Overtime pay shouldn’t punish rural economies
Income inequality has emerged as a major theme for Democrats in this midterm election year, with President Barack Obama appealing to working-class sensibilities by advocating for a higher hourly minimum wage and expansion of overtime pay.
If there’s an area of the country that knows something about income inequality, it’s western Colorado, where wages have traditionally lagged behind the Front Range. The annual average wage in Mesa County is $39,821, well below the statewide average of $51,000, the Grand Junction Area Chamber of Commerce reported in its “2014 Business Update.”
But the same forces that create a drag on wages here could make it exceedingly cumbersome for local employers to pay more overtime. If the state elects to enforce Obama’s proposed overtime changes, we hope state lawmakers and labor officials consider the disproportionate impact those changes could have on rural communities.
Earlier this month, the president ordered federal regulators to update overtime rules and create overtime-eligibility guidelines that would be more stringent than those in place.
The proposed changes would it make it harder for employers to deny overtime to workers based on “exemptions.” Certain kinds of workers are exempt from being paid overtime — those who both meet minimum salary thresholds and also exercise a certain level of authority, such as supervising two or more employees.
The changes would affect legions of workers who are ineligible for overtime pay under current conditions because they are designated as management, even when they have little or no supervisory responsibilities. Some make as little as $24,000 a year.
Many employers regard overtime pay as verboten. Some abuses occur under the current system. Many employees are incorrectly categorized as exempt, allowing business owners to withhold overtime pay otherwise due to them. That’s wrong. The Colorado Department of Labor announced two wage decisions since January that required business owners to pay hundreds of thousands of dollars to employees who were incorrectly categorized as exempt.
The changes the president is proposing would force employers to pay as much as $48,000 a year to preserve an employee’s “exempt” status. Or employers could avoid overtime by managing workers’ hours so that they never exceed 40 hours a week.
Many pro-business organizations are accusing the president of meddling in the workplace and promoting policies that will restrict economic growth and possibly lead to job losses. But at a time when the stock market has soared, we think it’s not unreasonable to safeguard the interests of workers — so long as regulations aren’t imposed unilaterally.
Delta’s economy isn’t Denver’s. It’s one thing for a Fortune 500 company to callously squeeze worker productivity to the max by exploiting overtime exemptions in the interest of shareholder profits. It’s quite another for a feed-store owner to utilize the overtime exemption to gain the flexibility to stay in business.
There has to be some recognition that the types of jobs and wages available in Western Slope communities don’t necessarily reflect state or national conditions. We think some tiered structure that would allow for a lower minimum salary in certain areas would meet the intent of Obama’s proposal without encumbering small business.
The issue is complex, as The Daily Sentinel’s Greg Ruland reported in the business section’s lead story on Thursday. It will take up to a year or more for Obama’s order to emerge from a federal policy review process. Changes in federal wage and hour rules don’t require the state of Colorado to follow suit, although it likely would, according to Grand Junction lawyer Michael Santo, who specializes in labor law. If Colorado doesn’t adopt the federal standards, it could be problematic from an enforcement standpoint.
The Grand Junction Area Chamber of Commerce hasn’t taken a position on the issue yet. But the chamber is expected to refer the issue to its governmental affairs committee soon.