President Obama has a plan to give overtime pay to more than 5 million American workers, he announced on Tuesday.
"In this country, a hard day's work deserves a fair day's pay. That's at the heart of what it means to be middle class in America," Obama wrote in an op-ed for the Huffington Post. The president's proposal would give time-and-a-half overtime pay to anyone making $50,440 a year or less — a big increase from the current $23,660. Right now, most salaried workers don't receive any overtime pay, no matter how much they work.
Unlike raising the minimum wage — another pro-middle-class policy the president supports — Obama can enact the change with an executive order. Conservatives and business groups are fiercely opposed to the ruling, which means that it will, like all executive orders (those that, thanks to past legislative decisions, don't require congressional approval), be challenged in court and most likely in Congress.
The proposal already has big support from unions. "This will help to build an economy that honors work, not one that steals from workers. This is the leadership working people expect and deserve," the AFL-CIO wrote last year about the expected proposal.
On the other side, retailers and employer groups have voiced their strong opposition. The National Retail Federation argued the move will lower productivity.
"The administration seems to be under the distorted impression that they can build the middle class by government mandate. Turning managers into rank-and-file hourly workers takes away the career opportunities offered by private-sector entrepreneurs and job creators that are the true path to middle-class success," David French, the federation's senior vice president of government relations, told us.
So, would you now qualify for overtime? If you make up to about $50K a year, maybe. There are, however, a plenty of exemptions. Current overtime law dictates that "white collar" workers including teachers, lawyers, doctors, and judges (and others, like nannies — the full list is here) are not entitled to federal overtime wages; under the new ruling, this will not change.
It's possible that, rather than increase wages, companies will reduce hours to keep employees out of reach of overtime. Politico reports that according to administration aides, employees working fewer hours could lead to job growth, as companies will be forced to make new hires. Nicole Woo, Director of Domestic Policy at the Center for Economic and Policy Research, believes the adjustments will help women — particularly millennial women — no matter what. “A lot of younger women are working these very rough jobs — managing McDonalds, managing the dollar stores and Chipotle. They spend the vast majority of their days making food, running cash registers, stocking shelves, but because they spend a small percentage of their days doing something managerial, they don’t qualify for overtime," Woo told us. If more women qualify for overtime, they will be better compensated for the long hours they work. If their employers decide to cut their hours, they will have more time with their families, and be able to save on costs like childcare, Woo explained. “There are certainly a lot of things we can do to help workers and millennial women, but this is one thing the administration can do without congress, which makes it especially interesting," she said. The president plans to speak further about the proposal on a trip to LaCrosse, Washington, on Thursday.
It's possible that, rather than increase wages, companies will reduce hours to keep employees out of reach of overtime. Politico reports that according to administration aides, employees working fewer hours could lead to job growth, as companies will be forced to make new hires. Nicole Woo, Director of Domestic Policy at the Center for Economic and Policy Research, believes the adjustments will help women — particularly millennial women — no matter what. “A lot of younger women are working these very rough jobs — managing McDonalds, managing the dollar stores and Chipotle. They spend the vast majority of their days making food, running cash registers, stocking shelves, but because they spend a small percentage of their days doing something managerial, they don’t qualify for overtime," Woo told us. If more women qualify for overtime, they will be better compensated for the long hours they work. If their employers decide to cut their hours, they will have more time with their families, and be able to save on costs like childcare, Woo explained. “There are certainly a lot of things we can do to help workers and millennial women, but this is one thing the administration can do without congress, which makes it especially interesting," she said. The president plans to speak further about the proposal on a trip to LaCrosse, Washington, on Thursday.