By: Jason Tran
The Labor Department is looking to soon extend the overtime threshold, allowing more Americans to receive overtime pay–time and a half. The Obama Administration can implement the increase of overtime threshold without Congressional approval.
The current overtime threshold is $23,600 and is not adjusted to inflation. It has only been changed once since 1975. Employers are required to pay employees who make under the current overtime threshold. If a worker makes more than the current overtime threshold, they are eligible to receive overtime pay. A retail supervisor, with a salary above $23,600, could be working 50 hours, but still receive the same salary as if the worker worked 40 hours. This proposal aims to boost living wages of the lower class and pay them more substantially for their contributions.
There are exemptions and exclusions for certain kinds of jobs. White collar jobs are excluded from receiving overtime pay, under current laws. The new proposal also seeks to tighten the definition of the jobs that are excluded. The current laws identify an executive administrator and a secretary in the same category, although a secretary’s salary is usually less.
Republicans and business opponents of the new plan claim the proposal will kill jobs and threaten to reduce working hours in order to avoid paying overtime. Thus, the plan will backfire in its goal of helping the lower class. In response, Democrats believe that the plan will increase unemployment. If an employer reduces a worker’s hours, then they must hire another worker. Under this scenario, jobs will not decrease, but working hours might be cut.
Middle class economics and income inequality are shaping up to be a prominent presence in the 2016 presidential campaign, as Former Maryland Governor Martin O’Malley and Vermont Senator Bernie Sanders have mentioned the issue of overtime pay for the lower class Americans and why it needs to be addressed.