How might overtime change affect middle class? Look at colleges.
The Obama administration's new overtime rule is intended to help the middle class. That could play out in a big way in higher education, for example, where researchers work long hours for $43,000.聽
The Obama administration's new overtime rule is intended to help the middle class. That could play out in a big way in higher education, for example, where researchers work long hours for $43,000.聽
In Cordelia Running鈥檚 view, she had it better than most.
After graduating with a PhD in food science and nutrition from Purdue University in 2015, Ms. Running wrapped up a one-year postdoctoral research program at Penn State earlier this spring. Purdue has hired her as an assistant professor for the coming year.
鈥淢y PI [principal investigator, or the head of the lab she worked in] was very flexible,鈥 she says. 鈥淪ome would be enraged if you didn鈥檛 spend 80 hours a week in the lab, but mine was a more reasonable human being.鈥
Still, she was typically the first one in and the last one out, and working on weekends was the norm. Like many academics, her schedule varied wildly based on the projects she was working on, but 60-hour workweeks 鈥渨eren鈥檛 uncommon.鈥 Running鈥檚 annual salary, set through a federal grant from the National Institutes of Health, was $42,800, a typical starting salary for academic post docs in science fields.聽
鈥淚 mean, we all have PhDs,鈥 she says. 鈥$40,000 for someone who just spent eight extra years in college鈥o, I don鈥檛 think that鈥檚 even, but that鈥檚 the rule of academia.鈥
That rule, however, is about to change.
On Wednesday, the Obama administration unveiled a long-awaited set of changes regulating overtime pay. The changes will extend overtime rights to a wider range of workers 鈥 especially in fields such as retail and hospitality. Experts have said the overtime rule can have as big an impact on the middle class as minimum wage increases can for lower-income workers.
The overtime rule 鈥済oes to the heart of the defining issue of our time, that is restoring and expanding access to the middle class,鈥 Vice President Joe Biden told reporters Tuesday.
Previously, the threshold was $23,660, or about $455 a week. As of Dec. 1, it will double to $47,476 a year, covering an estimated 33 percent of today鈥檚 salaried workforce, according to the National Employment Law Project. In another change, for the first time, incentives and bonuses can count toward 10 percent of the new salary level. Going forward, the Department of Labor will index the threshold and adjust it every three years.
The administration says the change will impact some 4.2 million Americans in its first year, many of them in low-level retail management and administrative jobs. But it will also provide some relief to tens of thousands of academic researchers like Running.
鈥淧ost docs average about $43,000 a year nationwide,鈥 says Ross Eisenbray, an economist and vice president at the Economic Policy Institute in Washington. 鈥淚f they work 60 hours a week, they effectively make $15 an hour. That鈥檚 what fast food workers are asking for, and these are some of the best-educated Americans.鈥
鈥淯niversities take their work, use it for marketing and grants,鈥 he continues. 鈥淎 whole industry depends on these people, and they are being exploited.鈥
But while the change is being celebrated in many corners of the academic world, university administrators have been less enthusiastic. They argue the pay raise is too abrupt and unwieldy, potentially costing large university systems millions in extra payroll costs. They also say it could have unforeseen negative consequences including lost jobs and higher tuition. 聽What鈥檚 more, they say (and even proponents of the change agree), academic research doesn鈥檛 adhere to a traditional 9 to 5 structure, making keeping track of post doc hours an all but impossible task.聽
Higher learning, lower pay
The National Science Foundation (NSF) estimates there are between 60,000 and 100,000 postdocs working across all academic fields, the majority of them in life sciences. Boston, a hub of biomedical research, has an estimated 8,000 working post docs. Unlike Running, many have research positions that run several years after completing graduate school.
Anke Schennink, who has a PhD in animal science, has been doing postdoctoral research for 4-1/2 years across two positions at the University of California at Davis. She鈥檚 the president of a union that represents about 6,000 post docs in the UC system, and says that many of its members struggle to afford basic living in high-cost areas like Berkeley, San Francisco, and Los Angeles.
鈥淚t really has an impact,鈥 she says 鈥淚t contributes to a lack of women in STEM because few of them can afford childcare on these salaries. Also, a significant proportion of post docs are international, which means you鈥檙e on a work visa, and in many cases your spouse cannot work.鈥
By and large, the research community agrees. In 2014, the National Academies of Science and Engineering, along with the Institute of Medicine, released a report recommending that postdocs working on federally funded biomedical research should make at least $50,000 a year, more in areas with high costs of living. While the new overtime rule 鈥 which was scaled back slightly from the $50,440 proposed last year 鈥 doesn't meet that threshold, it puts postdocs far closer than before.
