Overtime pay could expand for 3.6M Americans as the White House tries to boost the middle class

Burnin’ the midnight oil… but only getting paid for the 9-to-5 gas. Last week the Biden admin announced a proposal to extend overtime pay (aka: “time and a half”) to an additional 3.6M salaried US workers. Overtime is available to nearly all hourly workers, but salaried workers in “executive, administrative, or professional” roles are exempt unless they earn below $35.6K. The proposal would increase the threshold to ~$55K.

• Under the proposed rule, the salary threshold would rise every three years to keep up with wage growth. The current threshold, set in 2019 under the Trump admin, was the first increase since 2004.

• At $55K, OT eligibility would fall below the US median salary of $57K. Some Democratic lawmakers wanted to extend the threshold to $83K.

• Hot US wage growth has started to cool, which economists say is key in tamping broader inflation. The White House’s proposal would boost wages by $1.2B, but it could face strong opposition.

From right to rarity… In 1975, 60% of salaried workers qualified for overtime. Today, just 15% do. Part of the drop has to do with employers finding loopholes in federal labor law and misclassifying regular workers as managers, making them exempt from OT even if they work well beyond 40 hours/week. One study found that managerial titles nearly 6X’d during the 2010s on job postings with salaries around the OT threshold. Some job titles from the study: Director of First Impressions (a front-desk assistant) and Assistant Bingo Manager (a bingo caller).