No Overtime for the Supervisor of Sandwiches

I'd say to go take a look and see what those analysts are saying and who those non-institutional investors might be. I'm Anne Barry, investor CEO and board member and my show Brumarkets dives a deep beyond the headlines to break down the stories of stocks with insider insights.

So a really powerful chart that you see just massive deviation.

Well, it's the lifeblood of trade, as this is one chapter in there which really struck something I've been to see over business. You'll come away from each episode of Brumarkets able to ask the questions that help you strengthen your market knowledge. New episodes drop every weekday off to noon, so tune in to Brumarkets wherever you get your

podcasts. You know, if you're listening, you can't tell that I'm wearing sunglasses, but I do feel like it's altering my persona to be wearing sunglasses in sound. You look more opaque. Actually, I'm just kind of...

It's like cool Catherine. Yeah. Is the host today? Yeah. Like that.

Take your girl, Catherine.

Yeah. Chill. Hello and welcome to Optimistic Economy. I'm a economist, Katherine Ann Edwards. I'm editor Robin Rousy.

On this show, we believe the U.S. economy can be better, and we talk about how to get there when problem in solution at a time. This week on Anonymous Economy, we're both wearing sunglasses. We're wearing sunglasses. I have some type of eye thing going on, a blood vessel popped in my eye, and I look like

this is a deep cut, but for you Star Trek fans, I look like data when he's like half-boreg half data. We're one of my eyes as blue and the other one is red, and it's just for like a little mode of privacy. I am wearing sunglasses and Robin is wearing them in solidarity.

You know, I'm good enough to take them off because I can't read anything. This is going to be a real off-the-cup episode because I can't read anything, I know. I know. We should have had, we should have done this as a garden party episode outside, but I'm about 85% sure based on reading my notes that we were talking about over time.

We are. We're talking over time. Over time. Why we have it? Who doesn't get it?

“And what to make of the no tax on overtime provision that was part of the oba?”

Oba. Announcements?

I don't think I have any announcements except, you know, we always appreciate it when

you give us money. You can do that at Optimus.com and read.com. Truly, Optimus, when you give us money, we give it to Andy and Sophie for production. And so we cannot thank you for everything for every donation you give us, and a couple of weeks will be recording our Q&A episode, so send your questions about the economy to [email protected].

Also, someone's testify in front of Congress. We can say here that I will be testifying in front of Congress. Optimus, you don't know this about me, but I've actually testified in front of Congress before. It's like a bombshell, but I have. So proud of doing it again.

So if this is the day that I'm testifying, I will not be wearing sunglasses. All right. Redcon. I have one redcon, which is that my executive order, that parking, making employees pay for parking, is a form of wage theft, was met with the Spotify review.

The parking executive order means Katherine has moved back to Houston from DC fully and spiritually. So true.

“Yeah, when you start to manage the parking, that's like, that's Texas all over, isn't it?”

Yeah. Honestly. I feel seen that that is the case. I got a lot of pushback for that one, but I maintain that if you make employees pay to park your sapping their wages.

Okay. Okay. I had just one thing in Redcon. You know, we went through a lot of data, economic data that been reported in that episode. And I'm just curious, like, how confident are you feeling about this data and its accuracy

at this moment in time? Well, okay, is it a capturing question or a reliability question? So the capturing question would be like, do you think we're actually seeing everything in the economy measured through this data or is it a, this data is being manipulated or eroding, and it's not good anymore?

I guess my question was the latter, but the former is a really awesome important point. The data as good as it was, which is extremely good, but could be a lot better if we invested in the statistical agencies in the US. So we have very good data, and one of the things that makes it good is that we know what's wrong with it.

The strength of our data reporting really comes from the depths of transparency in what we get right and what we get wrong.

“And I think that's what makes it trustworthy for me is that if they make a mistake, if”

they miss something, they will tell you. Sorry, I feel about news outlets, too.

Yes, because they're like, we missed that one, we did this one, I mean, I guess that's

a shout out to us. It's kind of why we do retconists to say we might have said something that's showing us. Shout out to us. We also make mistakes. We're like pretty strong people.

We're pretty self assured in our personnel.

“So I think the data is facing generational problems.”

People aren't responding to surveys as much. There's a lot of administrative sources for data that we could integrate that we're not doing because the agencies don't have the money to do. So there are problems with the data, but we know what they are. We could do, we could do better.

We just have to invest in doing it better. Yeah. Now is it capturing the extent of pain in the economy?

I think the answer is going to be no for anyone experiencing pain.

Well, yeah. If you don't have a job, you don't experience unemployment at 4%. If you're unemployment is 100%. Yeah. If you're unemployment is 100%, every else is employment is 0%.

