1. POLITICO
http://www.politico.com/story/2015/06/barack-obama-overtime-salary-levels-white-house-118688.html#ixzz3cZ8IWxgi
LABOR
Barack Obama poised to hike wages for millions
The Labor Department could propose arule that would raise the current overtime threshold
– $23,660– to as much as $52,000.
By MARIANNE LEVINE 6/8/15 5:04 AM EDT Updated 6/8/15 11:25 AM EDT
The Obama administration is on the verge ofpossibly doubling the salary levels that would
require employers to pay overtimein the most ambitious government intervention on wages in a
decade. And it doesn’t need Congress’s permission.
As early as this week, the Labor Department could propose a rule that would raisethe current
overtime threshold —$23,660 –to as much as $52,000,extending time and a halfovertime pay
to millions ofAmerican workers. The rule has already come under fire from business and
Republican opponents who say it will kill jobs and force employers to cut hours for salaried
employees.
“The minimum wage they can’t do,”said Bill Samuel, director oflegislative affairs for the AFL-CIO. “This is probably the most
significant step they can take to raise wages for millions ofworkers.”
Congressional Republicans aregearing up for a major battleagainst raising the overtimethreshold. The House Education and
the Workforce subcommitteewill devotemuch ofa scheduled June 10 hearing on federal wage and hour standards to the
overtime rule, even ifit isn’t yet released. Sen. Lamar Alexander, chairman ofthe Senate Health, Education, Laborand Pensions
committee, said the rule—sight unseen—“seems engineered to make it as unappealing as possible to be an employercreating jobs
in this country.”
The business lobby, which is currently battling in two court venues what it calls the National LaborRelations Board’s “ambush
elections rule”streamlining union elections, is likely to devoteat least as many resources to fight the overtime rule. Rand el
Johnson, seniorvice president for labor at the Chamber ofCommerce, warned LaborSecretary Tom Perez in a Feb. 11 letterthat
any changes to existing overtime rules “threaten to upend years ofsettled law, create tremendous confusion, a nd have a
significantly disruptiveeffect on millions ofworkplaces.”
By law, any salaried worker who earns below a threshold set by the Labor Department must receive overtime. The current
threshold of$23,660 lies below the poverty line for a family four. The proposedrule is expected to raise that to somewhere
between $45,000 and $52,000—closer to the median household income—greatly expanding the pool ofAmericans who qualify
for overtime pay.
The overtimethreshold is not indexed to inflation and has been updated only once since 1975. It covers 12 percent ofsalaried
workers. Boosting the threshold to $50,440 would bring it back in line with the 1975 threshold, after inflation. By one
estimate that would give somewhere between five to ten million workers a raise.
Some workers abovethe salary threshold also qualify for overtime pay under current law. But the historic shift from a
manufacturing-based economy to a service economy has reduced their number becausewhite collar workers—definedquite
expansively—are exempt. The forthcoming overtime ruleis expected to tighten up that definition.
Under the current rules, the whitecollar exemption excludes “executive, administrative and professional” employees from
receiving overtimepay, which means, for example, that a secretary will sometimes be ineligiblefor overtimepay. Employers
routinely avoid paying overtimeto lower-wageworkers such as store managers or fast food shift supervisors, and even to some
non-supervisory workers by giving them discrete, only nominally supervisory responsibilities.
“It’s hard to believe thatsomebody making $30,000 is a supervisor,”said Daniel Hamermesh, an economist at th e University of
Texas at Austin, who has done extensiveresearch on overtime. “Atthis point, I don’t think even ourregulations are in line with
the original intent ofthe law.” Hamermesh said raising the threshold was “an absolute no brainer.”
One key concern about expanding overtimeis that it could prompt employers to reducethe numberofhours that individual
employees work to avoidpaying time-and-a-half. McDonald’s, reportedly, already uses its computer system to record the hours
worked by individual fast-food workers,and sends alerts telling franchisees to send this or that worker home when he or she is
about to exceed 40 hours. In many instances reducing employees’ hours worked may endangertheir eligibility for benefits.
Business groups carry that reasoning further, saying the rule will reduceemployment. Aloysius Hogan, a senior fellowat the
conservative Competitive EnterpriseInstitute, said it will have a “job killing effect.”Hogan said businesses will be incent ivized to
lay offhigher-paid executives and replace them with lower-paid workers. The National Retail Federation, a likely leaderin the
battle against expanded overtime, last month issued a study thatcame to a similar conclusion.On its release NRF senior vice
president for GovernorRelations David French said the rule would “hollow out middle -management careers and middle-class
opportunities for millions ofworkers.”
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2. But Hamermesh said that to whatever extent employers reduced hours to avoid overtime the result would be morejob creation,
not less, since someone elsemust hired to perform that work. Jared Bernstein, an economic adviserto Vice PresidentJoe Biden
during President Barack Obama’s first term, added thatfor many workers reduced hours wouldbe a plus:“Their salary is the
same but they havemoretime with their families.”
The Obama administration’s interest in updating overtime rules can be traced to
November 2013,when Bernstein,by then a seniorfellow at the Center on Budget
and Policy Priorities, and Ross Eisenbrey, vice president ofthe Economic Policy
Institute, presented apaper on the subjectto the Labor Department. The following
March President Obama issued a memorandum noting that overtime regulations
“have not kept up with our modern economy” and instructing the Labor department
to draft revisions.
Both Eisenbrey and Bernstein voiced optimism that the administration will have
time to review public comments on the proposed ruleand issue a final rule before
the president leaves office. But that’s not likely to happen without a fight. When
Obama issued his memorandum last year, House Education and the Workforce
Committee Chairman John Kline and subcommitteechairman Tim Walberg issued
a statement saying “executivememos and unilateral actions cannot providethe income security our struggling families need.”
Republicans, they said, had long recognized the need to update the Fair LaborStandards Act, b ut they warned the rule should
not be “just another political distraction from the president’s failed policies.” Ifthe responseto the “ambush elections” r uleis any
guide, there will be litigation against the overtime ruleand at least one attemptby the Republican Congress to block its
implementation.
The fight is already spilling overinto the 2016presidential contest. In announcing his candidacy May 30 formerMarylandGov .
Martin O’Malley called for “overtime pay for overtime work.” Sen. Bernie Sanders did the same in his May 26 kick-offspeech in
Burlington, Vt., calling it a “ scandal” that “millions ofAmerican employees, often earning less than $30,000 a year,work 50 or
60 hours a week—and earn no overtime.”
The Obama administration’s interest
in updating overtime rules can be
traced to November 2013. | AP