Universities, Inequality, and the Overtime Rule
By Ross Eisenbrey, Economic Policy Institute
The U.S. Department of Labor is about to issue a final rule that will increase the number of people entitled to overtime pay when they work more than 40 hours in a week. The rule will simply say, in effect, that if an employee earns less than $50,440 a year (or close to that—we won’t know the final number until the rule is released), she must be paid time and a half when she works more than 40 hours a week, even if she is a salaried employee, and even if her employer calls her a manager, professional, or supervisor.
This is a consequential move, which will improve the lives of many working people in a number of ways. Millions of employees who work long hours will get paid overtime for the first time. Millions of other workers who have been working long hours, at a cost to their health and their families, will have their hours reduced to 40 hours a week. Millions more will get a raise above the threshold, because their employer can continue to avoid paying overtime. And hundreds of thousands of people will get jobs because employers will reduce the hours of some employees to avoid paying overtime and hire additional people to do the work at straight time wages.
Many colleges and universities have complained that they cannot afford it. They don’t want to pay for overtime hours that have been free for years. At a congressional field hearing in March, the University of Michigan’s associate vice president for Human Resources said it would be “cost prohibitive” to raise salaries or pay overtime for post-doctoral researchers and others earning less than $50,000 a year. The coalition of universities and colleges lobbying to weaken the rule suggests a salary threshold “between $29,172 and $40,352” as the point where overtime pay could be denied. The U-M associate vice president went on to conclude that, “The climate for most colleges and universities in the U.S. is one of ongoing financial pressures that would curtail hiring new employees or increasing compensation as a result of these FLSA changes.”
Colleges and universities might be facing financial pressures, but if that is a concern, they should perhaps look at the top of their organization, and not try to prevent hardworking post-docs and social workers from getting a raise. Indeed, the executive who testified against the overtime rule is paid well over $200,000 a year. Here’s a list of the top 20 U-M salaries, constructed by Michigan Live from the university’s database.
- EVP for Medical Affairs & CEO of the U-M Health System, $871,250
- Assistant Coach, $800,000
- Assistant Coach, $800,000
- President, $772,000
- Executive VP for Medical Affairs, $739,025
- CEO of U-M Hospitals and Health Centers, $612,000
- Athletic Director, $600,454
- Chief Investment Officer, $575,000
- Executive VP and Chief Financial Officer, $551,668
- Coach, $500,000 (+$5 million in additional compensation, and a $2 million signing bonus)
- Provost and Executive VP of Academic Affairs, $485,040
- VP for Research, $365,348
- VP for Development, $355,136
- VP and General Counsel, $312,206
- VP for Student Affairs, $301,168
- Chancellor, U-M Dearborn, $290,388
- VP of Government Relations, $278,641
- VP for Global Communications and Strategic Initiatives, $270,000
- VP and Secretary for the University, $262,642
- Chancellor, U-M Flint, $261,375
Can the University of Michigan really not afford to pay their post-docs more? Or not work them more than 40 hours a week? Or do the university executives making these decisions need to rethink their priorities? The hundreds of employees making six-figure salaries could probably more easily live with a 10 percent pay cut than the low-paid PhDs can afford to live on less than $50,000 a year while working 60 hours a week. Some of these workers are making an effective salary of less than $15 an hour despite 11 years or more of undergraduate and graduate education. It’s a poor advertisement for the value of a university education, in my opinion.
Here’s an eloquent example of what the rule means for post-docs, drawn from among the 293,000 comments submitted to the Department of Labor as part of the rulemaking record. It was submitted by a female university scientist named Erin Clark:
I am a 32 year old woman. I knew I wanted to be scientist starting in high school. I spent 13 years of my young adult life in school learning how to be a scientist. I have two B.S. degrees and a PhD. In front of me I face 3-5 more years working as a postdoctoral research fellow. I live in one of the most expensive cities in the US because it has excellent research opportunities and Universities. I typically spend 60 hours a week working in the lab, making discoveries that may lead to new therapies and mentoring the next generation of scientists. My salary is $44,556. To summarize, I went to college, I got a PhD and now I make less than $15 an hour and work in an environment that is constantly pressuring me to work more. How could someone in my situation raise a family? Childcare would be a necessity given the hours I’m expected to work. The average annual childcare costs in my city are more than $16,000. Assuming I were to split the cost with a partner that’s still nearly 20% of my salary.
When I made the choice to dedicate my career to the pursuit of new knowledge with the ultimate goal of helping people through a better understanding of ourselves and our ailments, I did not know I was going to be asked to sacrifice so much of my personal life as well. Postdocs are the engine that drive much of scientific discovery. We deserve to be recognized for our contribution as well as the time and training we put into our careers. A postdoc is exactly the age most other folks in this country are starting their families, buying houses, living the American dream. But, just like so many other middle class folks, that dream is currently unattainable. The Department of Labor regulation regarding overtime pay is a step in the right direction to support the hardworking people who ARE the supports of this country. Postdoctoral researchers deserved to be included in this regulation.
Why do the universities want to pay scientists like Erin Clark $15 an hour while paying any number of associate deans, associate vice presidents, assistant coaches, lawyers, and directors of this and that $200,000-$800,000 a year? Why, exactly, can’t the university afford to pay overtime to its post-doctoral researchers? U-M testified that its post-docs “clearly perform learned and professional work,” yet it wants to pay them wages better suited to fast food workers. It is noteworthy that the National Academy of Sciences’ 2014 report on The Postdoctoral Experience Revisited recommended a minimum salary of $50,000 for postdoctoral researchers, with annual inflation adjustments and higher salaries in high-cost areas:
The NIH should raise the NRSA postdoctoral starting salary to $50,000 (2014 dollars), and adjust it annually for inflation. Postdoctoral salaries should be appropriately higher where regional cost of living, disciplinary norms, and institutional or sector salary scales dictate higher salaries.
I’m not suggesting that the university slash executive salaries—although given how many U-M employees earn such large sums, that is certainly one option. The point is that, given how highly its executives are compensated and how much it’s fighting the rule, U-M’s priorities seem misplaced.
Wages for almost everyone except the executive class in America have been stagnant for decades. (CEO compensation, on the other hand, has increased by almost 1000 percent since 1978.) Colleges and universities have contributed to this growing inequality. Huffington Post recently reported that 93 public college presidents are paid more than the combined income of President Obama and Michelle Obama. Making employers and the executives (even college and university executives) who decide these matters pay skilled employees for their overtime hours is an important step in making sure Americans get paid fairly when they get an education and work hard. When corporations or even universities complain about overtime pay, the first thing we should ask is, “How much do their CEOs and top executives make? Is their very generous compensation coming at the expense of a decent life for their employees?”