Hear Ye, Hear Ye: Middle Class Economics Rewarding Hard Work by Restoring Overtime Pay

Overtime Book, 1887. Factory accounts, their principles and practice. Emile Garcke and J. M. Fells

"Of course, nothing helps families make ends meet like higher wages ... We still need to make sure employees get the overtime they've earned."

– President Barack Obama, State of the Union Address, January 20, 2015

Middle class economics means that a hard day's work should lead to a fair day's pay. For much of the past century, a cornerstone of that promise has been the 40-hour workweek. But for decades, industry lobbyists have bottled up efforts to keep these rules up to date, leaving millions of Americans working long hours, and taking them away from their families without the overtime pay that they have earned. Business owners who treat their employees fairly are being undercut by competitors who don't.

Today (June 30, 2015), President Obama announced that the Department of Labor will propose extending overtime pay to nearly 5 million workers. The proposal would guarantee overtime pay to most salaried workers earning less than an estimated $50,440 next year. The number of workers in each state who would be affected by this proposal can be found here.

The salary threshold guarantees overtime for most salaried workers who fall below it, but it is eroded by inflation every year. It has only been updated once since the 1970s, when the Bush Administration published a weak rule with the strong support of industry. Today, the salary threshold remains at $23,660 ($455 per week), which is below the poverty threshold for a family of four, and only 8 percent of full-time salaried workers fall below it.

President Obama directed the Secretary of Labor to update regulations relating to who qualifies for overtime pay so that they once again reflect the intent of the Fair Labor Standards Act, and to simplify the rules so they’re easier for workers and businesses to understand and apply. Following months of extensive consultations with employers, workers, unions, and other stakeholders, the Department of Labor developed a proposal that would:

Raise the threshold under which most salaried workers are guaranteed overtime to equal the 40th percentile of weekly earnings for full-time salaried workers. As proposed, this would raise the salary threshold from $455 a week ($23,660 a year) – below the poverty threshold for a family of four – to a projected level of $970 a week ($50,440 a year) in 2016.
Extend overtime pay and the minimum wage to nearly 5 million workers within the first year of its implementation, of which 56 percent are women and 53 percent have at least a college degree.
Provide greater clarity for millions more workers so they – and their employers – can determine more easily if they should be receiving overtime pay.
Prevent a future erosion of overtime and ensure greater predictability by automatically updating the salary threshold based on inflation or wage growth over time.

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Hear Ye, Hear Ye: Middle Class Economics Rewarding Hard Work by Restoring Overtime Pay

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