What happens to worker pay, benefits under Trump?
By Paul Davidson
America’s workers have made significant strides in recent years, with many states, cities and companies raising the minimum wage or guaranteeing benefits such as paid family leave. The Obama administration, meanwhile, has expanded overtime pay and bolstered employees’ legal rights.
Worker advocates trace the advances to growing public awareness of the divide between low- and middle-class workers and the wealthy.
Yet Donald Trump’s victory in the presidential race is raising the prospect that the federal initiatives will be dialed back and that state and local efforts won’t spur national laws anytime soon. Although Trump has proposed some new employee benefits, worker groups have criticized them as limited. And his choice for Labor secretary, fast-food executive Andy Puzder, has opposed efforts to raise the minimum wage and increase overtime.
“He has selected somebody … who has shown a great disdain for workers,” says Judy Conti, federal advocacy coordinator for the National Employment Law Project, which supports workers’ rights.
But Robert Cresanti, head of the International Franchise Association, called Puzder “an incredibly caring CEO” who could be open to compromise. He acknowledged, however, that the pendulum is likely to swing back toward employers, at least at the federal level. “We’ve been very much out of balance the last eight years,” he says, adding that constraints on businesses have curtailed franchise openings and hiring.
At the same time, more states, cities and businesses are likely to try to fill the national gaps by championing higher pay and benefits. Here’s a rundown of what lies ahead in 2017:
THE MINIMUM WAGE
A wave of minimum-wage increases has marked the biggest success of a spreading low-paid worker movement. Last year, seven states—Arizona, California, Colorado, Maine, New York, Oregon and Washington—approved gradual hikes in their minimum wages to $12 to $15 an hour through legislation or ballot initiatives, according to NELP.
Each of those states, except Oregon, will take the first step in that climb on New Year’s Day, joining six others that are in the midst of a multiyear increase and seven more bumping pay floors through cost-of-living indexing.
Later in 2017, Maryland, Oregon and Nevada will lift their pay floors, as will 16 cities and counties. And eight more states—New Jersey, Vermont, Massachusetts, Connecticut, Rhode Island, New Hampshire, Ohio and Pennsylvania—will consider further increases in their bases to $15 an hour.
All told, 29 states, with 60% of the U.S. workforce, now have minimum wages higher than the federal government’s base of $7.25 an hour. Yet NELP’s Conti says a boost in the federal pay floor is still needed, noting the 21 states stuck at $7.25 continue to fall further behind the rest of the country and are not weighing increases next year.
But Michael Saltsman, research director for the Employment Policies Institute, which is backed by the restaurant industry, says the higher minimums have led to the loss of hundreds of jobs in California alone as restaurants close or lay off workers to offset the higher costs.
Legislation to raise the federal minimum to $10.10 an hour has been blocked by Republicans in Congress. Trump has said he supports such an increase but wants to leave it to the states. . Puzder has opposed raising the federal minimum, but earlier this year indicated he was open to lifting it “rationally,” though he didn’t specify what that meant.
Noah Finkel, a wage-and-hour attorney at Seyfarth Shaw, believes Puzder could support an increase to about $10 an hour, noting that’s well below the $15 target of states such as California and New York. But Congress would have to pass any hike.
Last May, the Labor Department released a new rule nearly doubling the threshold at which executive, administrative and professional employees are exempt from overtime pay to $47,476 from $23,660. It was expected to make 4.2 million workers newly eligible for time-and-a-half wages for each hour they put in beyond 40 a week.
But last month, a federal judge in Texas blocked the rule from taking effect Dec. 1 as scheduled while he considers a broader challenge to the requirement. Many experts expect the judge to overturn the mandate. And while Labor has appealed the judge’s order, Puzder could well drop the appeal when he takes office, Finkel says.
But, he adds, “In some ways, it’s too late.” Many businesses already have increased managers’ salaries to the $47,476 threshold to avoid paying overtime or converted salaried staffers to hourly employees so their hours can be tracked for overtime. They’re unlikely to reverse course, Finkel says.
Cresanti says the franchise industry oppose the higher salary threshold because it will increase labor costs and eliminate jobs. But he says Puzder, currently a member of the franchise association’s board, could fashion a middle ground that hikes the salary threshold less dramatically, making fewer employees eligible for overtime pay.
