President Barack Obama announced in a statement yesterday that he would be directing Tom Perez, the Secretary of Labor, to improve overtime pay labor regulations as part of his “year of action.” It is expected that the salary threshold for overtime pay will be raised, among other changes.
“If you go above and beyond to help your employer and your economy succeed, then you should share a little bit in that success,” Obama said in his remarks yesterday.
Under the current rules, any worker making more than $455 per week or $23,660 per year is not eligible for overtime pay, a threshold that has not been significantly changed since 1975. The Economic Policy Institute estimates that if the threshold is raised to $970 per week or $50,440 per year – what the threshold would be if it had been adjusted for inflation – around 10 million workers would receive overtime pay for working more than 40 hours a week.
In addition, any workers classified as executive, administrative, or professional under the “white-collar exemption” can currently be denied overtime pay, usually time-and-a-half, if they work more than 40 hours per week. An executive title can be applied to someone even if they oversee people for only a small percentage of their job, such as fast-food shift supervisors or convenience store managers.
The changes could significantly improve the economy and boost income for 10 million Americans, especially lower-income people. ThinkProgress also reports that it has the potential to reduce the standard workweek. Many Americans work 50 hours or more a week without overtime, so businesses may cap their hours or hire more people rather than pay them more.
The Obama administration has focused on labor protections and improvements in the past few months. Last September, the DOL expanded labor protections for home care workers. In February, Obama issued an executive order increasing the minimum wage for federal contractors from $7.25 to $10.10, and he is pushing Congress to raise the federal minimum wage for all Americans. The White House also released charts yesterday detailing women’s participation in the workforce and ways to reduce the gender wage gap.
“We need to fix the system so folks working hard are getting compensated fairly,” said Cecilia Munoz, the director of the White House Domestic Policy Council.
Media Resources: The White House 3/12/14; ThinkProgress 3/12/14; The New York Times 3/11/14; The Washington Post 3/12/14; Bloomberg 3/12/14; The Economic Policy Institute 3/12/14; Feminist Newswire 9/18/13, 1/29/14, 2/14/14