Overtime protections as a bridge to living-wage work

In our last blog post on the recently announced changes to the Fair Labor Standards Act (FLSA), we discussed the financial security that a full-time, salaried job with benefits offers to families. Far too many low- and moderate-income Southerners who work full-time, however, do not fully benefit from the increased security of predictable and limited hours. One of the big reasons for this gap is that, until the new changes go into place in December, the intended overtime protections under the FLSA allow some industries to take advantage of outdated regulations, paying poverty-level wages to full-time workers who consistently work above and beyond the 40-hour work week. With the current salary test for exempting an employee from overtime protections ($455 a week in earnings), a single adult with three children is below the poverty line, and well below what it takes to make ends meet.

According to an analysis by the Economic Policy Institute, the groups most likely to benefit from the new overtime rules are predominantly women, workers under age 35, racial and ethnic minorities, and those with lower levels of educational attainment. Below, we examine the trends and current earnings gaps by gender, race, educational attainment, and occupations that are most likely to be affected by the new overtime rules.

FLSA changes in brief

The U.S. Department of Labor issued a final notice of rulemaking that will increase the share and number of workers eligible for overtime protections. Specifically, the ruling increased an outdated salary threshold used to determine eligibility for exemptions from overtime protections: the old threshold of $455 per week (last adjusted in 1975) was updated to a new threshold of $913 per week. The new salary threshold for an overtime-exemption will go into effect on December 1, 2016. In short, a portion of workers that make more than the $455 threshold and less than the $913 threshold will likely get an immediate wage bump. A large percentage of these workers live and work in the South  and are likely to benefit from greater financial security and work-life balance that enables the pursuit of additional postsecondary education or training to meet the requirements for the jobs of the future.

Who is likely to benefit from these new rules? And how does educational attainment factor in?

Women: The gap in median, full-time, salaried weekly earnings for men and women is closing, but the need for progress remains. In 1979, women’s median weekly wages were only 62 percent of their male counterparts; in 2014, that figure was 83 percent. While women now account for a greater proportion of workers in professional occupations, continued growth and representation in occupations that offer a living wage is necessary to close the gender wage gap.Who benefits from new FLSA rules?

Young Adults: Nearly 36 percent of the workforce directly benefiting from the new FLSA rules are in the 16-34 demographic. An even higher share of the group’s salaried workforce is projected to benefit than other age groups: 33 percent of 16-24 year olds and 29 percent of the 25-34 years.Salaried workers benefited from increase in overtime salary threshold

Adults with less than a college education: A postsecondary degree or credential has long been the strongest predictor of securing a full-time, salaried job in today’s modern economy—but when disaggregated by race and gender, the median weekly earnings for full-time salaried workers are either below or barely above the new threshold for blacks, Hispanics, and women. For workers with less than a bachelor’s degree, weekly earnings are well below the new $913 threshold, and for those with less than a high school diploma, right at the 1975 threshold of $455 per week.

Median usual weekly earnings, by educational attainment

As shown in the chart below, adults with some college or no college are disproportionately likely to benefit from the changes to the FLSA. Nearly 62 percent of directly affected workers have some college education or none, and the share of workers by educational attainment is highest among those with at least a high school education (38 percent).Distribution of workers directly affected by changes

Occupations: According to an analysis done by EPI, workers in a set of 13 occupations are most likely to directly benefit from the new changes to the FLSA. Leading the group are two white-collar categories: management, business, and financial occupations; and professional and related occupations. Also on the list is service-sector occupations—a segment of the Southern economy that is growing more rapidly than most.

 

Occupations that benefit from FLSA changes

A family-supporting wage is a critical element of the Infrastructure of Opportunity

Far too little of the South’s current workforce are earning family-supporting wages—a product of policies, funding, and systems that have continued to produce low educational attainment and employment opportunities in the region. The changes to the FLSA and overtime regulations are expected to largely benefit women, people of color, young adults, and those with lower levels of educational attainment. Changing how work is compensated in the South, however, is not a silver bullet for stalled economic mobility in the region. In order for the South to succeed economically, states and communities must prioritize the building blocks of an Infrastructure of Opportunity for their citizens. As the data above suggest, educational attainment is and always has been the best predictor of a family-supporting wage. For those workers who represent the working-poor, the new FLSA changes offer the potential for an immediate wage boost and the potential for the time and flexibility to pursue a valuable certificate or degree to take the next step in their career.