THE JOINT EMPLOYER RULE
Last year, the National Labor Relations Board issued a watershed decision that could hold companies responsible for the labor practices of their contractors, staffing firms and franchisees. The board said Browning-Ferris, the waste management firm, had “indirect” control of the employees of a contractor, Leadpoint, because it set a ceiling on wages for certain workers.
Cheering the ruling were fast-food workers and unions who have argued McDonald’s is a joint employer of workers at its franchisees and so should have to negotiate with the chain’s employees across the country if they want to form a union. A separate complaint the NLRB is reviewing aims to hold McDonald’s, the parent company, responsible for discrimination against franchisees’ employees that took part in fast-food worker protests.
Conti says many franchisees can’t afford to pay damages in lawsuits while McDonald’s has deep pockets. And franchisors like McDonald’s so control “how (franchisees) serve it, how you make it … and prices” that they effectively are co-employers.
Cresanti, however, says franchisors “do not hire employees … do not fire employees and don’t set the hours of employees.” Under the ruling, he says, franchisors unfairly could be liable for labor, safety and other violations of franchisees, while the added costs would be passed to franchisees in higher licensing fees.
“This, for us, is crippling,” he says.
Puzder has opposed the joint employer label, which still must be affirmed by courts. But the NLRB is likely to remain under Democratic control until member terms expire by 2018, and Trump can appoint Republican replacements who likely would reverse the ruling. As a result, Cresanti is asking Congress to pass legislation to do so.
PAID FAMILY LEAVE
Momentum has been building for paid family leave, which allows employees—both mothers and fathers—to care for a newborn, a newly adopted child or a seriously ill relative for six or more weeks. A federal law has guaranteed workers unpaid leave for up to 12 weeks since 1993.
Three states offer paid family leave—California, New Jersey and Rhode Island—and New York earlier this year approved 12 weeks of leave that will be phased in in 2018. About a dozen states are considering such programs. Washington, D.C., recently approved up to eight weeks of paid parental leave.
The initiatives generally are funded by employee-paid payroll taxes, except for Washington D.C.’s, which is paid by employers.
“It’s about knowing you’re not going to lose your wages or a job because you’re being a good family member or a good parent,” says Liz Ben-Ishai, senior policy analyst for the Center for Law and Social Policy.
The nation’s blue-chip companies are also stepping up, with more than 50 announcing new or expanded leave policies the past two years, including Bank of America, Coca-Cola, and Amazon. This month, programs were expanded by American Express for up to 20 weeks and IKEA for up to four months.
A federal bill was blocked by Republicans in Congress three years ago. And so the U.S. is the only industrialized country without a national paid-family-leave program, according to the Pew Charitable Trusts. Trump has called for six weeks of maternity leave. But Ben-Ishai says that would encourage employers to discriminate against women in hiring and fails to recognize shared child care between parents.
Jack Mozloom, spokesman for the National Federation of Independent Business, says the programs are burdensome for many small businesses who don’t have the staffs to cope with the lost manpower.
PAID SICK LEAVE
Surprisingly, 36% of private-sector workers don’t get paid sick time, according to the National Partnership for Women and Families. Most are low-wage, hourly workers.
“If they are sick and miss a day or two, it might mean not feeding their families or paying rent,” Conti says.
Five states mandate paid sick leave — California, Oregon, Connecticut, Massachusetts and Vermont. Arizona and Washington state approved ballot measures this year.
But the prospects for a federal law are dim, Ben-Ishai says, with Republicans blocking recent proposals in Congress.
Saltsman, of the Employment Policies Institute, cites a study showing employers who offer paid sick time often reduce other benefits or cut hours, particularly for younger, low-paid workers.
SUBSIDIZING CHILD CARE
Trump has proposed allowing parents to deduct child care expenses from their income taxes. Lynette Fraga, head of Child Care Aware, says he “has opened the door” to the issue but a tax deduction would favor higher-income households.
It would be more effective, she says, to increase funding for child care for low-income and working families through a block grant program. That program currently provides assistance to just one of 10 eligible children, according to the National Association for the Education of Young Children.