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News from EPI 13.5 Million Workers Would Directly Benefit from New Proposed Overtime Rules

Today, the Economic Policy Institute released estimates of how many workers would directly benefit from the Department of Labor’s (DOL) proposal to raise the salary threshold under which salaried workers are automatically eligible for overtime pay. In Raising the Overtime Threshold Would Directly Benefit 13.5 Million Workers, EPI President Lawrence Mishel and Vice President Ross Eisenbrey estimate that, overall, 13.5 million workers would directly benefit from the increased threshold, most of whom would gain new rights to overtime eligibility. These 13.5 million workers are middle class workers, earning between $23,660 and $50,440, and include 1.6 million blacks and 2.1 million Hispanics. 6.9 million of the affected workers are women and 4.6 million are parents.

“The new proposed overtime rules will establish the right to be paid for extra hours worked for 13.5 million middle-class workers,” said Mishel. “It’s an important part of the collection of policies we need to enact to raise wages for workers across the board.”

Raising the threshold would affect workers in all states and would directly benefit more than 30 percent of the salaried workforce in nine states—Arkansas, Hawaii, North Carolina, Oklahoma, Louisiana, Florida, Nevada, Tennessee, and Alabama.

Of the major industries, the new threshold would benefit the greatest share of salaried workers in leisure and hospitality (38.8 percent); other services (36.4 percent); construction (35.1 percent); agriculture, forestry, fishing, and hunting (34.9 percent); public administration (34.7 percent); and wholesale and retail trade (33.8 percent). Occupations with the greatest share of salaried workers who would directly benefit would be office and administrative support occupations (48.8 percent); transportation and material moving occupations (44.3 percent); construction and extraction occupations (43.3 percent); installation, maintenance, and repair occupations (41.4 percent); and production occupations (38.6 percent).

“A combination of some employers misunderstanding the rules and the willingness of others to push the limits of the law has led to widespread noncompliance with the overtime rules,” said Eisenbrey. “Millions of workers have lost their right to get paid for all the hours they work. The new proposed salary threshold will provide millions of workers with higher wages and more time for leisure. It will also give hourly workers the opportunity to pick up work that might have otherwise been done during overtime by their full-time colleagues.”

In a related issue brief, The New Overtime Salary Threshold Would Directly Benefit 13.5 Million Workers: How EPI’s Estimates Differ from the Department of Labor’s, Mishel and Eisenbrey note that DOL’s smaller estimate (5 million workers) of impact is due to wrongly assuming that overtime eligibility has not eroded since the late 1990s. The authors catalog the various changes that have eroded overtime eligibility since the late 1990s, including changes in the law implemented by the Bush administration in 2004, various court decisions, and the behavior of employers to limit the ability of workers to earn overtime pay.

The methodological account of these estimates can be found in Estimating the Number of Workers Directly Benefiting from the Proposed Increase in the Overtime Salary Threshold.