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In attacking overtime pay, Trump is hurting his biggest fans
The Trump administration has canceled hundreds of Obama-era regulations since taking power. Now, it's taking aim at the former president's signature piece of labor legislation.
In 1975, Gerald Ford set the income threshold above which employees could be exempt from overtime to around $58,000 in today's dollars, but this number was never updated to reflect inflation or wage growth. That means the number is now $23,660. In May 2016 Obama announced that he was doubling the annual salary threshold to $47,476, effectively giving millions of salaried employees making less than that a raise. Obama's move was hardly radical. In fact, it wasn't even as progressive as Ford's. The new rule would have covered 34 percent of full-time salaried workers in the United States; in the 1970s, 50 percent of them were covered. Nonetheless, according to the Department of Labor (DOL), it was poised to raise wages for an estimated 4.2 million workers.
This modest update was predictably greeted with outrage from GOP lawmakers and business leaders. "This change is another example of the administration being completely divorced from reality and adding more burdens to employers and expecting them to just absorb the impact," said Randy Johnson, the Chamber of Commerce's senior vice president of labor, immigration and employee benefits. Twenty-one state attorneys and dozens of business groups sued to overturn the new rule, and it was blocked on procedural grounds by a federal judge in Texas last November. The Obama administration appealed the decision but was unable to clear up the issue before leaving office. Now the rule's future rests with the anti-labor forces of the Trump administration.
In July, Trump's Labor Department called for public comments on the rule – a first step toward rolling it back or rewriting it. This move comes despite the fact that the Obama administration reviewed 300,000 comments before coming up with its salary threshold number. "The Labor Department's decision to revisit and likely revise the overtime rule is a slap in the face to millions of workers all across America who have waited long enough to be paid fairly for their overtime hours," said National Employment Law Project executive director Christine Owens after the announcement. "Taking away overtime pay is no way to make America great again or benefit working people, as the president had promised in his inaugural address."
Working Unpaid Hours
Eric, a former fast food general manager in Texas who asked to keep his last name private, told Truthout that his company tried to subvert the law before it went into effect by switching multiple salaried employees to an hourly rate and telling them their pay rate would remain the same.
Although he thought the law was needed, he said that his company's goal seemed to be to "find ways around it while being technically in compliance." Eric said that, while salaried, he would make $37,500 while often working 75 hours a week.
Did the rule prompt many businesses to alter how they paid employees, like it did with Eric's? Heidi Shierholz, senior economist and director of policy at the Economic Policy Institute (EPI), told Truthout that there hadn't been a measurable surge in such cases, and also pointed out that businesses weren't exactly being truthful if they were using the rule as a justification for paying workers less.
"A key reason [we haven't seen a surge is because] there is no need to convert people to hourly, even if they are newly overtime eligible," she said. "You don't have to be hourly to collect overtime, salaried workers can get it, too. And the empirical literature on this finds that on net, workers will get higher pay as a result of the rule."
In fact, many businesses seemed to prepare for the overtime rule by giving their employees a raise, assuming they'd be on the hook for more money after the law took effect. PayScale research from 2016 found a considerable drop in the number of workers making less than $47,476. This means some workers can thank the overtime rule for a pay increase even though it never became a reality.
John, an employee at a Maryland research group who also asked to keep his last name private, told Truthout that he works with people who make $44,000 a year but clock considerable amounts of unpaid overtime regularly. During federal contract season, he said it was not uncommon for these employees to work between 50 and 70 hours.
Who Would Have Benefitted From the Overtime Rule the Most?
According to a technical paper produced by EPI months before Trump was elected, the overtime rule would have had an even bigger impact than the DOL assumed. While the DOL assessment estimated that 4.2 million workers would see a raise, EPI thinks the number would have been closer to 12.5 million. That's because, according to the EPI, the DOL relied on statistics from the late 1990s and didn't account for overtime changes that were made by the Bush administration in 2004 – changes that
The Trump administration has canceled hundreds of Obama-era regulations since taking power. Now, it's taking aim at the former president's signature piece of labor legislation.
