The Fair Labor Standards Act (the Wage and Hour Law) passed in 1938 was one of the pillars of the New Deal, and it contributed to our economic recovery from the Great Depression. At this hour, that law should be updated by elevating the minimum wage to help reinvigorate our drooping economy. Raising the minimum wage would add billions annually to our national purchasing power.
Instead, Congress is doing exactly the opposite. It is cutting down on the standards established in 1938. It is doing so by depriving millions of workers of time-and-a-half pay for overtime work. The GOP-controlled House of Representatives would allow employers to deny the time-and-a-half provision and substitute it by giving workers time off with pay. This sounds generous — but it is not. If a worker labors for eight extra hours and gets time and a half, he or she will earn more than if he or she gets eight hours off with straight pay.
In public employment, firefighters, police officers and others have for years counted overtime pay as part of their regular income. They will lose income and, equally important for the rest of the nation, they will be losing buying power.
Democrats in the House moved to reject the change in overtime regulations. “Overtime is not a luxury, it is a necessity for many Americans,” said Rep. George Miller, a California Democrat. The Democratic motion lost narrowly by a vote of 213 to 210.
The GOP cheered — though not too loudly. By easing employer costs, the GOPers — typically — believe that corporations will now have more money to carry on their work. The federal government is apparently blind to the negative impact of such a move on the purchasing power of the nation.
Equally shortsighted and self-defeating has been the policy pursued by the Federal Reserve Board. To reinvigorate the economy, the Fed has reduced interest rates 13 times in the past two and a half years, bringing the rate down from 6.5% to a mere 1%. Despite these repeated reductions, the economy continues to decline. And, irony of ironies, some of this decline has been brought on by the lower interest rate. The reason is summarized by The Wall Street Journal in a simple headline that reads: “As Fed Cuts Rates, Retirees Are Forced to Pinch Pennies.” The story explains: “Low interest rates have always been a threat to retirees relying on interest income. But the relentless decline of the past two years with no uptick in sight is taking a particularly hard toll on elderly CD and money market accounts.” Many elderly Americans are suffering. But their suffering is contagious. As their purchasing power falls, so does the national market.
The rising jobless rate, now at its highest in nine years, is in itself a depressing element on purchasing power and the total economy. But the high jobless rate is also spurring still another depressing force. Corporations are taking advantage of the fact to demand cuts in wages and fringe benefits because they are confident that should the workers strike, their jobs will be filled by the hard-pressed unemployed. The drive to depress wages and benefits is not confined to the private sector but includes governments. All of the above does not even include the millions of once well-paying jobs that American corporations have been exporting to Third World lands. ’Tis thus that in our times, as in times past, self-centered men with self-deceptive dreams turn out to be their very own worst enemies and enemies of their countrymen.