5 Million Americans Might Finally Get Extra Overtime Pay
President Obama is working hard to ensure that hard work is justly rewarded.
Earlier this month, his Labor Department sent to the Office of Management and Budget (OMB) a proposal to significantly expand the number of workers for whom overtime pay would be a federal mandate, not a corporate whim.
OMB has 90 days to analyze the costs and benefits of the proposal, then the Labor Department can disclose the final rule and implement it.
The federal overtime threshold is pathetically low. It is $455 per week. That is $23,660 a year, less than the poverty threshold for a family of four. What that means is that a fast food restaurant can pay a fry cook $23,665 a year, classify him as administrative chief fry cook, work him 60 hours a week and deny him a penny of extra pay, let alone overtime pay for those extra 20 hours. That’s exactly what’s happening across America. And it’s part of the reason wages are flat for working people.
In 1975, the Ford administration raised the salary threshold, though not enough to fully account for losses due to inflation. For the next 29 years, presidents refused to increase the threshold, even as inflation further eroded the value of the salary cut off. The Bush administration made a tiny adjustment a decade ago to the current inadequate level.
As the value of the overtime threshold diminished, the number of salaried workers covered by the federal overtime pay requirement fell from 12 million in 1979 to 2.5 million in 2014.
Now, President Obama is trying to reverse that. And to make sure this sad situation doesn’t happen again, Labor Secretary Thomas Perez has called for updating the annual threshold automatically, by pegging it to inflation or to the 40th percentile of earnings of full-time salaried workers.
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