So I think that's a real tension in economic reporting in the data that is not special to right now. We talked about it when the unemployment rate was invented in the measurement finalized. When GDP was invented and finalized, that these measures aren't perfect.

“And when the economy is weak and causing pain, I think that's when our dissatisfaction”

with measures get the highest. Yeah. Okay. Terms and conditions. What did you look up?

I looked up because, now believe it or not, even though you weren't there, I once again said something that was like a malapropis and I said it wrong. I had like a spiritual robin there to say, "Did you just say tender hooks?" And I was like, "Yeah, I'm on tender hooks." Or like, "No, it's tender hooks with a T."

Well, that's mortifying. So then I had to go look up what it means to be on tender hooks and turh hooks and ten turh hooks as a deal with the textile industry where like the tent was a wooden frame that you would stretch the cloth over and then the hooks kept it in place. So it just means to be a piece of cloth pulled taught.

And so if you're on tender hooks, it means you would stretch tight. Yeah. Now it's weird though because it really means you're nervous about something. And it was like, "Oh, tender hooks, like it's fragile." But they use tender.

I feel like tender hooks means you're just stretched so thin, you know, there's no slack. And it's a state of suspense or agitation. As opposed to the actual physical tender hooks that are keeping you as tight in a stretch as possible, which I thought was it like, "Oh, I'll work that in for the over time episode when we're all so stretched, but it's not the right meaning."

So, well, it's also, you're in a state of suspense about the uncertainty of a future event, specifically. So I looked up tent-turh hooks. So I looked up perquisite, which I did not know is the origin of the word perk, like perks on your job.

So perk became sort of an abbreviation for a purpose it in the mid-1800s and it's, you know, a thing that's regarded as a special writer privileged, I mean, often as a result of one's position in society, but also one's job or employment. I don't know why we don't spell it with the queue. That would be much better, right?

Oh, a perk with a queue. All right. Some indie pop artists is going to release an album called perk with the queue, and all caps now that we've said that. Actually, eventually, once when we start giving out things to, like, subscribers, we'll

call them perks with a queue. Amazing. Robin. God. You with the words.

Every time. OK. That's it for the front of the show.

We'll be back in just a second for the big Bill Crow about overtime.

Here we are, we're back for the big Bill Crow on overtime. So overtime has been in the news a lot lately, because it was tax filing season, and this year, people got to deducts part of the pay that they got for overtime. This was sort of the, what did you call it? A little sibling to the no tax on tips was no tax on overtime.

I don't know if it was a little sibling, because it turns out a lot of people took this deduction way more people than anybody thought they were going to. Yeah. So we thought we'd talk a little bit about overtime, why we have it, who gets it, who doesn't, and how it's sort of evolved into what we've got going on today.

Does that sound vague enough? That's a vague enough. That's vague enough.

“I think we can keep this under four hours.”

All right. Excellent. Good luck in post, Sophie, which is wishing you the best. All right, so overtime.

past the standard work week.

So you work 40 hours a week, and you make $20 an hour for the 41st hour. You get paid $30 an hour because you get a bonus for having to work over at the standard hours. It is meant to penalize employers working people too long so that they hire more people instead of overused the workforce they have.

I mean, it's hard to overstate how overworked the workforce was before we had this rule. I was reading about steel workers in particular would work 12 hour shifts, and they would alternate eventually from daytime shifts to night time shifts. And so when they made the change from one to the other, they would just work 24 hours. I mean, the notion of working 24 hours in a steel mill is totally crazy.

You know, it was routine that people would work 12 hour days, and then a half a day on Saturday. 78 hours a week was not uncommon at all for anybody working at the time. You hire people into your workforce and you would work them to the bone.

And it was Samuel Gompers of the AFL who became really one of the first major champions

of a limited of an eight hour work day. And even in the 1880s they wanted an eight hour work day. And if you watch the gilded age, this came up because trained daddy, the main, the husband.

“I remember any other names, but trained daddy at one point is trying to suppress a strike.”

And I guess the audience is supposed to sympathize with him because at one point he doesn't have the police fire on striking workers and like that makes him a good person. I don't know that show has really worked sympathies for the rich. However, what they are chanting is eight, eight, eight hours a sleep, eight hours a work, eight hours for what you like.

And that came out of Gompers in the labor movement of the 1800s. I mean, I read that even came back to the post of a warrior with Irish steward publishing the eight hour movement. I mean, it was, yes, like people had come out of working for the war effort and were just burned out.

