President Obama proposed Tuesday to expand overtime eligibility to salaried workers. Currently, fewer than one in 10 workers qualify, but the proposal would boost that to four in 10.
Under the current rules, salaried workers making more than $23,660 a year are ineligible for overtime pay, under federal law. The White House plan would boost the threshold to any worker making up to $50,440.
The change affects nearly five million workers, according to the Labor Department. The affected workers include those in many sectors, such as law, public relations, professional services, retail and manufacturing, says Ross Eisenbrey of the left-leaning Economic Policy Institute.
Most of the affected workers are women, says labor economist Daniel Hamermesh, emeritus professor at the University of Texas-Austin. He expects employers to respond by partially cutting back overtime hours for affected workers.
The upshot is, labor will get more expensive, he says. And some overworked Americans will work less. The White House bills this change as “middle-class economics.”
“Will this by itself make us walk away smiling and thinking that all is well with the labor market? No,” says Paul Osterman of the MIT Sloane School of Management. “But it’ll contribute to that.”
Correction: The audio version of this story misstated Ross Eisenbrey’s name. The text has been updated. We regret the error.
If you’re a member of your local public radio station, we thank you — because your support helps those stations keep programs like Marketplace on the air. But for Marketplace to continue to grow, we need additional investment from those who care most about what we do: superfans like you.
Your donation — as little as $5 — helps us create more content that matters to you and your community, and to reach more people where they are – whether that’s radio, podcasts or online.
When you contribute directly to Marketplace, you become a partner in that mission: someone who understands that when we all get smarter, everybody wins.