New overtime rules a win for corporate executives, economists say
The Trump administration’s new rules for overtime pay are set to go into effect Jan. 1, 2020, and some economists and labor activists have said they don’t go far enough in supporting workers.
“This is a real win for corporate executives and a real loss for workers,” Heidi Shierholz, the former chief economist at the U.S. Department of Labor, told ABC News on Wednesday. “Millions fewer workers will get the overtime protections that the middle class depends on.”
“It’s a loss for those workers and for the economy as a whole,” added Shierholz, who worked at Labor Department from 2014 to 2017 and is currently a senior economist at the Economic Policy Institute.
Labor unveiled its new overtime regulations on Tuesday, promising to “make 1.3 million American workers eligible for overtime pay.” It’s the first such first rule updates in 15 years, according to a government statement.
The update also raised the annual salary threshold at which time-and-a-half pay kicks in after 40 hours to $35,568 from $23,660.
Acting U.S. Secretary of Labor Patrick Pizzella said in a statement that the rule “brings a commonsense approach that offers consistency and certainty for employers as well as clarity and prosperity for American workers.”
The rules could benefit laborers currently paid slightly over the $23,660 threshold, which exempts them from overtime pay.
Critics were quick to point out, however, that the Trump administration’s overtime rules do not go nearly as far as a 2016 rule put forward by the Obama administration that was later shot down in a district court after businesses and states fought against it.
About “8 million fewer workers will get the new or strengthened overtime protections under this Trump rule than they otherwise would have” compared with the 2016 rule, Shierholz said. “Overtime protections are a really core component of labor protections that support a middle class. This is a win for people who have benefited from the rigged economy.”
Kelly Ross, deputy policy director at the American Federation of Labor and Congress of Industrial Organizations, said a major issue with this new overtime rule, and in general, is that so much time has elapsed between updates.
“They’re not really keeping up with the overtime protections that have been lost to inflation, if nothing else, or to the change in wage levels,” he said.
The previous update to overtime protections, in 2004, were the first since 1975, Ross said.
“One really important thing that’s missing from this rule is an automatic adjustment — we’ve seen twice that a long period has gone by between the adjustment,” he added. “It’s a similar situation to minimum wage: You increase the minimum wage once, and a long period of time goes by, and the value of the minimum wage gets eroded over time. The same thing happens with overtime protection.”
Ross also argued that the salary threshold “should be much higher,” tied to wages and adjusted for inflation.
“Too many people are being denied overtime,” said Ross, explaining how some employers label employees as managers to disqualify them from receiving overtime.
“You’ve got to make sure that these people are bona fide executives or management,” he said. “You can’t have people who are spending most of their time doing non-management work having a management title and being called management.
“These rules have no protections against that kind of abuse.”