WASHINGTON—Union leaders cheered—and corporate-backed congressional Republicans slammed—three new Biden administration decisions to help workers and consumers.
With deadlines for announcing new federal rules looming, the Labor Department issued two. One orders investment managers for pension plans to put recipients, not themselves, as the top priority. The other raises to $58,656 annually on January 1 the amount of money a worker can earn before becoming ineligible for overtime pay.
“Expansion of the federal overtime rule will help millions more workers earn the pay they deserve,” said AFSCME President Lee Saunders. “Some public service workers–including those in child welfare, mental health, and substance abuse counseling–have been ineligible for overtime pay despite modest wages and the long hours they put in at essential jobs,” he explained.
And the Federal Trade Commission banned new non-compete agreements nationwide, with exceptions only for existing non-competes for senior executives. And when those agreements lapse, even their successors will be free from non-competes, FTC Chair Lena Khan announced.
The end of the non-competes will aid at least 30% of all workers—even workers as ill-paid as fast food servers—Khan said. It’ll let them switch jobs to get higher pay without fear of being sued by former bosses. Non-competes now reduce workers’ value to prospective employers and hamper job hunts.
FTC calculated the end of non-competes will, over time, put an additional $53.29 billion into 101 million workers’ pockets. That’s not counting California, Minnesota, Oklahoma, and North Dakota for which estimates were not reported.
Not only that, but the Biden administration announced, after a White House roundtable which included five union leaders, that public pension funds holding more than $1 trillion in assets, combined, will follow pro-worker rules, including company neutrality in union organizing drives, when deciding where to invest their money.
The overtime rule will have the most immediate impact, the government calculates, with another four million workers added to the eligibility rolls starting July 1. The annual salary threshold for cutting off eligibility for overtime pay will increase to $43,888 that day and to $58,656 on Jan. 1, 2025, DOL said.
The Republican Trump regime slightly raised the threshold in 2019 to its current $35,568. After the second Biden hike, the overtime pay threshold will be tied to inflation and raised every three years.
Biden’s DOL is also tightening up the definition of which workers are “executive, administrative or professional” and thus not covered by the overtime pay rule, no matter how much—or how little—they earned. Under prior Republican regimes, even low-level workers, such as newspaper editorial assistants, were “professionals” and thus couldn’t get overtime pay.
“The Department of Labor is ensuring lower-paid salaried workers receive their hard-earned pay or get much time back with their families,” said Wage and Hour Administrator Jessica Looman. “This rule establishes clear, predictable guidance for employers on how to pay employees for overtime hours and provides more economic security to the millions of people working long hours without overtime pay.”
“This rule will fix those loopholes, so more people who spent their careers supporting their communities will now be in a better position to support their families. It will also help us retain more passionate and qualified individuals in public service. It’s a win-win,” AFSCME’s Saunders added.
Curbing pension fiduciaries drew high praise from the leaders of both teachers’ unions, and high flak from Sen. Bill Cassidy, the top Senate Labor Committee Republican, and from House Education and the Workforce Committee Chair Virginia Foxx, R-N.C., a notorious hater of workers and unions.
Glad to be there
“I am glad to be at the @WhiteHouse today to lift up the importance of pensions, in the private sector as well as public–and to acknowledge the tremendous work @JoeBiden’s administration has done to protect pensions and support working people!” said National Education Association President Becky Pringle, who also attended the White House session on priorities for investing pension funds
AFT President Randi Weingarten, AFL-CIO President Liz Shuler, Fire Fighters President Ed Kelly, and North America’s Building Trades President Sean McGarvey–who took time out from his group’s legislative conference in D.C.—also attended the White House session. Democratic President Joe Biden later addressed the building trades delegates.
“Every American deserves the right to retire with security, dignity, and grace, but far too often their financial future is jeopardized by advisers who put their own interests above those of their clients,” Weingarten, a New York City civics teacher, said of the new fiduciary rule’s limits on “advisers.”
“The result is billions of dollars in retirement income lining the pockets of those who should be dispensing sound, long-term advice, but who instead pursue high-cost, high-fee, risky investments that generate poor returns. Money that could be growing retirees’ nest eggs is lost forever—and it is middle-class savers who are punished the most.
“That charade stops today. This new rule clarifies and crystallizes the definition of a fiduciary, closes the loopholes, and exposes the opaque compensation models that allowed this bogus advice to spread. And it will help alleviate the nation’s retirement crisis that has resulted in nearly 50 million people financially struggling or at risk of economic insecurity as they age.”
Acting Labor Secretary Julie Su said the new fiduciary rule, which takes effect in late September, protects workers, their families, and unions “from improper investment recommendations and harmful conflicts of interest. Retirement investors can now trust that their investment advice provider is working in their best interest and helping to make unbiased decisions.”
DOL’s Employee Benefits and Security Administration, which will enforce the new fiduciary rule said the need for it is very simple: “The previous definition was from 1975 and didn’t work in today’s marketplace. Investors who are making decisions for their retirement accounts expect advice to be in their best interest—so, it should be.”
By contrast, worker-hater Rep. Foxx called the new rule “shameful,” and pointed out that federal courts bounced a similar Obama administration predecessor. She also alleged it “infringes on the jurisdiction of state regulators,” conveniently overlooking that the financial lobby is adept at capturing those regulators.
And Louisianan Cassidy, the Senate Labor Committee’s top Republican, slammed the new fiduciary rule by charging—based on industry data—that it would hurt low- and middle-income people because the investment advisers would limit their choices for investing their pensions.
“The Biden administration’s priority should be making it easier for Americans to invest for a secure retirement. Instead, this policy imposes burdensome regulations that restrict investing opportunities,” he proclaimed—overlooking the fact that many people lack spare cash to invest.
“Americans should be encouraged to save by, among other things, minimizing hassle. This is whether they are saving for retirement, a child’s education, or for the unexpected life event,” said Cassidy.
Left unsaid: OpenSecrets.org, which tracks D.C. influence, reports investment firms have been Cassidy’s #2 source of campaign cash during the last five years, with a total of $1.81 million, almost all of it from corporate political committees, not individual big donors.
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