New Overtime Rules Expose Practices that Limit Nonprofit Diversity

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May 31, 2016; New York Times and New York Magazine

The Obama administration’s recent move to make more than 4 million workers eligible for overtime pay has spotlighted assumptions about the benefits of uncompensated overtime for employees and the broader society. Practices central to the business models of many for-profit and nonprofit organizations get defended because they ostensibly serve a greater good. The continuing debate over whether these new rules should stand is giving us an opportunity to debate the supposed merits of paying low salaries to workers expected to work long workweeks.

What the Department of Labor did was raise the threshold under which white collar employees must be paid time-and-a-half for hours worked above 40 per week from $455 to $913 per week (going from $23,660 to $47,476 on an annual basis). These salaried workers perform a range of important tasks for their employers. Those who see the new rules as unwise claim that long hours are essential to their economic viability, that there are non-monetary benefits “earned” by their employees, and the larger society will be harmed if they are forced to curtail or end this practice.

In many fields, these jobs are viewed as paid internships or apprenticeships. Jill Salayi, general manager of Workman, a publishing company, protested the new rules in a letter to the U.S. Department of Labor, writing that the economic burden of paying overtime would result in the firm reducing her employees’ workweeks to comply, depriving them of a learning opportunity. “Less will be asked of them, which means they will not receive sufficient career development or see timely advancement and/or promotions.” Her argument seems to be that these jobs are as much about learning a trade to qualify for a better-paid job in the future as they are ways to earn a living wage.

Many seem to agree. Lowell Peterson, executive director of the Writers Guild of America, East, told the New York Times, “Being a writer’s assistant is often the way people get into the business of writing for a living.” Raelynn Olson, the managing partner of advocacy agency GMMB, which led the team that produced ads for both of Barack Obama’s presidential campaigns, said, “Many of the firm’s senior leaders began their careers in entry-level positions here, including a number of our partners.”

It’s not just for-profit voices arguing the training benefits of these jobs. The “United States Public Interest Research Group…and Judicial Watch…in letters to the Labor Department…argued that the new overtime rule would hamper the mission of training young idealists.”

Nonprofit Quarterly has looked at reactions to the new rules from the nonprofit sector.  Beyond the obvious economic challenges higher costs pose to organizations dependent on philanthropy and government funding for their survival, they are seen as conflicting with their staff’s desire to fulfill their organization’s mission. Long weeks for low salary is what they want because they care about those they serve. Society will be hurt if organizations can no longer allow them to contribute their free labor in this way.

If the trade of experience for low pay is one that actually benefits individual employees who learn on the job and make valuable connections in return, then the larger societal cost should be of concern. If contributing labor to support a mission helps society as a whole, it, too, has a downside. Dayna Evans, writing for New York Magazine, described how these practices contribute to the growing schism between rich and poor in our society:

In creative industries, where doors have historically been closed to people without college degrees and the financial resources to survive on $30,000 salary in cities where rent eats up more than 60 percent of that, this may finally open the doors to people from diverse backgrounds. In January, publishing house Lee and Low found that the industry is 79 percent white and 78 percent cis-woman. Giving overtime pay could allow someone with loans, no savings, and no backup to work in their dream field.

If you are well off enough that you can afford to pay this “tuition” or make a gift of your labor, perhaps you should be able to do so. But should those whose means are more limited be forced to do so or elsewise excluded? Not if this means we will see less diverse workplaces.—Martin Levine

  • Dariel Garner

    If you accept that ends do not justify means, then there can be no excuse for mistreating workers. For the life of me. I cannot see how an NGO can purport a social justice purposing and not fairly support it’s workers. Fairness goes beyond minimum legal mandate.

  • Justin Pollock

    I am very curious about the missing voice of the workers. We know what the employers who will have to appropriately pay people for the work they do are saying. But what do those workers think when told that they will either be paid more for the work they do over 40 hours or only required to work 40 hours to earn the pay they currently get? I bet there is a lot of joy, learning, and professional development that could happen with that time or money without an underlying sense of people being exploited.

  • E. Tramontana

    I know of no workers who want long weeks with poor compensation. Yes, they care about their missions but many can’t continue in the field they love and can’t work a second job due to long hours and low pay. Look at most non-profits mission and they want you to treat the client or audience with respect and dignity. Honor and appreciate the volunteers but paid workers deserve the same respect and ability to make a living and support their families.

    Yes, an entry level position is a way to learn on the job and eventually qualify for better jobs but that doesn’t mean they shouldn’t be compensated. Every employer should invest in the education of its employees. My non-profits budget will take a hit but it is still the right thing to do.

  • Kaitlin Carney

    I know of many young idealistic folks who have been turned away from the nonprofit sector because of labor practices that require low pay for long hours. The PIRG is one of the worst offenders and their leaders should be ashamed of themselves for taking advantage of low income college students for so long. If their model won’t work without exploiting low income laborers maybe they should change their model.

    • I couldn’t agree more, thank you for the insightful comment!

  • Nonprofits should not carry out their missions on the backs of their employees. Period.