Yeah. I mean, it's not, Gompers didn't indent it. He was incorporated into the labor movement that part of labor contracts weren't just for pay, but had to be for limited work day. And it starts to get popular kind of through the industrialized era as more people are

subjected to just abysmal work schedules. Yeah. Yeah. But it isn't until really till the depression, right? And it doesn't become implemented until it seems like we're trying to spread jobs

around, right?

“Rather than try to work a bunch of people, 16 hours a day, you should have twice as many”

people were okay hours a day. So Fair Labor Standards Act 1938 is a federal law. It prohibits and regulates child labor. It sets a minimum wage and it sets overtime provisions. It standardizes the work we get 44 and then it, I think it phases into 40.

That act was for all workers, not women and children and in the 40 years before that labor organizers and the unions would focus on men and legislation was just about regulating women and children because women and children were seen as unorganizable in the labor sense. Oh. Yeah.

And in fact, there's like these really detailed histories about how the Fair Labor Standards Act was deeply opposed by some of the largest labor leaders. At the time, because they did not want the government to give you labor rights. They wanted to earn labor rights for their members and the official union labor movement has like very interesting relationship with the Fair Labor Standards Act because it is

the first federal law to regulate labor and it does not exclude men.

It is for all workers, not just women and children. And in we think of that as natural, but it was a big change turning point. Yeah. More that the wage and our provisions that had been won from unions were for their members and then this made it an actual federal floor for all workers covered by the legislation.

Yeah. So not everybody was covered by the legislation, right? No. When the Fair Labor Standards Act was introduced, it was really watered down from what people wanted in terms of the minimum wage in terms of the length of the work week and in terms

of which industries were covered by railroad workers are still not covered by it. Yeah. It expanded over time. So 38 starts at this like nugget of we have made a federal law that regulates wages and hours of workers, not by gender or age and certain industries. And then for the next 40 years, it just continues to expand to get better minimum wages,

cover more workers, cover more industries. But the Fair Labor Standards Act is like both a high water and low water mark in terms of the protection of workers. And besides, it institutes over time, which says that if you work more than the standard

“work week, you have to pay time and a half for your workers.”

And you know what? I think because I live in California where we have a law that sets the limit at eight

But this is it's a week, right? It's 40 hours a week. So you could do 10 hours for four days a week and not get over time or you could do three and a half days at 12 hours a day or something. Yeah.

And I also read that Project 2025 was like, we should just make that over a month instead of a week. Well, the alternative would have been an actual prohibition. Like in order to regulate the work week, you were not allowed to employ people past 40 hours.

So instead, you can employ people past 40 hours with a penalty. And the penalty is meant to encourage you to keep the work week at 40 hours. So then you can, you'll have to hire more people and have standard shifts. This was a massive way, and it was both preceded by a drop in the work day, associated with the great depression, preceded by a drop in the work day that unions had negotiated

for their own members. And then it was followed by a absolute transformation of what it meant to be, say, a production worker in the US in terms of how many hours you worked. OK. So this is 1938.

We get the FLSA and it creates this sort of penalty for overworking people. And it does open a back door, right, which is this, like, this exemption. And that's kind of like the whole story to me about over time. Yes. In the 1938 legislation, there is a phrase that bonafide, they use the word bonafide.

It's section 13A1, that the minimum wage and overtime provisions do not apply to bonafide executives and administrators and professionals.

“So this is the broadly thought of the sort of the white color worker exemption, right?”

This, the idea is actually they had no idea what it meant at the time. Of course that.

I mean, you can read about this from the Congressional Research Service, the first guy

who's in charge of coming up with what bonafide executive administrative and professional means. It's like, so they go through, these are the EAP, executive administrative professional. The EAP professions. So everybody is subject to a 40 hour work week, everyone is subject to overtime and less

you are an EAP. So they have to define what EAP is. We're still fighting about this, right? Still fighting on this. So I'm going to try to give you a condensed history of EAP.

This is the exception to overtime. So law passes in 38, it's going to go into effect. There's a guy whose job it becomes to define EAP. And he says, in executive is someone who's primary job as management.

We're going to say administrator and executive are basically the same thing.

And then a professional is someone who has intellectual and varied work. Yeah. So that's their kind of first EAP. And over the course of the next like 15 years, keep in mind there's a war in between when no one really cares about this, but like in the years afterwards they try to come up with

what executive administrative and professional means. And we arrive at a start as a two part test ends up as a three part test.

“So in order to be exempted, first part you have to be a salary worker.”

Second part, you have to make a minimum amount of money that would put you into the EAP class. And your duties have to be basically of the either management or intellectual and varied type. Sure. So you have to be paid a certain way, pay a certain amount and do certain things.

