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Written by Alida Minkel
on August 25, 2020

Racial disparities in income and wealth are only worsening as a result of the COVID-19-induced economic downturn. While this is extremely important to examine, what often gets overlooked are the disparities in access to resources. Read more to learn why tracking exempt versus non-exempt employees is critical to understanding the inequitable accessibility of resources.


Simply put, exempt versus non-exempt employees refer to those employees covered by the Fair Labor Standards Act (FLSA) versus those who are, well, exempt from the FLSA overtime rules. Exempt employees are salaried and are not eligible for overtime pay or minimum wage whereas non-exempt employees receive hourly wages and are eligible for overtime pay if they work over 40 hours a week.[1]

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According to the 2019 HACR Corporate Inclusion Index (CII) report, 84 percent of all reported Hispanic employees were non-exempt employees. Although having a large number of Hispanic non-exempt employees isn’t problematic in and of itself, Hispanic overrepresentation in this category is concerning because non-exempt jobs do not afford employees with the same benefits or access to leadership positions as exempt jobs, making career advancement significantly more difficult.[2] That is, non-exempt jobs are least likely to pay well, provide health insurance, and to offer job security and advancement. Workers in these positions often times find themselves in an economically precarious state, especially when the economy experiences a downturn.

 

WHAT DOES THIS MEAN FOR HISPANIC WORKERS?

We have already written about industry projections for U.S. Hispanic labor force growth, but it’s important to note that many of these same industries, like hospitality and construction, have been hit especially hard by the effects of the COVID-19 pandemic. According to the Pew Research Center, three sectors – leisure and hospitality, education and health services, and retail trade – account for 59 percent of the total loss in non-farm jobs between February and May 2020.[3] Many jobs within these industries are low-paying, non-exempt jobs. What’s more, Hispanic workers are overrepresented in these industries, meaning they have been bearing much of the brunt of the impacts of the resulting economic crisis. For context, Hispanics comprise 24 percent of people working in the leisure and hospitality industry and a whopping 30.4 percent of those working in construction.[4] When these industries suffer, Hispanics, especially those in non-exempt positions, suffer. To learn more about the effects of the COVID-19 crisis on the U.S. Hispanic community, read our post on the topic.

Tracking non-exempt employees versus exempt employees is crucial to understanding the large gaps in safety nets for many U.S. workers. Racial disparities in income and wealth are only worsening as a result of the COVID-19-induced economic downturn, and as more and more workers rely on access to an increasing number of resources to survive, it’s important to understand which groups lacked access to begin with.

[1] United States Department of Labor. Handy Reference Guide to the Fair Labor Standards Act. Washington, DC: United States Department of Labor.

[2] Lopez, Eric and Roxana Vergara. 2019. 2019 HACR Corporate Inclusion Index. Washington, DC: Hispanic Association on Corporate Responsibility.

[3] Kochhar, Rakesh. 2020. “Hispanic women, immigrants, young adults, those with less education hit hardest by COVID-19 job losses.” Pew Research Center. Retrieved July 9, 2020. (https://www.pewresearch.org/fact-tank/2020/06/09/hispanic-women-immigrants-young-adults-those-with-less-education-hit-hardest-by-covid-19-job-losses/).

[4] United States Bureau of Labor Statistics. 2020. Labor Statistics from the Current Population Survey. Washington, DC: United States Bureau of Labor Statistics.



*Although the terms “Hispanic” and “Latino/a” often have distinct meanings, in this publication we use the terms interchangeably.

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