New overtime rule leaves millions of workers behind

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The Trump administration’s new rule on overtime is based on the notion someone making $35,568 doesn’t need or deserve overtime.

Last week, the U.S. Department of Labor announced its final overtime rule, setting the salary threshold under which salaried workers are automatically entitled to overtime pay.

The rule falls far short of the Obama administration’s overtime rule, which would have extended overtime pay to workers earning up to $47,476 and indexed future changes to wage growth. In contrast, under the Trump administration’s new rule, only salaried workers earning less than $35,568 will be automatically eligible for overtime pay, leaving behind 8.2 million workers and costing them $1.4 billion per year in lost pay compared with the Obama-era rule.

The rule leaves behind millions of workers who would have received overtime protections under the much stronger rule, published in 2016, that the Trump administration chose to abandon,” says Heidi Shierholz, senior economist and director of policy at the Economic Policy Institute (EPI).

The 2016 rule was the result of an exhaustive rulemaking process spanning more than two years. However, shortly before the 2016 rule was set to go into effect, a single district court judge in Texas, using highly flawed logic, enjoined the department from enforcing the rule, and the court later erroneously held the rule to be invalid. The Trump administration abandoned the rule and finalized one with a dramatically lower threshold. It’s worth noting that if the overtime threshold had simply been adjusted for inflation since 1975, today it would be roughly $56,500 –more than $20,000 higher than the Trump administration’s new rule.

“Roughly 8.2 million workers who would have benefited from the 2016 rule will be left behind by the Trump administration’s rule,” Shierholz said.

That 8.2 million includes 3.2 million workers who would have gotten new overtime protections under the 2016 rule and won’t get them under the Trump rule, and five million who would have gotten strengthened overtime protections under the 2016 rule and won’t get them under the Trump rule.

“This administration is turning its back on millions of workers including 4.2 million women, 2.9 million people of color, 4.6 million workers without a college degree, and 2.7 million parents of children under the age of 18.,” Shierholz said.

The annual wage gains are $1.4 billion dollars less under the Trump administration’s rule than under the 2016 rule. And those annual earnings losses will grow over time, Shierholz says, because the Trump administration neglected to include automatic indexing in their rule.

At its heart, the Trump administration’s rule is based on the notion that someone making $35,568 a year is a well-paid executive who doesn’t need or deserve overtime protections.

“The administration did not need to undertake a new rulemaking — they could have defended the 2016 rule, and supported middle-class workers and their families,” Shierholz said. “Instead, once again, President Trump has sided with the interests of corporate executives over those of working people.”


 

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