White Collar Rules

The Bush administration decided to make a change in America’s work rules intended to harm managerial employment and lower business employment costs. They decided to abolish over time for management or managerial employees. “The exemptions do not apply to manual laborers or other “blue collar” workers who perform work involving repetitive operations with their hands, physical skill and energy.”

The Federal Government already gets right in the middle of the wage and effort bargain with the Fair Labor Standards Act, which for many years required pay at time and a half for work over 40 hours a week. Probably managers have always put in some uncompensated overtime, but the Bush cabal decided to change the rules here so the Department of Labor drafted “White Collar Rules” governing over time. The term White Collar Rules is not my term. It comes from the BLS web site.

These new rules abolish overtime pay for executive managers who manage an enterprise or customarily manage a department or division of at least 2 or more full time employees. To be in the executive category a manager must customarily and regularly direct work and have authority to hire and fire other employees.

The rules above are for executive managers, but to give the rules broad application, other types of managers are also defined and described. Some other categories like administrative employees, learned professionals, creative professionals, computer employees, and outside sales employees were included in the “White Collar Rules.” Administrative manager rules specify that employees only need to be paid on a salary basis of $455 or more a week with work that is office work or non-manual work. Their work only needs to include “the exercise of discretion and independent judgment with respect to matters of significance.”

In the learned professional category employees only need to compensated on a salaried basis at $455 a week or more and have “advanced knowledge defined as work which is predominantly intellectual in character and which includes work requiring the consistent exercise of discretion and judgment.” There are a few more categories but you get the idea. We can only speculate what work Bush appointees might argue fits these definitions.

Leaving out hourly rated manual laborers and “blue collar” workers from the regulations outlined above is not a concession. It gives the impression of a concession for political and public relations purposes, but employers can cut off individual hours before paying time and a half as overtime. Putting welfare mothers in the workforce as America does, the continued immigration of Mexican labor and the needs of adolescents and college students for part time work guarantees plenty of walk on applicants for part time jobs.

Encouraging overtime, paid or unpaid, assures more people will be looking for jobs. However, pressuring the managerial ranks to give up overtime compensation turns cost into profit since free work from managers makes it cheaper to employ someone. The 40-hour work has been the standard full time workweek for more than eighty years, but managers working 50 or 60 hours a week assures fewer people in the managerial ranks. Two managers working 60 hour weeks equals 3 managers working 40 hours a week. Rigging the rules to coerce people into unpaid over time assures a drop in managerial ranks.

Just in case you doubt the drop in the managerial ranks we can take a peek at the Occupational Employment Survey published by the Bureau of Labor Statistics. BLS reports a drop of 1.9 million establishment jobs for managerial occupations in its Occupational Employment Survey. That is 7.8 million in November 2000 but just under 6 million in May 2005. General and operations managers, administrative service managers, financial managers, food service manager, all down. The only categories with more managerial staff are education administrators and social and community service managers, both categories employed by government and often paid with tax dollars.

The totals above are for establishment employment, meaning they are job totals at firms, non-profit associations or government. Managerial employment has the highest wages of America’s occupational classifications. Even though the managerial ranks continue to decline, managerial wages go up and they go up faster than the rate of inflation. Some of the former managers move into self-employment as consultants or into consulting firms where they sell managerial advice on an as requested basis. Some move back into the professional occupations they started in before moving into management: engineering, law architecture, and so on. The decline in managerial ranks creates a surplus of older applicants for professional jobs requiring college degree skills and helps explain some of the difficulty college graduates are having moving into career employment.