In 1975, Gerald Ford set the income threshold above which employees could be exempt from overtime to around $58,000 in today's dollars, but this number was never updated to reflect inflation or wage growth. That means the number is now $23,660. In May 2016 Obama announced that he was doubling the annual salary threshold to $47,476, effectively giving millions of salaried employees making less than that a raise. Obama's move was hardly radical. In fact, it wasn't even as progressive as Ford's. The new rule would have covered 34 percent of full-time salaried workers in the United States; in the 1970s, 50 percent of them were covered. Nonetheless, according to the Department of Labor (DOL), it was poised to raise wages for an estimated 4.2 million workers.
This modest update was predictably greeted with outrage from GOP lawmakers and business leaders. "This change is another example of the administration being completely divorced from reality and adding more burdens to employers and expecting them to just absorb the impact," said Randy Johnson, the Chamber of Commerce's senior vice president of labor, immigration and employee benefits. Twenty-one state attorneys and dozens of business groups sued to overturn the new rule, and it was blocked on procedural grounds by a federal judge in Texas last November. The Obama administration appealed the decision but was unable to clear up the issue before leaving office. Now the rule's future rests with the anti-labor forces of the Trump administration.
In July, Trump's Labor Department called for public comments on the rule – a first step toward rolling it back or rewriting it. This move comes despite the fact that the Obama administration reviewed 300,000 comments before coming up with its salary threshold number. "The Labor Department's decision to revisit and likely revise the overtime rule is a slap in the face to millions of workers all across America who have waited long enough to be paid fairly for their overtime hours," said National Employment Law Project executive director Christine Owens after the announcement. "Taking away overtime pay is no way to make America great again or benefit working people, as the president had promised in his inaugural address."
Working Unpaid Hours
Eric, a former fast food general manager in Texas who asked to keep his last name private, told Truthout that his company tried to subvert the law before it went into effect by switching multiple salaried employees to an hourly rate and telling them their pay rate would remain the same.
Although he thought the law was needed, he said that his company's goal seemed to be to "find ways around it while being technically in compliance." Eric said that, while salaried, he would make $37,500 while often working 75 hours a week.
Did the rule prompt many businesses to alter how they paid employees, like it did with Eric's? Heidi Shierholz, senior economist and director of policy at the Economic Policy Institute (EPI), told Truthout that there hadn't been a measurable surge in such cases, and also pointed out that businesses weren't exactly being truthful if they were using the rule as a justification for paying workers less.
"A key reason [we haven't seen a surge is because] there is no need to convert people to hourly, even if they are newly overtime eligible," she said. "You don't have to be hourly to collect overtime, salaried workers can get it, too. And the empirical literature on this finds that on net, workers will get higher pay as a result of the rule."
In fact, many businesses seemed to prepare for the overtime rule by giving their employees a raise, assuming they'd be on the hook for more money after the law took effect. PayScale research from 2016 found a considerable drop in the number of workers making less than $47,476. This means some workers can thank the overtime rule for a pay increase even though it never became a reality.
John, an employee at a Maryland research group who also asked to keep his last name private, told Truthout that he works with people who make $44,000 a year but clock considerable amounts of unpaid overtime regularly. During federal contract season, he said it was not uncommon for these employees to work between 50 and 70 hours.
Who Would Have Benefitted From the Overtime Rule the Most?
According to a technical paper produced by EPI months before Trump was elected, the overtime rule would have had an even bigger impact than the DOL assumed. While the DOL assessment estimated that 4.2 million workers would see a raise, EPI thinks the number would have been closer to 12.5 million. That's because, according to the EPI, the DOL relied on statistics from the late 1990s and didn't account for overtime changes that were made by the Bush administration in 2004 – changes that