Will They Know What You Overcame? Hamilton, Mobility, and Community Support

The musical Hamilton has taken the nation—and MDC—by storm. Hamilton’s writer, Lin-Manuel Miranda, won a MacArthur “genius grant” last fall and Hamilton artists performed the musical’s opening, “Alexander Hamilton,” at this year’s Grammy Awards. Miranda’s lyrics have infiltrated MDC’s offices, with sayings like “I’m not throwing away my shot” or “Why do you write like you’re running out of time” coming up in random conversations. I’m actually surprised that we’re just getting around to writing about the musical on the State of the South blog.

Maybe the reason Hamilton resonates with me and so many of my MDC colleagues is because deep down it’s a story about mobility. Alexander Hamilton was raised by his single mother in the West Indies. His mother died young, leaving Hamilton to live with a cousin who then died, leaving Hamilton orphaned again. The musical’s opening describes what happened next:

Then a hurricane came, and devastation reigned
Our man saw his future drip, dripping down the drain
Put a pencil to his temple, connected it to his brain,
And he wrote his first refrain, a testament to his pain

 

Well, the word got around, they said, “This kid is insane, man”
Took up a collection just to send him to the mainland
“Get your education, don’t forget from whence you came, and
The world is gonna know your name.

In Ron Chernow’s book, Alexander Hamilton, he discusses how often Hamilton depended on that financial support from his homeland during his early years in America. This community support led Hamilton to King’s College (now Columbia University) and eventually to President George Washington. Hamilton served as Washington’s “right-hand man” during the Revolutionary War and throughout his presidency as secretary of the treasury.

These same themes of community and mobility came up last week in a conversation between President Obama and Misty Copeland, the first African American female principal dancer with the prestigious American Ballet Theatre. They talked about race and success; during the conversation, President Obama talked about when he realized that he’d “arrived” and his relationship with his community:

Obama: I don’t know how it felt for you, but certainly for me, you know probably I burst out onto the national scene with the Democratic Convention speech of 2004. And that was the first time that I had a big national audience. And everybody responded really favorably. And so I got a lot of attention and interviews and magazine pieces and all this stuff. And I still remember telling Michelle and my closest friends, I said I’m not any smarter today than I was last week, right. In some ways, when you struggle for a while, and you’ve had the ability of being an ordinary person and you’ve gone shopping, changed diapers and tried to figure out how to pay the bills and so forth, so that you’re not some overnight success. Then handling some of these issues ends up being easier because you have a better sense of perspective. You don’t sense somehow that this is because I’m just so special, or because I’m so much smarter than that other person. Because in fact you’ve known those other people who are talented and smart and capable. In some ways you got a break, you were lucky. And that, for me at least, keeps me grounded because it reminds me that, you know, for all the blessings and privileges and responsibilities that I’ve gotten, I’m just representing a huge cross-section of people who are talented and capable and supported me getting to where I came from. So that takes a little bit of the edge off. And more importantly, it means that your friends don’t start looking at you and thinking oh, you’re acting kind of like you’re all that, right? And it’s good to have friends who will do that for you. If you start acting weird, they’re like —

 

Copeland: Check you.

 

Obama: Yeah. It’s like what, suddenly you’re some prima ballerina? Please. I remember when—and they’ll remind you of some story. Okay. That’s helpful.

Community support comes in different ways: it can be financial like it was for Alexander Hamilton or to keep you humble like it is for President Obama. The role of a strong community encouraging its youth and young adults cannot be overstated. I know the role my community played in my upbringing. Everyone in my small hometown were my “aunts and uncles,” providing both the financial support and the humility lessons Hamilton and Obama received.

As MDC works to build infrastructures of opportunity in communities throughout the South, we encourage you to think about your role in supporting youth and young adults. Take a moment to look around: I’m sure your community is full of “young, scrappy, and hungry” youth who are not throwing away their shot at success.

 

Poverty, Diversity, and the Preschool Classroom

We are at a critical moment in early education. According to A Better Start: Why Diversity in Preschool Classrooms Matters, the recent surge in early childhood initiatives and the increasing diversity within the population of young children have yet to translate to diversity within the classroom. In order for all children to succeed regardless of race and class, we must see these investments through into the future.

In North Carolina, 14 percent of non-Hispanic white children under 6 live in poverty, compared to 44 percent and 46 percent of black and Hispanic or Latino children (US Census Bureau, 2014 American Community Survey). Even the overall success of investments and efforts to improve early childhood education programming and access has not addressed participation rates and quality of services along the aforementioned lines of economic and racial segregation. More must be done to incorporate diversity and instill equity into learning environments.

