Spotlight Exclusives

Working Overtime: What Do New Federal Rules Mean for Low-Income Employees?

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Last week, President Obama announced a long-anticipated update to labor regulations which would make 5 million more American workers eligible for overtime pay.

Under the new rules, salaried workers earning less than roughly $50,400 annually would be guaranteed time-and-a-half pay for any hours they work beyond 40 each week, and that income threshold would be tied to inflation. The current threshold is $23,600, just below the federal poverty line for a family of four.

In a blog post on The Huffington Post, Obama wrote that “too many Americans are working long days for less pay than they deserve,” and that his proposal would benefit workers and business owners alike.

The new rules, advocates say, will help millions of workers reach the middle class. According to the Economic Policy Institute, about 61 percent of salaried workers were eligible for overtime pay in 1975 — today, that figure is just 8 percent.

“This is an important first step in updating our nation۪s labor practices and will ensure a fairer overtime wage for more workers, including women, low-income people, and people of color,” wrote Nancy Zirkin, director of policy of The Leadership Conference on Civil and Human Rights, in a press release.

But many on the right and in the business community aren’t so sure.

“I believe the most likely effect of this rule will be that firms reduce workers۪ hours to avoid the threshold for having to pay higher overtime rates,” said Aparna Mathur, resident scholar at the American Enterprise Institute, in an analysis of the proposal. “Unfortunately, it appears that this legislation will push us further in that direction with no obvious benefit and very tangible costs.”

Business groups like the U.S. Chamber of Commerce and the National Retail Federation also spoke out against the rule change, arguing that businesses simply can۪t afford to pay overtime to millions more employees, and that low-income workers may simply be fired rather than paid more.

The proposal is far from final — the rule must still be published in the Federal Register for a public comment period, and isn۪’t expected to take effect until 2016. But the debate sparked by the president۪s announcement is a vital one.

The rights and welfare of low-income workers figure to be significant issues in the 2016 presidential campaign, with the minimum wage, immigration reform, and income inequality all high on voters۪ agendas. The president۪s proposal adds yet another wrinkle to that debate. Spotlight will continue to monitor the conversation on these issues as campaigns begin to take shape.

Posted by Adam

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