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The Implications Of Overtime Pay Proposal

UNIDENTIFIED WOMAN #1: I think most people hate to think of themselves as middle class.

UNIDENTIFIED WOMAN #2: Have what you need, but maybe not everything you want.

UNIDENTIFIED MAN #1: We have a car, but we live in an apartment. That's middle class.

UNIDENTIFIED MAN #2: If you add a boat, then you're not middle class anymore. That's what changes it right there.

UNIDENTIFIED MAN #3: The middle class are families who are earning six figures.

UNIDENTIFIED MAN #4: Thirty thousand, $35,000, probably.

UNIDENTIFIED MAN #5: That means me (laughter). And it means I'm in trouble (laughter).


This is Hangin' On, our series about the economic pressures of American life. And today, we're talking about overtime. Lots of people work way more than 40 hours a week in this country. And they don't see a bump for that extra time. The Obama administration is trying to change that. And this past week, the Labor Department announced new rules that raise the threshold for people eligible for overtime pay. Annie Lowrey writes about the economy for New York Magazine. And she joins me now.

Hi, Annie.

ANNIE LOWREY: Hey, there.

MARTIN: Can you, Annie, give us a simple explanation of what's being proposed and roughly how many people it could potentially impact?

LOWREY: Sure. So right now you can receive overtime pay, in some cases, if you're making money per hour and in other cases if you are a salaried employee who is making less than $23,660 a year. The Obama administration just moved that cutoff, which is a federal regulation, up to $47,476 a year. And so that has made about 4.2 million workers eligible for time and a half when they work more than 40 hours a week.

MARTIN: I imagine there are a lot of people in the business world who have opinions about this. Is this something that's going to end up being prohibitively expensive for businesses?

LOWREY: Yeah, businesses hate this (laughter), especially businesses that have a lot of workers in this wage band 'cause it really does just force them to, first of all, ensure that they have a system to make sure that they know how many hours their employees are working and second, to pay them more. But the Obama administration has basically said - you know what? -on net, we think that this is good for workers. They've tried a lot of policies to help flush more money to these middle-class families, some of which have succeeded, some of which have failed.

MARTIN: So there are people on Capitol Hill who don't think this is necessarily such a good idea, a lot of Republicans in particular. But is there anything Congress can do to keep it from happening?

LOWREY: So Congress can't stop it through the Congressional Review Act. That said, they can attach a rider to legislation or pass legislation blocking it. The question is whether they're going to do that because if they don't do anything, then this is going to come into effect on December 1.

And so, it's certainly possible that Republicans in Congress could block it. But this is a fight that the White House wants. You know, they want to say, hey, this going out to 4.2 million relatively low-income or middle-income workers. And these Republicans, you know, want to make sure that you have a small enough paycheck. That's a pretty good talking point for them, they think, because it forces Republicans to basically, you know, go back to the argument that this is bad for business, which is, in the White House's view, probably a less powerful talking point.

MARTIN: What is the real impact? I mean, will this have a real impact on wages? Or is this more of a political statement in an election season?

LOWREY: It will have absolutely an impact on a lot of workers' earnings. That said, there are a lot of businesses that are going to make changes to kind of blunt that impact. So for instance, they might say to some of their workers - we're really sorry, but we you can't work more than 40 hours a week. Similarly, they could also set base pay a little bit lower so that even with the overtime added, the overall pay that they're giving to a given worker in a year is not so much affected.

But, you know, the bulk of the evidence suggests that, yeah, this is going to help force more money to this pool of workers. And part of the reason is that, you know, say that you're a salaried worker who's making $35,000 a year again, right? It's pretty hard for your employer to come to you and say, hey, we're reducing your base pay by $3,500, you know, in order to make up for this overtime rule. Those prices for workers tend to be kind of sticky. And workers really don't like that when employers negotiate them down in that way. And so for that reason, it's going to help ensure that those workers are just getting a raise that the White House wants to make sure that they get.

MARTIN: Annie Lowrey of New York Magazine. Thanks so much, Annie.

LOWREY: Thanks for having me. Transcript provided by NPR, Copyright NPR.