June 24, 2013 The Future of Fair Labor By JEFFERSON COWIE ITHACA, N.Y. — SEVENTY-FIVE years ago today, President Franklin D. Roosevelt signed the Fair Labor Standards Act to give a policy backbone to his belief that goods that were not produced under “rudimentary standards of decency” should not be “allowed to pollute the channels of interstate trade." The act is the bedrock of modern employment law. It outlawed child labor, guaranteed a minimum wage, established the official length of the workweek at 40 hours, and required overtime pay for anything more. Capping the working week encouraged employers to hire more people rather than work the ones they had to exhaustion. All this came not from the magic of market equilibrium but from federal policy. For decades afterward, Congress brought more people under the law’s purview and engaged in perennial struggles to maintain or increase the minimum wage. Fifty years ago this month, John F. Kennedy signed its most important amendment, the Equal Pay Act, which guaranteed women and others equal pay for equal work. Despite this noble history, today the act faces an uncertain future, thanks to a series of disconcerting shifts in the way we think about work in America. The problem is indicative of the moral and political slipperiness of our time. A large and growing number of employers willfully classify their employees as “exempt” from the law by shifting their jobs, but not their pay, to administrative, executive and professional categories. Being exempt allows employers to ignore pesky things like overtime or minimum wages, since these are salaried, not hourly workers. Lawsuits over back overtime pay resulting from misclassifications have gone through the roof. If the line between exempt and nonexempt workers has become unfairly blurred, the line distinguishing employee and independent contractor has faded to near invisibility. We are moving toward the “1099 economy,” named after the tax form provided to independent contractors, a classification that often walks the line of legality. For some workers, being a 1099’er means more flexibility, creativity and control over their work. However, there are many more reluctant 1099 workers who want regular jobs but find themselves locked out of the system by employers looking for an easy way to buck their responsibility to their employees. And then there is the most infamous classification hustle: the internship. For bright, young (and typically affluent) interns at America’s top corporations there is no actual job, so there are no fair labor standards to apply. That means no minimum wage and no maximum hours. There is often no pay at all. A recent decision by the Federal District Court in Manhattan declaring that the hard-working “interns” involved in making the 2010 film “Black Swan” for Fox Searchlight were really employees is encouraging, and may well have long-range implications. It’s a hopeful sign that we may yet be able to re-establish an idea that is as old-fashioned as it is good: work and you get paid. And yet, countercurrents persist. When Obamacare goes into effect next year, businesses that have more than 50 full-time employees will have to start offering health insurance. This could produce a scramble among small companies to reclassify enough employees so as not to have to pay for health insurance. In response, we need a new commitment from the federal government to buttress the Fair Labor Standards Act. More money for enforcement is a must. Compliance actions from the Department of Labor’s Division of Wages and Hours fell by over a third between 1997 and 2007. This is partly a matter of resources: for this coming budget year, the Obama administration is seeking a modest increase of $15 million for enforcement of both the Fair Labor Standards Act and the Family Medical Leave Act. That’s not enough. There are several other ways to improve the act. Because its enforcement scheme relies on employees to come forward, rather than on government-initiated supervision through audits and worksite visits, protection against retaliation needs to be more robust. We can also improve the law’s deterrence function, in the form of punitive damages for severe or pervasive violations. It’s true that we are in the middle of a seismic shift in the way we structure our work lives. Both workers and employers want more flexibility. But that similarity of interests shouldn’t mask the fact that employers will always have more power than their employees, and that it’s in their interests to make those employees work as long and as cheaply as possible. In Roosevelt’s day, the courts found most wages and hours legislation unconstitutional based on the doctrine of “liberty of contract.” The idea was as simple as it was pernicious: wages and hours legislation violated an individual’s freedom to make an independent (read: worse) deal with his employer. We can’t afford to drift further back to the bad old days of liberty of contract. Americans are drastically overworked and underpaid compared to workers in other advanced countries, and our workers are trapped in a rigid pattern of inequality that has ended a historic claim to being the nation of upward mobility. Roosevelt did not bother with economic arguments when it came to hours and wages. He offered a simple framework, both moral and patriotic. “A self-supporting and self-respecting democracy,” he proclaimed, “can plead no justification for the existence of child labor, no economic reason for chiseling workers’ wages or stretching workers’ hours.” That is as true today as it was then. Jefferson Cowie is a professor of labor history at Cornell and the author of “Stayin’ Alive: The 1970s and the Last Days of the Working Class.”
Posted on: Wed, 26 Jun 2013 01:02:42 +0000