Obama’s new rule on overtime is about more than just fair pay

This could mean 100,000 more jobs 

On May 18, the White House and the Department of Labor released a statement stating their intent to revamp the dated overtime rules in time for December 1, 2016.

Before this, employers were not required to pay their workers for extra hours unless employees earned up to $455/week ($23,660/year).  This means that according to the old conditions, workers could be staying late hours without any compensation.

In a video from the White House, President Obama says that forty years ago, more than 60 percent of workers were eligible for overtime pay.  Now, the numbers have dropped to a mere 7 per cent.

Now, with the new rules, workers who earn up to $913/week ($47,476/year) will be eligible for overtime, or ‘time-and-a-half’ pay.  On top of that, the salary threshold will change every three years, in response to the changing wage gap over time.

The Department of Labor released this video to illustrate the new conditions:

For the employers, the new rules are flexible in giving them options on how to move forward.  Employers must choose between paying employees for overtime, raising worker salaries to above the new threshold, limiting worker hours to 40 hours/week, or some combination of the options.

This could mean up to, or more than 100,000 new job positions being added to the US economy.  For employers who respond to the changes by limiting worker schedules to 40 hours/week, the extra work will be be redistributed or given to new employees.

Many have spoken out about the ‘unfairness’ of the new rules, from stating that workers will be demoted from a salary to an hourly-wage, to arguing that career prospects for job-seekers will be negatively affected.

Yet, to clarify, employers are not required to convert their employees to an hourly-status.  It is important to realize that the choices in response to the new rules are there to provide employers and employees with the means to find common ground.

This diagram breaks down the 4.2 million workers who will be protected from the new rule:

56 per cent (2.4 million) of these workers benefiting from the new rules are women.

For new college grads in search of entry-level jobs, these new rules bring good news.  53 per cent (~10 million) of the 4.2 benefiters will hold a Bachelor’s Degree.

The rules will also benefit young parents ages 18 and under.  1.5 million of those affected will be  young parents, meaning that 2.5 million children will have at least one parent benefiting from the overtime protections.

These new rules are more than just about worker protection and extra pay where it is due.  Workers will be entitled to spend time away from the workplace to immerse themselves in family, education, new professional interests, and other means of self-care.

The Obama administration has been very vocal about their agenda to raise wages and to reduce the unemployment deficit.

Looking forward to the nearing end of his presidency and the future of the United States, Obama says, “This is the single biggest step I can take through executive action to raise wages for the American people.”