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New Rules on Overtime Pay Ahead

July 2, 2015
Plain English Version


It is true in the United States that the rich get richer. Ten percent of families enjoyed 90 percent of the growth in income between 2009 and 2014.

The middle and working classes have been left out. Raising the minimum wage is a way to address this growing problem. It would put more money in the hands of workers in the service sector. Making unions stronger is important. They need the power to bargain with employers. In this political climate, there is little chance of either happening.

President Obama is doing the one thing he can do. He is changing the rules about who gets overtime pay. Overtime pay is usually time and a half of the hourly wage. For example, if the hourly rate is $20 an hour, the overtime rate would be $30 an hour.

Many workers are said to function as managers in their firms. Many are simply doing clerical work. Regardless of their duties, they will now get overtime pay for any hours worked over 40 hours a week. The rule affects workers who earn less than $50,440 a year.

Experts say that will mean a raise in overtime pay for at least five million workers.

As expected, corporations said the rule would cost workers’ jobs. And they will look for ways to get around the rule.

The current rule is set at $23,660. Clerical and management workers earning more than that do not get overtime pay.This amount puts workers’ purchasing power at mid-1970s levels.

Liberals say low wages are bad for the economy. Growth comes when consumers have money to spend beyond housing and monthly bills. Tax reform is seen as a good way to put more money in the economy for wages. The rich and the big companies do not now pay their fair share.

Source: The New York Times June 30, 2015


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