Child Pov NC

Source: CLASP calculations of American Community Survey data

Children’s peers are increasingly diverse. As the Center for Public Education explains, “Trends in immigration and birth rates indicate that soon there will be no majority racial or ethnic group in the United States—no one group that makes up more than fifty percent of the total population.” Economic and racial segregation of neighborhoods and schools misrepresents the world these children will grow up in and it begins in U. S. preschools; only 17 percent of children are currently learning in racially and socioeconomically diverse classrooms.

Children, particularly children of color, are aware of—and thus affected by—race as early as age four. At this developmental stage, they ask questions to inform their own behaviors and learn from their environment to understand the way the world works, according to Louise Derman-Sparks. As A Better Start notes, “Children with disparate skills may learn from each other in the daily interactions and play activities that typically characterize the preschool day.” This kind of interaction enriches language and vocabulary development and, according to A Better Start¸ even promotes cross-cultural learning.   That’s why preschool is a significant supplement to the home environment of all children: though incoming math and language skills correlate to socioeconomic status (SES), children from low SES consistently perform better in math and language in the company of higher SES peers. A Better Start explains how classroom diversity can benefit higher SES, white students by reducing the prejudices and social isolation of children by race.

Getting that kind of head start on academic and social learning is a key foundation in an infrastructure of opportunity that works for children from day one. No matter how family demographics, ideologies, and resources may differ, parents share common values for their children. Providing families of all racial and socioeconomic backgrounds access to the same high-quality early childhood education gives those children, full of potential, the opportunity to learn from each other rather than internalizing the “way the world works” through misleading cues like segregation.

MDC recently began work with the Kate B. Charitable Trust as the “activating agency” for Great Expectations, a major community-wide initiative of the Trust that aims to ensure that all young children in Forsyth County—with a special focus on those living in financially-disadvantaged families—meet age-appropriate developmental milestones in their first five years, enter kindergarten ready for school, and leave kindergarten fully ready for learning and life success.

The approach to Great Expectations centers on systems change with a strong commitment to creating ways to elevate the voices of low-SES parents and caregivers and parents/caregivers of color in the conversation about how to improve outcomes for their children. An improved system could increase availability and accessibility of high-quality child care classrooms for all families, regardless of SES and race. As more low-SES children and children of color enroll into childcare, more parents/caregivers will have the opportunity to share their vision for their child’s early education. Everyday experiences like story time and reading assignments could be transformed to show children their potential through stories from and about children from varying lifestyles and cultural backgrounds.

Through interactive exposure to diversity in play and in academic settings, children can turn their natural curiosity and sense of community into tools to form conceptions of equity—as they contextualize their identity with race and class. Doing so at an early age encourages the social responsibility and intuition children need to succeed and value the shared success of their peers—and that is essential to maintaining a productive and equitable society.

Half a Million Halfway There: Young Southerners Not in School or Work

A recent update to the Annie E. Casey Foundation Kids Count Data Book shows that 1.3 million youth ages 16-19 in the U.S. were disconnected from both work and school in 2014. That’s a national disconnection rate of 7 percent. In all Southern states except Virginia, the rate is at the national average or higher:

DisconnectionRateinOlderTeens_LARGE

Source: Kids Count

In total, nearly half a million youth ages 16-19 in the South were disconnected from both work and school in 2014:

DisconnectionRateinOlderTeens_Table

Source: Kids Count

 

U.S. youth disconnection also is higher than average for OECD countries, as shown below.

What’s a NEET, you ask? That’s the UK acronym for young people that are Not in Education, Employment or Training. Wherever you are, a delay in high school graduation, postsecondary study, and employment can have life-long consequences, so national and local governments are investing in a variety of programs to get these youth on track. In the UK, that means apprenticeship grants and wage incentives for businesses that employ young people; sector-based work academies that offer training, work experience, and a guaranteed job interview; funding for local initiatives that support education; and training for these young people. In the South, we see some similar efforts, like the South Carolina Technical College System’s Apprenticeship Carolina initiative; All In Brownsville that is, among other things, increasing the college application rate of the Texas town’s high schoolers; and local partnerships like Made in Durham that are linking educators and employers to help young people stay connected.

