A 5-year battle over low-income workers’ pay that began during the Obama presidency ended on Tuesday today when the Trump administration declared victory and blocked overtime wages for 2.8 million workers.
The new rule says that salaried workers earning $35,568 or less qualify for overtime pay for work beyond 40 hours a week. Initially, the eligibility limit was going to be set at more than $47,000.
As a result, a 2016 plan originally intended to provide overtime pay for nearly 5 million more Americans was chiseled so that the outcome is this: 1.3 million workers who will make out, and 2.8 million who will lose out.
In addition, the mandate set forward by the Labor Department blocks annual adjustments that would allow low-level salaried workers to keep up with the cost of living. That is the same tactic used back in 1975, when President Gerald Ford expanded the income-eligibility for overtime but never applied a COLA increase.
Four decades ago, 60 percent of the workforce qualified for time-and-a-half wages. By 2016, OT pay was protected for only about 7 percent. If the 1975 federal requirement had kept pace with the rate of inflation, the current level for qualifying would exceed $55,000 in income.
The 2016 law initiated by the Obama administration would have essentially doubled the threshold, at $47,476, and would have boosted that limit every three years by tying it to average increases in U.S. wage growth.
But major corporations and business groups convinced 21 states to sue the administration before the rule went into effect. A federal judge in Texas invalidated it in 2017 and the updated OT mandate was set aside by Trump a year later.
In Michigan, where an estimated 270,000 workers would have benefited from the change, the new president’s decision to fight the rule was not popular. In a 2018 poll, by a margin of 75-18 percent, Michigan voters supported expanding overtime pay eligibility among salaried workers.
The survey by Lansing-based EPIC-MRA found broad, bipartisan backing for state legislation that would require time-and-a-half overtime pay for those earning up to $47,000 a year.
The business community argues that expanding OT pay to more workers hurts the bottom line and reduces employment. But if boosting OT eligibility hurts job growth, shouldn’t the flip-side indicate that for all those decades when the threshold kept sinking due to inflation it should have helped create more jobs? I wonder how many companies benefiting from the weakened overtime rules of the past 44 years used that advantage – that yearly bonus – to hire more people.