And only in those circumstances can you get out of minimum wage and overtime. Right. Remember when I got my first job, I was like, I don't understand what this means. Being not exempt, just seemed like the biggest double negative. So probably almost everyone listening is exempt.

You are exempt from the minimum wage and overtime provisions of the Fair Labor Standards Act, because you're a white or all or like it or not, because you're a white color employee. So through the 40s, 50s, 60s, and through the 70s, there are every time they try to update this definition. Everybody loses their (beep) like workers lose their (beep) employers lose their (beep)

Everybody is mad about this definition all of the time, but Congress and the Department of Labor are trying to come up with a test of what does it mean to be exempt from a fairly labor standards Act?

“Are you exempt from everything in the Fair Labor Standards Act or just overtime?”

Over time in minimum wage. So in 75, they're like, all right, we have to do this again. We're going to come up with an interim measure, interim rule, and then we're going to go back and revisit it. And right after that, inflation spikes, and within the Carter administration there's a

fight about whether or not we should raise the overtime exemption limit, or if that will put inflationary pressure into the economy and shouldn't do it. So they put it on hold. They don't get to address it in the second term because they lose and Reagan becomes president. Over the course of the Reagan administration, any attempt to raise the overtime exemption

is thwarted and it's put on hold and it's paused.

Same thing with Clinton, he says he's going to touch it, he never does.

It's not until 2004 that the interim overtime exemption salary level is addressed and over

It goes from around 2/3rds of salary workers in the US are subject to overtime, it falls

to around 8% of workers failing the test and getting overtime. And then when we say get overtime, that doesn't even mean they actually get it. It just means that if they work more than 40 hours a week, they would have to be paid over time. Yes.

Right.

“It is really, I think it's hard to convey just how like revolutionarily bad this was an”

our economy because it is as white-collar work is growing. Right. As resources grow. Yeah. Yeah.

Like service work, white-collar work, people are moving out of the factories. There would be inter-retail and service and management and professional business and services. Administration of various kinds. Yes. In all of that grows, essentially, outside of the umbrella of FLSA protection as opposed

to underneath it. It's pretty amazing. In 2004, that salary threshold was 23,660 dollars. So if you made $23,661, you were no longer able to get overtime if your employer didn't want to pay you that.

And that number stayed frozen for 16 years. Oh, the number was frozen between 1975 and 2004. And then in 2004, they raised it to $22,000, whatever $3,000. $23,660 dollars. Yeah.

23,660 dollars. Sorry. I can't read my notes. I keep trying to find it on the page, but I can't. But, I mean, it was like, it's frozen in time between 1979 and 2007, nominal terms, frozen

for 30 years. And when they move it up, it's still below the poverty. Yeah. Yeah. And it was, I mean, credit to the Bush Administration, at least they raised it, the only democratic

president in that time period had eight years to do so and did not. So it's not just that this standard was left to erode, it was that growth occurred outside of it. So now we have a cultural, like now two generations later, culturally, most American workers

“have no idea that even if you're salary, you should be subject to overtime and it should”

be rare for you to work more than 40 hours in a week. It should not be normal that you work 45 or 50 hours, you come in on Saturday or Sunday or you answer your email all the time. There is a version of the world where that's not normal and that's not the one we have in part because this policy was not addressed.

But to take it back to our timeline, 2004, the Bush Administration raises it and it goes from around $8,000 to around $23,000. When Obama becomes president, he champions this policy, the Obama administration champions it and the Biden administration does as well. Federal rulemaking takes a long time, but they wanted to update the federal rules without

having to have Congress update the legislation and they did and it went through the rulemaking process and by the end of the Biden administration, they get the standard up to the equivalent of $35,568, aka $684 a week. That's what it is in 2019. Biden sets into place a two-year increase that will buy 2026 raise it to around $60,000.

So it's going to go from $35,000 to $60,000. Anyone who makes less than $60,000 a year in the US is going to get over time, which means you're going to have radical changes in how these people are employed in terms of how many hours they have to work. Like a week after Trump wins reelection in 2024, a federal judge says that it's not

allowed and the new Trump administration is basically like they've appealed it, but they're

not fighting the appeals. So this was like a massive victory and I mean, like, talk about snatched. You know, yes and no, because this has happened before. This is what happened to Obama and in the Obama administration, were they tried to raise it

“almost $48,000 and I think it was the same court, probably the same judge.”

It's a guy in Texas. He's the same judge. Guy and he's Texas, who says, but he goes back to this stupid three-part rule and says, well, you can't just change the salary level, you know, because now you're ignoring the duties and job role piece of how we calculate who's going to get over time, right?

