About that raise

Even as U.S. productivity and working hours have increased, wages have stagnated or declined since 1979. A new overtime rule proposed by the Obama administration would at long last give many working- and middle-class employees a raise.

Under the rule, workers making less than $50,440 a year would be eligible for overtime regardless of their job titles — that is, even if they’re classified as managers or in other positions not eligible for overtime at higher salaries. The current threshold is a ridiculous $23,600, which is below the poverty line for a family of four.

By restoring the value of the threshold, which hasn’t changed substantially in 40 years, the new rule could help as many as five million workers get more pay or work fewer uncompensated hours by 2016, including about 200,000 in Pennsylvania and 130,000 in New Jersey.

It’s as important that the new threshold be indexed to inflation or another measure to ensure that its impact isn’t diminished over time. That question is to be decided after the current public comment period.

Unfortunately, the administration has sidestepped the task of clarifying which workers above the pay threshold are entitled to overtime. Those provisions were muddied under President George W. Bush, making it easier for unscrupulous employers to exploit employees by misclassifying them as managers. The result is a continuing drain on the middle class.

Instead of helping those workers, the Labor Department vaguely promised to review the issue. Anyone concerned about it should speak up during the 60-day comment period, which began this month.

Employers are expected to respond to the rule in a number of ways. Some will allow employees to continue to work long hours and pay them the required time-and-a-half overtime rate, putting more money in their pockets and the economy. Others will keep more of their workers to 40-hour weeks, giving them more valuable time for themselves and their families. Those employers may hire more workers or give part-timers more hours to pick up the slack, increasing employment.

The rule still has some tough battles ahead. Business groups are already complaining that it will cost jobs and pay, even though economists predict the opposite will occur. The Labor Department will also face enforcement challenges. To begin with, it must ensure that employers and employees understand what they’re entitled to.

Shoring up overtime requirements is an essential step toward helping the neglected working- and middle-class employees catch up with inflation. Here’s hoping that many of them can look forward to more money for their work or more time with their families in 2016. They’ve earned it.

The Philadelphia Inquirer

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