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Restoring Overtime Protection Is a Significant First Step Toward Raising Wages

July 30, 2015

President Obama and the Department of Labor have taken an important first step to ensure that millions more workers receive the overtime pay they deserve. The administration’s proposal would extend overtime protection to at least 7 million additional workers, and possibly many millions more. This is the most significant action the Obama administration can take to raise wages on its own authority and a significant first step toward broad-based wage growth.

The gist of the Obama administration’s proposal is to restore most of the overtime protection that has been lost to inflation since 1975. Specifically, the administration proposes to raise the overtime salary threshold – which is used to determine overtime eligibility – to $50,400 per year, slightly below the level necessary to account for inflation since 1975. The administration also proposes to index the threshold in the future to keep overtime protections from being eroded again.

By the Labor Department’s calculations, the proposal would extend overtime protection to almost five million working people who are not entitled to overtime pay now, plus another two million working people who are entitled to overtime protection now but are being wrongly denied protection by their employers. However, the department’s estimates are extremely conservative, and the number of workers who will be newly entitled to overtime is almost certainly many millions higher. In addition, millions more workers who are already protected currently will also benefit because their overtime rights will be more secure. In one way or another, the proposal will benefit all of the nearly 15 million salaried workers whose earnings are between the current threshold and the proposed threshold.

The administration’s proposal will especially benefit women, blacks, Hispanics, workers under age 35 and workers with lower levels of education. In terms of occupations, it will benefit first-line supervisors of food preparation and serving workers, insurance claims and policy processing clerks, customer service representatives, miscellaneous legal support workers, first-line supervisors of office and administrative support workers, social workers, first-line supervisors of retail sales workers, insurance sales agents, and counselors, among others.

Thanks to the administration’s proposal, millions of workers who are currently not being paid anything for their overtime work will be paid for the first time at a rate of time-and-a-half. This means more money in the pockets of working people, who are more likely to spend their paychecks in the community, generating economic activity. When workers have more money, businesses have more customers and more incentive to hire and invest.

Extending overtime protection will also benefit working people in other ways. Some workers who are currently working excessive hours will be able to work fewer hours and spend more time at home with their families with no reduction in pay. Some unemployed workers will find employment when businesses increase hiring to “spread the work.” Part-time workers will be assigned more hours or be converted to full-time employees. Other workers will get a salary bump above the new threshold. All working people will benefit from stronger wage growth and a stronger economy. These are all good outcomes for working people.

Nevertheless, opponents of higher wages are already mobilizing to weaken or defeat the overtime update. They want to lower the salary threshold below $50,400 and they are demanding more delay so they can run out the clock and prevent the administration’s overtime proposal from ever being implemented.

However, the opponents of higher wages have been able to manipulate the rules and get their way for far too long. This is why working people are having such a hard time providing for their families and our economy is so out of balance. Low wages are holding back our economy and hurting businesses, and we have to raise wages if we want to fix our economy.

In the coming weeks, we will urge the administration to stand strong on its proposal, strengthen it where possible, and not bend to the demands of corporate interests and lose this opportunity to raise wages.

Specifically, we will take the following actions:

  • Encourage individuals to send comments to the Labor Department in support of restoring overtime protections during the 60-day comment period ending September 4, 2015.
  • Ask the Labor Department to increase the overtime salary threshold to more than $970 per week ($50,440 per year).
  • Ask the Labor Department to ensure that workers with earnings above the threshold who spend more than 50 percent of their time performing non-exempt duties cannot be exempted from overtime protection.
  • Oppose extension of the 60-day comment period. 
  • Oppose appropriations riders or any other legislation that would delay or deny funding for implementation of the administration’s overtime proposal.
  • Organize a public education and mobilization campaign to develop a simple narrative about the importance of overtime and maintain the campaign through the fall.
  • Activate Working America’s infrastructure to promote the overtime campaign.

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