I was for a lefty labor think tank in 2008 and they were absolute champions of this. Like they believed very strongly in this. And I remember when I got the employment contract, it included overtime. I made over the overtime provision of $23,000, but they felt that like I was a research assistant, so I should have been a classified employee, non-exempt.

And that's how I was paid. I was paid hourly.

And I remember the first time I got over time, I was like, yo, this is awesome.

But I was 22 working in DC and I had easily the best job at it every one I knew because all of these like 22 to 25 year old junior staffers working at think tanks, working at research firms, working at consulting firms, they all worked horrible hours. Yeah, and I would be like, well, happy hour for a lefty labor leader starts at 501 and y'all can join me when you're done.

But I'm so lucky I had this job.

I am so lucky I had this job because I am in my first job, first real job that's full

time that has a salary. I would log my hours in and out every day and on Friday afternoon the woman who ran

“in HR would say like you need to clock out by three because you'd already were too many hours”

that week because I already worked 40 hours. And I remember I told my boss that I hadn't finished what they had given me. And she just said, Catherine, if you can't finish the task that are assigned to you, either we haven't told you how to do them correctly or we haven't given you the appropriate amount of time.

And if you can't do the job, that's management's fault. Not your fault. And I was like, oh, well, really? So you can see why when I got my second job, I actually me and management clatched all the time.

I feel like yo, yo, you are not doing your job. But I think it was just like this is a basic dignity. Like you are 22, you're an idiot, you have no idea what you're doing.

We gave you a task, your first month on the job.

If you can't finish it in time, we haven't given you the support or we're managing our people and correctly, I'm like gifted in life that I am now 20 years deep into thinking that that is the rule and not the exception. There was a gift. But not a gift, most people got, not a gift that most people got.

And imagine how your work life would be different if the expectation was, I work 40 hours and if I don't, it's because my managers doing a bad job and not because I'm not doing a good job. So basically we wind up in the situation where there's still this two to three part of tests, but really the salary test is the one doing all of the heavy lifting.

Yep.

“And so when the salary threshold goes up, then what happens?”

I mean, isn't that essentially what this paper studied? Yeah. So this is one of my, of papers that have come out in economics in the last 10 years. This one is a personal favorite. It's a good one.

It's a good one. From 1975 to 2004, the salary cap to get over time erodes in 2004, the Bush administration increases the salary exemption, does this actually make a difference? Did this matter in the economy? I mean, did people actually get over time?

Well, that's not what they found. What the 2004 cap created was a bunch of people who used to be not eligible to get over time. And now they were. Okay.

So what their employers did was basically decide that they were all managers, so they still wouldn't have to pay them over time. So instead of being a store assistant, I become a store manager and I don't give over time. And they did this systematically. And this paper looks at the systematic managerial tidalene of workers in our economy in order

to avoid over time. So the most egregious example came from the family dollar store. So it gave a very large share of its employees the tidal of store manager. And their job would be like sweeping, stalking shelves. Like you are the store manager and the charge of shelves.

Here is the store manager and charge of sweeping. Yeah. And they were working like 60 to 90 hours a week and only doing like five hours of anything that could even remotely be constituted a management activity. Yeah.

So they lost their court case, family dollar lost, and they had to pay $35 million an

unpaid overtime to 1,500 employees. That's a lot of money, 35 million dollars to 1,500. Is that punitive?

“Is that just, that's actually just how much money the wage theft had been?”

No, that was paid do. Oh my God. Family dollar was not alone in this. All kinds of companies started to inflate the titles of their basically hourly shift workers in order to keep them from getting over time.

So let me find some of the titles. This is the best part. Now my favorite is Director of First Impressions. Oh yeah. Director of First Impressions.

So if you work at a place like a pet co and your job is to wash the dogs, are you a groomer or are you a grooming manager? You work at a food cart in a large office building and you become the food expectations manager. These are absolutely ridiculous titles. Reservations clerk was the lead reservationist.

Oh, the lead reservationist.

Yeah.

“A greeter like a Walmart greeter would be a manager of consumer expectations.”

Yeah, these are crazy. These are ridiculous. But this is what employers did to avoid having their employees be subject to overtime so that they could still work them for more hours. This is gross.

The idea that someone would be making $20,000 a year and they would be a director of First Impressions so you could work them 50 hours or 60 hours or 90 hours a week without penalty is gross. We do have a law to prevent it and it has fallen into disuse. Yeah, I mean, it's such abuse.

