By Susan Dardes and Donna Butchko
On July 6, 2015, the Department of Labor announced that they were proposing a new salary threshold for hourly workers in the United States. What does this mean? In simple numbers, right now if you make less than $23,660 a year you are eligible for overtime pay if you work more than 40 hours a week – regardless of how your employer classifies you (as hourly or salaried). This proposal would raise that minimum to $50,440 by the end of 2016. Not a fortune, but a step in the right direction.
Raising America’s Pay is an Initiative of The Economic Policy Institute (EPI), a nonpartisan, non-profit think tank based in Washington, D.C., which studies economic policies for middle and working class citizens. EPI has determined that this current OT threshold of $23,660 is well below the poverty level for a family of four, but has not been adjusted since 1975. Since then, pay for an hourly worker has leveled off or declined, while compensation for the company CEOs they know as “boss” has risen to obscene rates. In fact, since 1978, CEO pay has risen 90 times faster than worker compensation.
In many companies, when you get promoted to the title of “supervisor” you also move from an hourly pay rate, to salaried. If you make $23,660 as a supervisor you are not eligible for overtime pay, regardless of how many hours you work in a week. That’s equivalent to an hourly wage (for 40 hours a week) of $11.38 an hour. This low overtime threshold means that many salaried employees make less each year than the hourly employees that report to them. Frequently it means that taking the promotion results in a reduction in wages – something not all employees can afford.
The current proposal suggested by the US Department of Labor would mean that a worker could earn that higher amount and still be entitled to overtime pay for their family. Most of these modest income hourly wage earners are hard working mothers, often heads of households. In fact, the majority of them are persons of color, younger workers and those without a college or, worse yet, high school diploma. All in, this increase in overtime levels would affect somewhere between 5 million and 6.1 million workers, who would then be protected under the Fair Labor Standards Act, (FLSA) in that they be paid at least 1.5 times their pay for each hour beyond 40 hours worked.
The website fixovertime.org urges followers of the proposed overtime law to email the Secretary of Labor, Tom Perez, and voice your support. DOL statistics kept since 1975 indicate that 40 years ago, 62% of hourly workers were protected by overtime pay; today, only 8% of those workers are covered. Ironically, productivity hasn’t suffered—people are working harder than ever. It’s time they are rewarded for their efforts.