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News from EPI Updating the Overtime Threshold Would Protect Workers Who Need It the Most

To help ensure the basic, family-friendly right to a limited workweek, the Fair Labor Standards Act requires that workers be paid time-and-a-half for working more than 40 hours a week. Salaried supervisory, managerial, and professional workers can be excluded from the right to earn overtime pay if their earnings are above $455 per week, or $23,660 per year. In March, President Obama directed the Department of Labor to raise this threshold, so that only better-paid salaried workers would be denied overtime pay when they work long hours.

Millions of white collar workers who are not highly paid would benefit from raising the threshold to $984 per week ($51,168 per year), which is simply the 1975 threshold adjusted for inflation. In Workers in Lower-Paid White-Collar Occupations Need Overtime Protections, EPI economist Heidi Shierholz shows that the professions that would be most affected by this change are characterized by low salaries, weak or nonexistent wage growth, and few benefits.

“Many of these workers are barely able to make ends meet. If you’re just scraping by, you’ll do whatever your boss tells you to do,” said Shierholz. “That’s why these workers need legal protections—to prevent abuses by employers that hold all the cards.”

The occupations that would be most strongly affected by an increased overtime threshold include first-line supervisors of food preparation and serving workers, insurance claims and policy processing clerks, customer service representatives, food service managers, miscellaneous legal support workers, first-line supervisors of office and administrative support workers, social workers, first-line supervisors of retail sales workers, insurance sales agents, and counselors.

Shierholz finds that full-time, salaried workers in these occupations are less likely to have employer-provided health insurance, less likely to have a pension plan, and more likely than other full-time salaried workers to have trouble making ends meet. About one in seven full-time, salaried workers in these strongly affected occupations lives below twice the poverty line. Moreover, these workers have so little bargaining power that their wage growth does not come close to matching overall productivity growth. In short, the workers that would benefit from this change are those who need it most.