Millions Fewer Would Get Overtime Protections If the Overtime Threshold Were Only $31,000

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By Heidi Shierholz, Economic Policy Institute

Federal law requires that people working more than 40 hours a week be paid 1.5 times their rate of pay for the extra hours, but exempts salaried workers who make above a certain salary threshold and are deemed to have “executive, administrative, or professional” duties. The salary threshold is meant to help protect salaried workers with little bargaining power—for example, low- or modestly-compensated front-line supervisors at fast food restaurants—from being forced to work unpaid overtime. But, at $455 per week (the equivalent of $23,660 per year), the overtime threshold has been so eroded by inflation that it is now less than the poverty rate for a family of four. If the rule had simply been adjusted for inflation since 1975, today it would be well over $50,000.

In 2016, the Department of Labor published a highly vetted, economically sound rule that would have increased the threshold to $913 per week ($47,476 per year). However, a district court judge in Texas ruled that the new overtime threshold is invalid. While the Trump DOL plans to appeal the judge’s flawed ruling, they will not defend the $47,476 threshold. Instead, they intend to propose a new threshold, and have asked the court to stay the appeal while they engage in new rulemaking.

DOL officials have repeatedly indicated that they would prefer a salary threshold far below $47,476—rolling back protections for millions of workers. It is likely that they are considering proposing a new threshold of around $31,000.

Where does that number come from?  In 2004, under George W. Bush, DOL increased the overtime threshold, but fell far short of fully adjusting it for inflation since its prior increase almost 30 years earlier, in 1975. The $31,000 figure is the 2004 threshold adjusted for inflation. Meanwhile, if the 1975 threshold had been adjusted for inflation, it would be well over $50,000. Labor Secretary Alexander Acosta has suggested that simply adjusting the weak 2004 threshold for inflation might be appropriate. Additionally, in a July Request for Information, DOL specifically asked for public comment on whether updating the 2004 salary level for inflation would be an appropriate basis for setting the salary level, further suggesting that that level is under strong consideration by the department.

EPI estimated that the 2016 rule, with a salary threshold of $47,476, would have provided new or strengthened overtime protections to 12.5 million workers. Using that same data, we find that a threshold of $31,000 would provide new or strengthened protections to only 3.4 million workers. In other words, 9.1 million workers—close to three-quarters of the 12.5 million—would be left out. The table below shows how many people in each state would not get new or strengthened overtime pay protections if the threshold were set at $31,000 instead of $47,476. Setting the salary threshold below the 2016 level would roll back a long overdue wage increase for American workers across the country.

Table 1

Workers in each state who would not get new or strengthened OT protections if the threshold is set at $31,000 instead of $47,476

State Number of workers getting new or strengthened protections as a result of raising the threshold to $47,476 Number of workers getting new or strengthened protections as a result of raising the threshold to $31,000 Number of workers getting new or strengthened protections under $47,476 threshold who woud be left behind if the threshold were dropped to $31,000 Share of workers getting new or strengthened protections under $47,476 threshold who would be left behind if the threshold were dropped to $31,000
United States 12,502,000 3,374,000 9,128,000 73.0%
Alabama 167,000 51,000 116,000 69.5%
Alaska 16,000 5,000 11,000 68.8%
Arizona 258,000 81,000 177,000 68.6%
Arkansas 130,000 38,000 92,000 70.8%
California 1,076,000 282,000 794,000 73.8%
Colorado 248,000 60,000 188,000 75.8%
Connecticut 113,000 28,000 85,000 75.2%
Delaware 49,000 12,000 37,000 75.5%
District of Columbia 29,000 8,000 21,000 72.4%
Florida 1,068,000 340,000 728,000 68.2%
Georgia 493,000 143,000 350,000 71.0%
Hawaii 57,000 12,000 45,000 78.9%
Idaho 64,000 19,000 45,000 70.3%
Illinois 539,000 124,000 415,000 77.0%
Indiana 248,000 69,000 179,000 72.2%
Iowa 124,000 29,000 95,000 76.6%
Kansas 98,000 22,000 76,000 77.6%
Kentucky 149,000 40,000 109,000 73.2%
Louisiana 174,000 57,000 117,000 67.2%
Maine 46,000 11,000 35,000 76.1%
Maryland 233,000 49,000 184,000 79.0%
Massachusetts 262,000 65,000 197,000 75.2%
Michigan 275,000 50,000 225,000 81.8%
Minnesota 158,000 28,000 130,000 82.3%
Mississippi 88,000 21,000 67,000 76.1%
Missouri 257,000 70,000 187,000 72.8%
Montana 33,000 9,000 24,000 72.7%
Nebraska 81,000 22,000 59,000 72.8%
Nevada 115,000 44,000 71,000 61.7%
New Hampshire 54,000 15,000 39,000 72.2%
New Jersey 410,000 103,000 307,000 74.9%
New Mexico 61,000 20,000 41,000 67.2%
New York 982,000 286,000 696,000 70.9%
North Carolina 425,000 135,000 290,000 68.2%
North Dakota 34,000 8,000 26,000 76.5%
Ohio 351,000 85,000 266,000 75.8%
Oklahoma 154,000 43,000 111,000 72.1%
Oregon 124,000 31,000 93,000 75.0%
Pennsylvania 459,000 99,000 360,000 78.4%
Rhode Island 37,000 8,000 29,000 78.4%
South Carolina 219,000 55,000 164,000 74.9%
South Dakota 32,000 9,000 23,000 71.9%
Tennessee 290,000 82,000 208,000 71.7%
Texas 1,244,000 354,000 890,000 71.5%
Utah 119,000 34,000 85,000 71.4%
Vermont 25,000 6,000 19,000 76.0%
Virginia 333,000 83,000 250,000 75.1%
Washington 232,000 52,000 180,000 77.6%
West Virginia 66,000 21,000 45,000 68.2%
Wisconsin 187,000 51,000 136,000 72.7%
Wyoming 20,000 5,000 15,000 75.0%

Notes: For mor information see Ross Eisenbrey and Will Kimball, The new overtime rule will directly benefit 12.5 million working people: Who they are and where they live, Economic Policy Institute, 2016

Source: EPI analysis of the U.S. Department of Labor’s proposed (July 6, 2015) and final (May 18, 2016) rule, “Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees,” 29 CFR Part 541; and Current Population Survey Outgoing Rotation Group microdata, 2015

Originally posted here.

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