And I don't think that I realize that unpaid overtime wages are like 80 percent of the

wage that FLSA cases over time is everything when it comes to labor standards because this is if I can pay someone $20,000 a year and not be charged, but I work them 60 hours a week instead of 40, I am getting 20 hours of free labor off of that person. So there's wage theft like the actual wage theft for people are not paid overtime and they're subject to it.

And there's the wage theft of we should be making overtime if I work 41 hours in a week and every hour after 40, they are stealing money from me. Like they're stealing, yeah, they're stealing your full hourly hour beyond that. It reminds me of, what's that movie? Office space?

Office space. Yeah, I'm going to need you to come in on Saturday, you know, like the idea that you're

salaried and therefore you're at the whim of your bosses to come in and work additional

hours on Saturday. Yeah, it's that's free labor. They couldn't ask you to work on a Saturday, they couldn't ask you to stay late. In every hour past 40 is labor that they're getting for you from free because they're avoiding labor regulation.

“Yeah, it took me a while to get there, but I think we finally got to the point that”

I wanted to make, which was one of the reasons why Americans don't earn that much money is because they give a lot of it away for free. Well, and they don't know that they're giving it away for free. It's been 50 years since we have had robust over time enforcement for white collar workers. I heard someone once referred to this as the middle class as minimum wage.

The protection you need is for time at work to make sure they're not staffing more for me because if I make $50,000 a year and work 40 hours a week, that's a very different job than if I make $50,000 a year and work 60 hours a week. My relative hourly pay is a lot lower on the salary, the more hours I work, and so this is, I don't know, I think on some issues, I can be really centrist and be like, I'm a capitalist.

I love capitalism. We can do this. On other issues, I feel like I'm almost leaning towards Republican on certain things, but on this one, I am like, "I am to the left of Latin, you're letting." What he needs over time, the work week is 40 hours.

This is ridiculous. On this show, we like to talk about when problem and solution at a time. This one's both. It's right there in front of us. We want to have normal work lives.

We want to. We have the legislative power to do so, and we've had administrations, successive administrations who have tried to get this protection for workers, but it's so behind the scenes. Now it's mutual generations, we've gotten so divorced from this mindset of, "It doesn't matter if I work in an office.

I still deserve." You're telling me, you're telling me, "Your time is your time, and they're stealing it." We keep saying overtime and we keep saying overtime, but really, this is about limiting the work week. How many hours are you allowed to work?

We have one mechanism for enforcing it. It's overtime. We've let that mechanism fly. You work all the damn time. You don't have limitations on your work weekend anymore.

Yeah. I thought the other interesting part of that study was that they also looked at where this title inflation was most common, and it really was linked to essentially enforcement. Places like the dollar store that were nationwide, they pushed to see what they could get away with the most in stage where they knew that the wage in our, or the Bureau

of Labor in that state wasn't going to do anything about it. Yeah. Some states have lacks labor enforcement. Some states have super strict labor enforcement, and they knew exactly what to do. They pushed the envelope in a place where they thought they could get away with it.

“I think the key part of that study was that they only did that for jobs that fell just”

over the salary cap.

So if the salary cap is 22,000, you would see the bump to director of first impression

and came for people who made 23, not 21. It was absolutely a tool to get over the cap, to get around having to pay overtime and limit

But I thought was really interesting is that they took the time to be like, and just so you know, they didn't have better careers.

It wasn't as if they actually becoming a director of first impressions was actually putting

you on the career track to succeed at this company, it was just a way to get around work weekend.

“In fact, I think they found that it costs them higher turnover, right?”

But they don't get it, because they may save, they save 13% on compensation, but they would lose four or five percent in turnover, they're still coming out ahead. Yeah. Yeah. I mean, who cares if people quit all the time, if you can underpay them is like underpayment

is cheaper than turnover, why would I care? So you could say, this doesn't apply to me. I'm not a low wage worker, I'm not at a family dollar, I'm not at a pet co. This isn't me like I work in an office. Maybe this really complicated three part test of white collar salaried with the income

limit and the duties test, you're like, look, I don't get it. It doesn't apply to me. I'll put it to you in this way, pretend that in 1975, the federal government eradicated the overtime provision and said, if you are a white collar worker, you are not subject to overtime.

And that's it. Just a firm decision, we're not going to have overtime for white collar workers. Do you think American workers will have a longer or shorter work week in 2026?

The answer is obviously we're going to work more.

They didn't make it so clear. It was, instead, they have a three part test that's kind of complicated and one part needs to be addressed and they make it into an interim ruling and they decide they get back to it later, but they don't get back to it later. I mean, the way that it happened is complicated, but the effect is the same.

White collar work used to be subject to overtime and now it is not. And you work a lot of hours and if you had overtime, you wouldn't work as many hours. That's it. At the end of the story. Yeah.