鈥淲e are losing great postdocs to other careers,鈥 Schennink聽says, and it鈥檚 not hard to see why. Recent PhD graduates with health and engineering fields who forgo post doc programs and move into other areas of the workforce have an average starting salary of $76,000, according to 2010 government data.
Too costly?
Administrators, however, contend the sudden raise in salaries for postdocs and other eligible academic workers, including athletic coaches, librarians, admissions officers, and IT workers, will be an abrupt financial burden. Employers have until December to comply with the new regulations.聽
鈥淲here do they think that money is going to come from?鈥 asks David Armstrong, president of Thomas More College in Crestview Hills, Ky. 鈥淔or someone to say that hundreds of your employees are getting double pay by fiat, that鈥檚 tough. We鈥檙e a small liberal arts school. Let鈥檚 say it鈥檚 10 employees, we won鈥檛 have the budget. I鈥檒l have to increase tuition, and we can鈥檛 have that.鈥
In Florida, the change will affect approximately 6,500 employees and cost the state university system $62 million, according to calculations from Florida International University鈥檚 HR department. Indiana University estimates it will spend between $5 million and $15 million in extra labor costs, depending on how it decides to comply 鈥 either by raising salaries, limiting workers to 40 hours a week, or some combination of both.
Mr. Armstrong argues the rule change could lead to job loss, as well as a dearth of entry-level positions vital for getting people their start in the academic world. 鈥淭hose jobs create a lot of opportunities for young people.鈥 He says he got his start making $20,000 a year, upon graduating law school in 1989, working a patchwork of low-level jobs including residence hall director and assistant football coach. 鈥淚f I have to pay an entry-level person $55,000, I鈥檓 not going to hire one.鈥
聽It鈥檚 a worry echoed in research circles as well. The National Postdoctoral Association favors higher salaries, but said in a comment submitted to the Labor Department that it feared researchers would cut the number of positions or re-classify post docs so they wouldn鈥檛 qualify.
The Obama administration鈥檚 stance is that the overtime threshold has become too low as inflation has increased, and that a substantial bump is necessary to simply catch up. The current overtime threshold is below the poverty line for a family of four.聽 In 1975, 62 percent of salaried workers were eligible for overtime pay. Today, it鈥檚 7 percent. The new overtime rules would cover about 40 percent of the workforce.
Schennink, the union president, says warnings about lost jobs are 鈥渄oomsday scenarios,鈥 because post docs bring valuable grants, prestige, and innovation to universities. Researchers bring the UC system an estimated $6 billion in research grants every year 鈥 a pay increase for the system鈥檚 post docs would make up a small fraction of that.
What鈥檚 more, she points out, hiring levels weren鈥檛 affected when UC post docs unionized and got pay raises in 2010, and recent analysis suggests that post doc openings nationwide have only increased along with salaries.
鈥淚f they鈥檙e having trouble, they need to reexamine their priorities,鈥 says Eisenbray, the EPI economist.聽 鈥淭hey have no problem paying administrators and football coaches six and seven figure salaries. Why are we paying an assistant vice president $300,000 a year and a cancer researcher $15 an hour? They ought to be embarrassed to make that argument.鈥
Other concerns
Even those in favor of post docs getting a raise say it won鈥檛 be a perfect transition. People on both sides of the issue have argued tracking research hours would be a complicated waste of time. 鈥 I don鈥檛 even know how you鈥檇 do it,鈥 Running, the nutrition scientist, muses. 鈥淒o you count sitting on a plane with your laptop open? Do you count writing up a paper at home? You never really 鈥榣eave鈥 research, so that might be more confusing than it鈥檚 worth.鈥
鈥淚t would be an administrative nightmare,鈥 Schennink聽agrees.
Dale Belman, a professor of human resources and economics at Michigan State University, predicts grant-funding institutions like the Department of Energy will simply raise stipends past the overtime limit to avoid that issue. 鈥淚 expect the effects will be modest at best,鈥 he says.
Running also worries that the rules themselves don鈥檛 go far enough. The overtime law has a teaching exemption, which means that adjunct professors who work long hours for low pay and little stability are not protected. Her husband is one of them. 鈥淚 don鈥檛 see the value of protecting some people and not others,鈥 she says.
Still, Schennink聽says it鈥檚 a big step forward for a group that keeps the engine of academia humming. 鈥淚f we can help postdocs afford child care and rent and food, that boosts productivity,鈥 she says. 鈥淚t will lead to better research.鈥澛