Some managers could see raise if U. S. rule is changed
WASHINGTON — President Obama is preparing to do what the U. S. economic recovery has been slow to accomplish: raise the wages of millions of Americans.
His administration is drafting new rules on who qualifies for overtime compensation, forcing more businesses to pay time- and- a- half after 40 hours of work. Many employees now earning as little as $ 23,660 a year — below the federal poverty line for a family of four — aren’t entitled to overtime pay because they are considered managers.
While Republicans in Congress have blocked proposals to raise the minimum wage, Obama can change the overtime rules through executive authority. Some officials at the Department of Labor are urging the president to lift the threshold as high as $ 51,000 before someone could be called an executive exempt from overtime. A group of 26 Democratic senators has asked him to push it even higher, to $ 56,680.
“This is absolutely one of the best practical ways to give people the on- ramp to the middle class,” said Sen. Sherrod Brown, D- Ohio. “When you strip people of their overtime pay, which is what’s happened over the years, they really don’t have a chance to get ahead: They’re working harder and harder and not seeing real pay increases.”
Opponents argue that pushing the level too high could force fastfood restaurants, retailers and other enterprises to cut employment or even go out of business.
Sen. Lamar Alexander, R- Tenn., who chairs the Senate Labor Committee, condemned Obama’s anticipated action as part of an economic strategy seemingly “engineered to make it as unappealing as possible to be an employer creating jobs in this country.”
Business lobbyists argue that changing the rules might prompt employers to rethink their supervisory structures, reducing flexibility for managers to directly serve customers and cutting entry- level management jobs.
“It’s likely you would see fewer managers and assistant managers and more hourly workers,” said David French, senior vice president of government relations for the National Retail Federation. “Fewer slots for restaurant managers would limit career advancement.”
The current overtime cutoff salary of $ 23,660 now only covers 11 percent of salaried workers compared with 65 percent in 1975, according to an analysis by Ross Eisenbrey, vice president of the Economic Policy Institute, a research group partly funded by labor unions.
Within the administration, officials have discussed a range of possible overtime thresholds. A $ 51,000 trigger favored by some Labor Department officials would cover an additional 6 million workers, said a person familiar with the internal discussions.
But some on the White House economic team have expressed concern that too sharp a shift could be disruptive to employers and endanger the economy’s recent strong job growth, the person said, adding that there is also a push to index the level to inflation.
An increase in the salary threshold to $ 51,168 would bring it back up to the inflationadjusted equivalent of the level set in 1975 under Republican President Gerald Ford. Eisenbrey estimates that would cover about half of today’s salaried workers.