Five million Americans would get a wage boost next year under a new proposal by President Obama to extend overtime pay.
The proposed change, which would take effect in 2016, provides overtime pay to those earning less than $50,400. Once those employees in that earning range work more than 40 hours, they will be eligible for time-and-a-half pay. The previous limit on overtime pay was set at $23,660.
“This proposed overtime rule goes to the heart of what it means to be middle class in America,” Secretary of Labor Tom Perez said on Tuesday morning during a White House conference call. He added that as a result of the proposed plan, Americans will benefit by earning more, or having more time to be spent with families, for instance. In addition, some businesses will be forced to hire more help — instead of asking fewer employees to worker longer, uncompensated hours — meaning a boost to the labor force overall.
“We've got to keep making sure hard work is rewarded,” Obama wrote in an op-ed published in The Huffington Post on Monday. "Right now, too many Americans are working long days for less pay than they deserve.”
He continued, “That's how America should do business. In this country, a hard day's work deserves a fair day's pay. That's at the heart of what it means to be middle class in America.”
Obama first made the announcement on Monday night, and he is expected to discuss the change further later this week during a visit to Wisconsin. The White House will hold an open comment period for 60 days on the proposed plan.
“The president is committed to building out our progress by making sure hard work is rewarded,” said Cecilia Muñoz, the White House director of Domestic Policy Council, said during the Monday White House call. “Workers will not be expected to work long hours without extra pay and those who do will be compensated.”
“The president said he wanted to go big here and he did,” former White House economist Jared Bernstein told The New York Times. “I can’t think of any other rule change or executive order that would lift more middle-class workers.”
The president’s announcement is expected to fire up partisan divides on the issue of wage protections. While 2016 presidential candidates Bernie Sanders and Martin O’Malley have supported overtime pay reform, some trade groups and conservatives vocally opposed the change. The National Retail Federation, for instance, argued that it will add “add to employers’ costs, undermine customer service, hinder productivity, generate more litigation opportunities for trial lawyers and ultimately harm job creation,” according to The Times. Experts expect that the proposed plan will be challenged in court and potentially also in Congress.