Overtime overdue

THE Labor Department’s new proposal to update the overtime-pay rules would give millions of US workers a toehold in the middle class. By raising the salary threshold for overtime, which has barely budged since 1975, nearly five million more people would start earning overtime pay, according to White House estimates.

The new rules would also help remedy a severe imbalance in the economy. Since 1979, pay for the median worker has risen only 9 percent, even as worker productivity has grown 64 percent. Theoretically, productivity gains should translate into higher pay, allowing the middle class to grow and prosper. But that hasn’t happened, in large part because many employees are not paid time-and-ahalf when they work more than 40 hours a week.

Under current rules, salaried workers are not eligible for overtime if they earn enough to qualify as executives, professionals or administrators. The proposal would raise the salary threshold that defines those positions. Today, employees can be considered part of the top ranks – and generally ineligible for overtime – once their salary reaches a paltry $455 (R5 570) a week, or $23 660 (R290 000) a year. The new threshold in 2016 would be $970 a week, or $50 440 a year, about where it would be if it had kept pace with inflation over the decades. At or below that level, salaried workers are automatically eligible for overtime. (The current rules for hourly workers would remain intact.)

Some details still need to be worked out. In the coming months, the Labor Department will solicit public comment on how to adjust the new salary threshold so it does not erode all over again.

There will also be blowback from business interests, but their Republican allies in Congress should think twice about backing them up – no party and no politician that opposes the new overtime rules can credibly claim to care about the middle class.