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“Who Gets Overtime Pay”: The Next Policy To Help The Middle Class That Republicans Will Oppose

Lately, Democrats have been searching for new ways to appeal to working class and middle class voters on economic issues. They know their basic economic perspective is popular, but they worry that the few specific policies they advocate, like increasing the minimum wage, don’t touch enough people’s lives. They also worry about being seen as advocates for the poor but not the middle class. So they’re looking for ideas.

But there’s one policy change already in the pipeline that looks as though it could be the next big Democratic economic push. It’s got everything: the potential to affect millions, guaranteed opposition from business groups, and the specter of another executive action from President Obama. That last point means that the change can be made as soon as the administration wants, and that Republicans will be apoplectic when it happens.

It’s about who gets overtime pay, which has all but disappeared from American workers’ paychecks. But maybe not for long.

A little background: Under the Fair Labor Standards Act, workers are supposed to be paid overtime (time and a half) if they work more than 40 hours a week. That doesn’t apply to executives and managers, or workers whose salaries exceed a certain threshold. The threshold is what’s at issue; it has only been raised once since 1975. The current threshold is $455 a week, or $23,660 a year — under the poverty level for a family of four. If you make more than that, you’re ineligible for overtime pay. Today only around one in ten American workers is eligible for overtime pay, compared to 65 percent of workers who were covered in 1975.

So what some are proposing is to raise the threshold back to something like what it used to be. Raising it to what it was in 1975, adjusted for inflation, would mean a level of $984 a week, or $51,168 per year, which is close to the median family income. According to the Economic Policy Institute, at that level over six million Americans would become eligible for overtime pay. Raise it a bit higher and you could cover millions more.

This March, President Obama instructed the Labor Department to reexamine the rules and propose a revision, and the department’s decision should be coming some time soon. And an organized campaign to promote it looks to be developing. Today in The Hill there’s an op-ed arguing for changing the overtime rules by Nick Hanauer, a liberal billionaire venture capitalist who could become an important figure in the economic arguments we have over the next few years. Unlike many other major political funders like the Koch brothers, Hanauer doesn’t just give other people money — he’s putting himself out as an advocate.

Many people first heard of Hanauer a few months ago when he wrote an open letter addressed to “my fellow filthy rich,” challenging the notion that the wealthy got where they are because of their unusual virtue and telling them that they had to start working to combat inequality in America). It looks like Hanauer wants to be a player in this debate, and he has the money to make an impact.

So don’t be surprised if a lot of elected Democrats suddenly start talking about overtime rules. This issue is more than an arcane piece of labor law. It gets to the heart of the insecurity and dissatisfaction Americans feel with their economic lives and prospects. It’s been repeated to the point of cliché that Americans feel like they’re working harder but not getting ahead. The lack of overtime is one key reason why. It’s one thing to work 50 or 60 hours a week and know that it means you’ll have extra money in your pocket. But if your boss tells you to come in on Saturday to finish up those TPS reports and you get nothing from it, it’s hard not to feel powerless and exploited.

For Democrats looking for specific policy moves that will demonstrate their desire to help middle-class Americans, the overtime pay issue looks like an excellent candidate, not only because it would mean more money for regular people but also because it would push the dynamics of power, compensation, and dignity a little bit back in the direction of workers.

Republicans will argue that raising the threshold infringes on the prerogatives of business owners, and that Obama is a tyrant for using the regulatory process to make the change. But I’m guessing Democrats would be happy to have that debate, so they can show that they’re trying to help the middle class. And at the end of the debate, the administration can issue the rules, and there’s nothing Republicans will be able to do to stop it.


By: Paul Waldman, Contributing Editor, The American Prospect; The Plum Line, The Washington Post, December 18, 2014

December 21, 2014 - Posted by | Economic Inequality, Middle Class, Overtime Pay | , , , , , ,

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