "exempt," meaning they would be
ineligible for overtime. Chao has proposed raising that threshold
to $22,000, a step that would immediately make an additional 1.2
million workers eligible for time-and-a-half.
While that change
would help the poorest laborers, it wouldn't hurt most blue-collar
members who work under collective bargaining agreements would make
at least as much under the new proposal as they do today. This
includes most firefighters, nurses and police officers.
leading the opposition to the changes? Another group that
traditionally lines up behind liberals: Trial lawyers.
Because current law is
so confusing, many companies struggle to determine which jobs are
eligible for overtime, and which are not. Trial lawyers exploit
this confusion: They pore over work roles until they find groups
that seem mislabeled, and then file class-action
It's a booming
business. In 2001 there were more suits filed over overtime pay
than suits alleging discrimination in the workplace. And why not?
If a lawyer can convince a court to agree that a company has made a
mistake, he can force that company to shell out millions of dollars
in back pay.
For example, two years
ago, the Farmers Insurance Exchange of California was slapped with
a $90 million judgment because it hadn't been paying overtime to
its claims adjusters. More recently, Radio Shack and Starbucks
surrendered without a fight. Those companies coughed up $30 million
and $18 million, respectively, to settle out of court with store
Under Chao's changes,
those white-collar workers who make more than $65,000 would lose
their right to overtime under the new laws. But keep in mind the
original reason for such laws: To benefit poor laborers.
Middle-class managers and professionals were never supposed to be
Besides, these laws
might well make life better for many in the middle class. The new
regulations would allow companies to create a modern work force
with more, better-paying white-collar positions. They also would
allow companies to create more flexible work schedules. That means
many of the new executives, who are now mostly hourly workers
punching in at nine and punching out at five, would be able to
spend more time with their families. As long as they remained
productive, they could do their work any time they
Trial lawyers and
union leaders have never been eligible for overtime. Sadly, they
are working hard to make sure that our poorest employees aren't,
Elaine Chao probably
does feel lonely sometimes. But if she can succeed in her attempt
to reform our outdated labor laws, it will all be worth it. She'll
have earned the gratitude of millions of working
When she left The Heritage Foundation more than two years ago, I felt certain Elaine Chao was heading off to one of the loneliest jobs in the country: Labor Secretary for a Republican president.
Edwin J. Feulner, Ph.D.
Founder, Chairman of the Asian Studies Center, and Chung Ju-yung Fellow
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