“Can we talk just for a second about the new tax on overtime?”

Yeah. Situation? Like, what a mess. Yeah. So in theory, you could say, oh, no tax on overtime.

That's helping workers who get overtime like that's helping the working class. No. Most people aren't getting overtime, most people aren't getting overtime. That's number one. What it did was it allowed workers when they filed their federal income taxes to deduct

from their income, the bonus portion of overtime paid if it came from FLSA enforcement. So in other words, you make $20 an hour, but this week you worked 10 hours of overtime at $30 an hour. You could only really deduct the bonus $10. You earned $300 extra, but you had only deduct $100.

So I hate this rule because it's basically subsidizing the use of overtime. Yeah. Right? That defeats the whole damn point. Like we want overtime to be, okay, we want overtime to be incredibly expensive for

employers. And punitive for overworking workers. Yes. You worked someone 60 hours a week. You're an asshole.

“You need to, you're, we're going to soak you.”

So you don't work people this long. It is not fair to do this. So we are going to set up this penalty so that you don't work people past 40 hours a week and we have a standard 40 hour work week. This tax no tax deduction for overtime is doing is subsidizing the penalty to reduce

it because now your workers, you're basically like, it's like, it's this crazy, like backwards incentive, you're incentivizing employees to disregard the overtime, to disregard the work week. Employers. So yeah, but you're incentivizing employees too because you're trying to tell employees

like, oh, like, we'll make it more worth your while by having this big deduction as a way to stretch the work week. That's true. Once it's being this kind of collusion where it's like, we'll hire fewer workers, but you'll get to take home more of your paycheck now.

Right? It's just bonkers. It's like it's 180 degrees from the idea of penalizing companies for overworking their employees. It's now we're going to subsidize it.

This is like the, like, crowning achievement of eroding the success of having a 40 hour work week is a tax deduction for overtime on your income filing. It's not going to go to most low wage workers. It's just going to encourage people to blow past the 40 hour work week. Yeah.

I mean, and that doesn't even get into the mess of no employers were ready to report this to the IRS. The rules about reporting these deductions have been unclear. And so far, it seems like 20% of filers took this deduction because there's basically no way to check it.

And it's almost twice as much as anybody anticipated.

It's going to be like $50 billion a year that we're going to give away in this deduction.

This is basically taking two employees that make the same amount of money.

And the other one makes it, like, by stretching their income over the overtime provisions.

And the government is like, you know which one's better. We're going to give the tax bonus to the person who works longer than 40 hours. Right. You're putting your thumb on the scale for, we want to encourage people who are working longer as opposed to having normal work weeks.

This is putting the weight of the federal tax system on the side of working longer. Oh, God. The more I read about this, the more I don't know the more crazy making it was. It's just, at the time, when I remember reading about the no tax on overtime, no tax on tips, I was like, this is just a political stop and I'm frustrated with that.

But when I really thought thought about what it was incentivizing, I thought, this is really disgusting. Mm-hmm. Mm-hmm.

“Sometimes I think it's helpful to think about it in like, old and time.”

It's like, Andrew Carnegie has a monopoly on steel. And he works people. A.E.R. is a week. It's steel mill, and he convinces the federal government to help his steel workers with taxes for the 70 to 80th hours works for the week.

You would be like, yo man, you are gross. Build libraries. Give your money away. You're an awful person. But instead, it's like, oh, let's use the tax system to like, collude with people who

overwork their employees. Like, no, the whole point was so that we get to have f***ing lives and not work all the time. Yeah. Mm-hmm.

I think it's because of my amazing first employer that I feel so strong strongly about

this. But I also think that this is one of these. This is something that could affect you that you probably don't realize, that this could be a difference maker in your lives. Yeah.

I don't know. So much of public policy, so much of economic policy is really thinking about people at the bottom. Mm-hmm. If you get programmed to think that they're very little the government could do to help

you in a relatively cushy white collar job that has health insurance and retirement that would make your life easier of like, oh, no, give me like six months sister, I promise you. I don't know government could do a lot to make your life better. And it starts with labor laws that are so radical there from 1930s like come on. Like, how radical can it be as a law if it's from 1938?

Yeah. So here's my question, right, given what this judge in East Texas keeps doing, which is to say, you can't just raise the salary threshold.

“You have to do something about the two thirds or other tasks that do this test.”

The duties test. But we could fix the duties test, right? Like, with an update to the other side. More Congress just amends the family. Yeah.

Okay. Yes. It's not like a constitutional amendment. It's just a law. It's just a law.

