If You're A Millennial You Could Take Home More
If you're a salaried employee who pulls in between $23,661 and $47,476 a year, President Obama just hooked you up with a pretty sweet goodbye present to celebrate his final year in office. Starting December 1 of this year, when you ask yourself the question "Am I eligible for overtime pay?" the answer will now be a resounding "YES!"
This legislation more than doubles the current cap for salaried employees who are allowed overtime pay. According to the Labor Department, this new legislation will expand the pool of salaried workers who qualify for overtime from a mere 7 percent to a substantially larger 35 percent of the total salaried workforce.
This move has been a long time in the making. According to a March 2014 blog post from the AFL-CIO, the current cap has been in place since the Ford Administration. The Economic Policy Institute had recommended increasing the cap to $50,440 would have restored the cap to the level set by the Republicans in 1975 (adjusted for inflation). While the law may not be ideal, it is still an almost gargantuan achievement in this political climate to have been able to positively affect the bottom lines of an estimated 17 million working-class Americans.
Now, it'll be interesting to see just how the labor market reacts. The Washington Post's article cited Linda Harig, vice president of human resources at the University of Tennessee, saying that this could result in a 4.7 percent increase in tuition costs, all other things equal. (The very idea of spending a cent less on sports programs amounts to heresy in those parts, so being creative with the budget isn't likely to happen.)
But there's another side to the coin. This rule shift may inadvertently result in a healthier work-life balance for salaried employees who are now covered, but whose employers are less likely to want to pay overtime costs. They may simply return to a traditional 40-hour work week. There's another positive that may appear as well: Employers could now hire additional workers to pick up extra work that isn't finished when their employees are now off of overtime, since it may be effectively cheaper to hire a new permanent worker or two than it would be to pay existing ones overtime.
Whatever ends up happening in the broader labor market, one thing is clear: President Obama is definitely not phoning it in.