Greg Sargent Nails the Key Points on the OT Debate

January 7th, 2015 at 7:42 am

If you want to get caught up on an issue I’ve often featured in these parts–the White House’s proposed rule to increase the salary threshold for overtime pay–then read Greg Sargent’s column in the WaPo.

The administration, to their lasting credit, recognized that updating this threshold (the salary level under which salaried workers get time-and-a-half) from its current level of less than $25K/year, was an important way to help middle-class workers. Ross Eisenbrey (who, I guess I should mention, single-handedly beat my team in basketball the other night) and I give you the details here.

We suggest a threshold slightly north of $50K (and then indexed to inflation) based on a variety of criteria that you can see for yourself. For one, it’s the 1975 threshold, which we thought made sense, updated for inflation. But more to the point, from what we could tell–and I’ll admit this isn’t physics–this salary level comported with jobs that held the types of duties, tasks, and responsibilities that the OT rules were intended to cover.

But as Greg points out, despite the fact that a group a Senators wrote the administration endorsing a similar level to the Ross and I endorsed, there are rumors that the White House may come in a lot lower, at around $42K.

The differences here matter — a lot. According to the EPI, raising the threshold from its current level to a sum in the neighborhood of what the liberal Senators want could mean higher overtime pay for at least 2.6 million more people than raising it to $42,000, the amount the Obama administration is supposedly eying.

He also write this, with which I strongly concur:

In fairness, we don’t know where the administration will set the threshold. It is expected to announce its preliminary decision in February, whereupon there will be a public comment period, followed by a final decision sometime later. During that period, the administration may release its economic rationale for its decision, and liberal economists may scrutinize it to see if it is needlessly constraining or too inclined to see an ambitiously-set threshold as a threat to businesses. That period will also offer an occasion for liberals to lobby for a higher bar.

Please stay tuned to this one. The American middle class might need your help!

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One comment in reply to "Greg Sargent Nails the Key Points on the OT Debate"

  1. Fred Donaldson says:

    There is a side benefit to increasing the exempt threshold, which now allows employers to work the “exempted” ridiculous hours – in some cases 2 or 3 hours extra every day on average, plus often weekend hours. It’s no picnic now for so-called professional workers, who earn just above the $23,660 mark, and whose real remuneration without overtime can be scandalously low.

    Gaming the system is easy. Promoting an hourly worker to supervisor of a department and giving them a $1 an hour raise, and an extra ten hours of work each week, nets them $40. That works out to $4 an hour. quite a bargain for the employer and very unfair to the employee.

    For example, a $500 a week exempt salary level works out to $12.50 an hour. If you hired a non-exempt worker at $400 a week ($10 an hour), it would require only 7.5 hours of overtime pay to exceed the $500 a week exempt employee. The exempt employee in this case, working at a lower hourly rate, makes more money for the some total hours than the exempt employee, who is paid more base salary, but less in total remuneration, saving the company money and encouraging the hiring of more exempt and fewer non-exempt employees to do the same job.

    What will happen if the threshold is raised? Progressive companies will markedly push up the wages of “exempt” employees to the new threshold, insuring a substantial raise for everyone, and the non-progressive employers will be forced by law to follow suit. This could be a massive benefit to the middle class lifestyle for many employees, who now work too long for too little to benefit too few..