So, so right now, all of the changes in this test are coming from administrative rule making from the Department of Labor, that at various points judges, this one guy keeps striking down as like it's beyond the scope of what you're allowed to do, give no legislation. Given the legislation is the key part, Congress meets, they pass a new Fair Labor Standards Act amendments.

It increases the minimum wage to $15 an hour. And then it says, and oh, by the buy, section 1381, that says, who are the people exempt from the minimum wage and overtime? Like, they get said at it, whatever they want to do. This doesn't seem like a really hard fix.

I know people who want to use this similar philosophy to mandate that Americans get 10 days of vacation every year, because that will also increase employment, because you're just taking a bite out of the total hours, and they have to hire more people.

“Just to kind of a similar, how much is an employer allowed to sap of your time?”

Yeah. So let's just put that down on paper, but they're still a bunch of conservative neoliberal economists who would tell you that I would break the economy if I got my way because I would make people not work 50 hours and they'd have to work just 40. Yeah.

I do think that the other thing that's skewed this is that people don't want to hire more workers because often because of healthcare and things that they do provide, right? So they would rather pay the overtime than add another person getting benefits. So many things are so screwed up because of benefits. So many things are so screwed up because of benefits.

So I will say when the Fair Labor Standards Act was, I think it was either past or being debated.

FDR had this quote that I have always really loved.

Do not let any calamity, howling, executive, with an income of $1,000 a day, tell you that a wage of $11 a week is going to have a disaster effect on all industry. Yeah. Seriously. Yeah.

I would love to hear a man who has enough personal wealth that he built himself a rocket to go into space for fun and then later sent his fiance there because she also wanted a friend and made it into a girl's trip to tell me that his business model will break

Like, oh, bet on it.

“In that case, you don't get to take a rocket.”

You just get to take a hot air balloon and go up real high and come back down and you don't

actually get to go into space. Too bad. Oh, no. I bet we still have an economy. So we're good.

Cheers to Putin, CEOs, and a hot air balloon instead of rockets. And calamity, howling, executive. What a great turn to race. It's pretty great. It's pretty great.

He's not even like my top five favorite presidents, but the man had a way with words. All right. We're going to take a break. We'll be right back. We take executive orders and spiritual sponsors.

Executive orders. What's your executive order this week? Okay.

“So mine is in theme of the show similar to the, I think you should have a billboard above”

every business that uses child labor and gets busted. I think that every worker should get to wear a badge if when they enter their 41st hour of work for the week. So once you go past 40, it's either like a sash or like a crown. Or some kind of name pack of like, I'm past 40 hours.

Special hat. Yeah. Yeah. Can you imagine if you're in like an emergency room and there's two doctors and ones like, I'm on my 67th hour of work for the past three days.

It's like, oh no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no. The other one. But yeah, I think there should be some kind of like public signaling mechanism of like, I'm working more than 40 hours. So people can see how ridiculous it is that we are broadly expected to work 50 hour weeks all the time.

My executive order is more petty, which is I believe that some percentage of new cars when they make them, that they have to be in a color that's not just on the like black to white spectrum. You know, the idea that you've rolled out a car in five colors, but those colors are all black white, silver, gray, onix, storm cloud, like God forbid, you want a car that's not, you know, monochrome.

I adore this. Yes. We need more color colors. Yeah. Okay.

Spiritual sponsors.

My Spiritual sponsor for today's episode is awesome first bosses because my life, my whole

“work life is better because I had good first bosses.”

Nice. Nice. My Spiritual sponsor staying in the vehicular is my e-bike. I have a fair day e-bike. It's 10 years old.

It is still running. I just got new brakes on it. You know, I live on top of a fairly steep hill and it's like, it's like being a superhero going up the hill and that's not even, it is honestly probably the one of my favorite belongings.

It's that bike, that and these sunglasses. All right. Thank you for putting your sunglasses back on for the end. The optimistic economy podcast is edited by Sophie Lamond in our video production for social media is by Andy Robinson, snapping him out, video clips from the show for you to

share around TikTok, Instagram, Facebook, YouTube and LinkedIn and you can buy t-shirts, hats and tote bags on our website, offsomesticony.com. And optimisticony.com is beta testing, a new feature that has the transcripts for each episode that you can pull out a quote and either copy it into a text message or share it on social media.

You're testing this, y'all tell us what part doesn't work. Is it live? Is it live already? Or it will be. I think so.

Yeah. Sure. It will be by the time this airs. If you're on sub stack, either as a free or paid subscriber to optimistic on me, you can join our chat room and if you have the means to contribute at whatever level is comfortable

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And if you were in your 41st hour work for the week, go home! That's right.