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Thursday, March 28, 2024 | Back issues
Courthouse News Service Courthouse News Service

Labor Dep’t Expands Overtime Protections

(CN) - President Obama raised the ceiling for overtime pay Wednesday for 12.5 million Americans, a move expected to boost wages by $12 billion over the next 10 years.

"For generations, overtime protections have meant that an honest day's work should get a fair day's pay, and that's helped American workers climb the ladder of success," Obama said in statement this morning. "That's what middle-class economics are all about. But after years of inflation and lobbyists' efforts to weaken overtime protections, that security has eroded for too many families."

At the president's behest, the U.S. Department of Labor issued a rule today that will expand the overtime salary threshold from $23,660 to $47,476 annually.

Set to take effect Dec. 1, 2016, the change is promised to upgrade the incomes of 12.5 million U.S. workers.

It will double the overtime salary threshold, raise the weekly overtime salary threshold to $913 per week and automatically update every three years as mechanism against inflation.

The new rule extends overtime protection to 4.2 million more workers who were not eligible under the previous threshold. Women account for more than half of these workers — 2.3 million or 55.6 percent.

New York City Comptroller Scott Stringer greeted the news today with a report that says the improved overtime protections will put $20 million into 67,000 New Yorker's pockets.

Between 1938 and 1975, the overtime salary threshold rose every five to nine years by Republican presidents (Eisenhower, Nixon and Ford) and Democratic presidents alike (Truman and Kennedy).

Between 1975 and 2004, the overtime threshold saw just one update: in 2004 during the Bush administration, when the threshold was set at $23,660, below the poverty level for a family of four.

A graph by Economic Policy Institute shows hourly compensation increased only 9 percent between 1973 and 2014, while productivity grew 72 percent in the same time period. From 1948 to 1973, workers' pay and economy-wide productivity grew at close to the same rate: 96 percent and 91 percent respectively.

The Department of Labor suggests that, if the 1975 threshold had kept up with inflation, it would be $1,100 per week, 143 percent higher than the existing threshold of $455 per week. As a result, only 7 percent of full-time salaried workers are eligible for overtime pay.

On his way to visit the Columbus, Ohio, headquarters of Jeni's Splendid Ice Cream, where he is expected to discuss the economy, Vice President Joe Biden applauded the news as well.

Biden said he and Obama "have been laser-focused on rebuilding the basic middle-class bargain that used to exist."

"What it comes down to is that if you contribute to the success of the company that employs you, you should get paid fairly for it," Biden added.

"That's the fundamental spirit behind a big change our Administration made today to modernize our overtime rules: Making sure hard work is rewarded with fair pay."

Overtime protection was first established in America in with the Fair Labor Standards Act of 1938.

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