In a blog post on The Huffington Post Monday night, President Obama announced a plan to expand overtime protections to nearly 5 million workers in 2016:
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But more work lies ahead, if we are to succeed in making sure this recovery reaches all hardworking Americans and their families.
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This week, I’ll head to Wisconsin to discuss my plan to extend overtime protections to nearly 5 million workers in 2016, covering all salaried workers making up to about $50,400 next year. That’s good for workers who want fair pay, and it’s good for business owners who are already paying their employees what they deserve — since those who are doing right by their employees are undercut by competitors who aren’t.
That’s how America should do business. 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.
As president, my top priority is to strengthen the middle class, expand opportunity and grow the economy. That’s why I believe in middle-class economics — the idea that our country does best when everyone gets a fair shot, everyone does their fair share, and everyone plays by the same set of rules. It’s driven me from day one. It’s fueled our American comeback. And it’s at the heart of the fundamental choice our country faces today.
Will we accept an economy where only a few of us do exceptionally well? Or will we push for an economy where every American who works hard can contribute to and benefit from our success?
Will we invest in programs that would help educate our children, maintain our roads and bridges, and train our workers for the high-paying jobs of the future? Or will we cut these programs, and decide to give more to the wealthiest Americans instead?
To me, the answer is clear. Let’s invest in America’s future. Let’s commit to an economy that rewards hard work, generates rising incomes, and allows everyone to share in the prosperity of a growing America. Let’s reverse harmful cuts to vital programs, and instead make the critical investments we need to grow our economy and strengthen the middle class.
That’s what I’ll be talking about this week — this choice, and these priorities.
America is at its best when we look out for one another. We soar when we strive to do better for one another. That’s what I’m focused on and that’s what I’ll fight for every day for the next 18 months.
Let’s get to work.
Details of the overtime proposal were first reported by Bloomberg. Obama Plans to Expand Overtime Eligibility for Millions:
The Obama administration plans to raise the wages of millions of Americans who work more than 40 hours a week by requiring their employers to pay them overtime.
Workers who earn as much as $970 a week would have to be paid overtime even if they’re classified as a manager or professional, based on draft rules to be announced as soon as Tuesday, said an administration official.
Many employees now receiving as little as $455 a week, or $23,660 a year — below the federal poverty line for a family of four — aren’t entitled to overtime pay because they are classified as managers exempt from overtime pay.
The regulations, from the Labor Department, would take effect in 2016, said the official, who asked for anonymity because the plan hasn’t been announced. Workers in retail stores and restaurants are among most likely to be affected.
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The new Labor Department rules would be the broadest action by the administration to bolster middle- and lower-income workers, whose wages have stagnated since the recession. Obama is scheduled to discuss the economy during a trip to La Crosse, Wisconsin, on Thursday.
“You would be hard pressed to find a rule change or an executive order that would reach more middle class workers than this one,” said Jared Bernstein, a former economic adviser to Vice President Joe Biden who is now a senior fellow at the Center for Budget and Policy Priorities.
The median U.S. household income of $54,600 in April was $1,600 short of the amount at the start of the recession in December 2007, according to inflation-adjusted estimates from Sentier Research.
Ross Eisenbrey, vice president of the Economic Policy Institute, a research group partly funded by labor unions, has estimated that the higher salary threshold would expand overtime to as many as 15 million additional workers.
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The 1938 New Deal-era law establishing the federal 40-hour workweek and requiring overtime for additional hours exempts professional, administrative and executive employees.
Labor Department regulations define those categories, in part, through a minimum salary level. The threshold, eroded by inflation, has only been raised once since 1975, a readjustment in 2004 under President George W. Bush that was criticized as too modest by labor unions and some Democrats.
The overtime cutoff covered 8 percent of salaried workers last year, compared with 65 percent in 1975, according to an analysis by Eisenbrey.
The definition of a manager is ambiguous enough under current regulations that restaurant or retail workers who spend most of their time doing manual labor or serving customers can be deemed “executives” exempt from overtime, Eisenbrey said.
The administration official didn’t disclose whether any changes will be proposed to the regulatory definition of a manager, though the Labor Department also is considering tightening that standard.
We’ll know more when the new labor regulations are announced by the president on Thursday.
UPDATE: According to Cronkite News, Expanded overtime rules could reach 100,000 Arizona workers: “The Department of Labor announced plans Tuesday to expand overtime guarantees to about 5 million salaried workers who are not now covered, including an estimated 100,000 white-collar workers in Arizona.”