On Wednesday, the New York Times Editorial Board addressed the question of who receives overtime in the American workplace. In March, President Obama signed an executive order directing the Labor Department to update federal overtime rules.
In the EO he touched on the fact that “white collar exemptions” for salaried workers had not been updated since 1975. These exemptions allow employers to avoid paying overtime to workers who earn more than $455 a week in salary. A worker earning $460 a week ($23,660 a year) is exempt from earning the time-and-a-half overtime rate that Congress made law in 1938. But $23,660 “is below the poverty line for a family of four,” NYT explains. Workers in low-wage industries who are given titles such as assistant managers or shift supervisors see their wages suppressed by exemptions created for white collar administrators.
NYT suggests a remedy for the harm inflicted by this archaic equation:
The fix is easy. Simply updating the salary threshold for inflation would raise it to nearly $1,000 a week. This change would make an additional 6.1 million salaried workers eligible for overtime, including food service managers, customer service representatives, insurance claim processors and retail supervisors, according to recent estimates by the Economic Policy Institute.
NYT explains the argument made by opponents, but swiftly dismisses it:
Raising the salary threshold is being framed by some critics as a threat to young professionals. Their argument is that a low-salary threshold allows young professionals — corporate interns, junior accountants, assistant professors and the like — to work virtually unlimited hours early in their careers, without their employers having to worry about paying overtime. If the threshold were raised, an employer might balk at letting them work those extra long hours and that would impede their climb up the career ladder.
The problem with this argument is that the overtime law is not about young professionals getting ahead. It is about workers who do not control their own time, are not highly paid and are not in jobs that ever have or ever will command professional salaries. Another problem is that government policy in the Obama administration is often debated and developed by people who were once 80-hour-a-week young professionals themselves, and thus may be susceptible to the argument against an appreciably higher salary threshold.
That argument, however, is irrelevant. In updating the overtime rules, the Labor Department should set the salary threshold at around $1,000 a week — which is where it would be now if it had kept up with inflation and other economic benchmarks over the past several decades.