But efforts like these are operating in a South that still doesn’t have enough good jobs. Poor labor market opportunities are hitting our young people—particularly our young people of color—the hardest: 27 percent of black 20- to 24-year-olds, and 14 percent of white 20- to 24-year-olds, are unemployed—twice the levels for workers 25 and older. And even if employed, those without education struggle to get ahead: in the South, the median income of high school graduates is $26,500; for people with some college, $32,299; and for four-year graduates, $48,317. All the more reason that we need to build an Infrastructure of Opportunity—the systems that provide pathways to opportunity and re-connection efforts—to ensure access to education, employment, and training for all the young folks on that map.

On the Road: Getting Schooled on Mobility in Guilford County

IMG_2626

A textile installation at the Elsewhere Museum.

Through a partnership with the John M. Belk Endowment, MDC is profiling eight North Carolina communities to learn how they building infrastructure to improve economic conditions in North Carolina and strengthen the systems and supports that boost young people to higher rungs on the economic ladder. We’re looking at mobility, current and emerging living-wage employment opportunities, and patterns of postsecondary persistence. This week, Shun Robertson and I visited Guilford County, a county of half a million people with two large cities, several colleges and universities, and an economy that is undergoing economic restructuring after the loss of a number of manufacturing jobs in the last two decades. While we had enlightening conversations with education leaders, community foundations, workforce partners, and a fascinating trip through Elsewhere Museum, the highlight of our visit was an hour spent at Greensboro’s Walter Hines Page High School.

Page is led and loved by Dr. Patrice Faison, North Carolina’s 2011-12 Principal of the Year. We arrived as the final lunch was ending. Dr. Faison dropped her keys on her desk and said “Do you want to sit or do you want to visit some classrooms?” Despite some lingering anxiety about being in high school, we opted for a tour. As we walked Dr. Faison told us about the demographics of her school—50 percent are eligible for free and reduced lunch; many others are extremely affluent. Forty percent are African American; 40 percent are white. That is, she told us about the school when she wasn’t greeting students—“Hey bae! I love your new haircut. It looks great!—, stopping to hear a student’s good news about getting a job at a local elder care facility, and using her walkie talkie to request that someone pick up scattered paper in a hallway or direct staff that students shouldn’t be allowed to leave lunch time detention for bathroom breaks—“they’re only there for 25 minutes!”

We stopped in four classrooms—a life skills course, an honors math class, an inclusion math class (where two teachers support students with additional academic needs), and an IB English course. No one seemed particularly surprised to see Dr. Faison; she does at least five walk-throughs a day. Outside every door hung a “diploma” that hailed the high school the teacher graduated from—because graduation is the clear expectation at Page. But that’s not the end for these students; we asked them—mostly sophomores and juniors—“where are you headed next?” and the resounding answer was “college!” When we asked what they were going to study, someone inevitably said “math” or “English” to appease the teacher, but we also heard: architecture, engineering, cosmetology, finance, construction, and psychology.

And with a nearly 90 percent graduation rate, most Page students could have a good start on that college and career path, but some are facing severe headwinds in Guilford County. The following chart shows that Guilford County has a higher percentage of students from low-income families than most of North Carolina’s ten largest counties do, and low-income students and black students are much more likely to attend high-poverty schools than their more affluent or white peers:

NC Big 10 School Pov

Source: Urban Institute and Southern Education Foundation

In addition to these equity issues, the Greensboro area has some of the lowest levels of economic mobility in the nation. Ferrel Guillory’s column today for Education NC shines a light on low economic mobility in this state. Greensboro ranked 98th out of the largest 100 U.S. commuting zones:

Top 10 Bottom 10 CZs EdNC

“[O]ur state and city governments have a challenge before them to organize an array of initiatives to give more North Carolinians in the coming-of-age generation an opportunity to pursue the American Dream of doing as well or better than their parents,” says Guillory. “Schools can’t do it all…but schools remain a key component in boosting young people up the social and economic ladder.”

Dr. Faison sees certainly believes Page is a key component in eliminating barriers to economic mobility in her students’ lives. She’s doing what she can to clear the path, from restructuring the budget to create a full-time social work position to counseling parents on how to help their children be ambitious and successful. She says “I feel like we save people, but it can’t wait until high school.” When families are worried about housing and other basic needs, learning becomes even more difficult. Her hope is to continue building a school and community that can respond to the variety of needs that students bring with them to empower young people and their families so they can, as the Page mission statement says, “grow into responsible citizens who are engaged in a global community.”

If you’d like to see photos from our Guilford County visit, check out our Instagram feed.