What to Know About Obama’s Overtime Pay Announcement

Wait, when did this happen?

In an op-ed titled “A Hard Day’s Work Deserves a Fair Day’s Pay,” which appeared on Huffington Post on Monday night, the President outlined the as-yet-unnamed overtime pay rule.

Set to take effect in 2016, the rule—which follows a Presidential directive in March to the Department of Labor to revise standards—would more than double the salary range for workers who are required to receive overtime pay, regardless of whether they are paid hourly or in salary.

Does this mean I’ll get more overtime?

Quite possibly: Obama’s op-ed notes that “nearly 5 million workers” would be affected by this change in 2016.

Current overtime-eligible salaries top off at $23,660, but the new rule would allow workers earning up to $50,440 to demand time-and-a-half for each hour of work beyond 40 hours.

The new salary cap reflects the average, middle-class American household’s income, which has stagnated at just under $52,000 for the past 15 years.

“That’s good for workers who want fair pay, and it’s good for business owners who are already paying their employees what they deserve—since those who are doing right by their employees are undercut by competitors who aren’t,” Obama wrote.

But why now?

The push for overtime pay moved up the President’s priority list after a scathing 2013 report by economists Jared Bernstein and Ross Eisenbray, which argued that the economy would actually be better off if employers built in overtime pay that was indexed to real salary levels instead of those from 1975, as under the current rule.

In other words, the President is seeking to make overtime pay more responsive to how we live in 2015 as opposed to how we lived in 40 years ago.

Who benefits from this proposal the most?

In a post-recession economy that has seen men struggle to recover their pre-recession earnings and employment levels, the rule promises to be a boost to men whose income is above the current overtime threshold.

Single women, however, stand to gain the most: With average income hovering around $35,154, unmarried women previously experienced the double whammy of earning less income than their single male counterparts (single men earned an average of $50,625 in 2013), and being unable to earn overtime pay.

Is anyone opposed to it?

Yes—much of the Republican Party. Some Republicans in Congress have already raised concerns about the rule, saying companies will have a reduced incentive to hire people now that they will have to pay them more.

The National Retail Federation has made a similar argument, previously citing an Oxford Economics study that argues employers would have less of a reason to hire workers, thereby nullifying any advantages to take-home pay for employees.

The rule would “add to employers’ costs, undermine customer service, hinder productivity, generate more litigation opportunities for trial lawyers and ultimately harm job creation,” the NRF said.

Both supporters (like the AFL-CIO) and opponents expect the rule, which would likely be enacted by the end of next year, to go to court and face Congressional challenge.