Labor Department may extend overtime to more workers

Gigi Douban Jun 10, 2015
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Labor Department may extend overtime to more workers

Gigi Douban Jun 10, 2015
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As early as this week, the Labor Department will consider updating overtime laws. Currently, salaried workers are eligible for overtime only if they are paid less than $23,660 a year, or $455 a week. The new rules would bump that threshold to as much as $52,000.

The new rules would affect workers with low salaries who now put in long hours with no overtime. Arindrajit Dube, associate professor of economics at the University of Massachusetts Amherst, points to the example of a shift supervisor at McDonald’s.

“She is hardly someone we think of as an executive employee, but the law does not require McDonald’s to pay her overtime even if she works 50 hours a week,” he says.

Dube says what seems like a huge jump in the overtime threshold simply brings things up to 1975 standards, adjusting for inflation. The effect?

“We’re talking about as many as 10 million workers getting a raise,” Dube says.

A National Retail Federation report says the change could cost businesses $5 billion a year. But Stephen Trejo, economics professor at the University of Texas at Austin, says employers will make adjustments, like cutting straight-time pay.

“There’s not going to be pressure on firms to raise their wages,” he says. 

He adds that workers might be better off in the short term, but it might just even out in the long term.

 

 

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