In this Jan. 5, 2012 photo, workers are seen amid the construction of a new building in the Flats area of downtown Cleveland. U.S. employers stepped up their hiring in November, though they advertised fewer jobs for a second straight month. The mixed data suggest the job market has strengthened but employers remain cautious. (AP Photo/Amy Sancetta)
The administration of US President Donald Trump has introduced a new labour rule that would take $1.4bn from workers’ pockets, according to a US think tank.
The US Department of Labor (DOL) announced its final rule on overtime on September 24, setting the threshold at which salaried workers are automatically entitled to overtime pay to $35,568, annually.
"For the first time in over 15 years, America's workers will have an update to overtime regulations that will put overtime pay into the pockets of more than a million working Americans," Acting US Secretary of Labor Patrick Pizzella said in a statement on the rule.
"This rule brings a common sense approach that offers consistency and certainty for employers as well as clarity and prosperity for American workers."
But the Economic Policy Institute, which describes itself as a non-partisan group that "seeks to include the needs of low- and middle-income workers in economic policy discussions", claims this rule will “leave behind” over eight million US workers who would have received guaranteed overtime under a 2016 rule.
“While the administration may be trumpeting this rule as a good thing for workers, that is a ruse,” Heidi Shierholz, Senior Economic Analyst and Director of Policy at EPI, said in a statement delivered to TRT World.
“In reality the rule leaves behind millions of workers who would have received overtime protections under the much stronger rule, published in 2016, that Trump administration abandoned.”
Thresholds
The previous rule on overtime held that professionals and blue-collar workers who made less than $23,000 annually were entitled to overtime, with some exceptions.
The administration of former president Barack Obama decided to change the threshold to an annual salary of $47,476 in 2014, a number which would increase tied to inflation and cost of living.
The rule, which caused concern for many businesses across the country, was meant to go into effect in 2016, but 21 Republican-controlled states sued the administration before it could happen.
A federal judge in Texas invalidated the rule in 2017, saying the Department of Labor didn’t have the authority to make such a large increase.
As the decision came in 2017, after Trump had assumed office, his then-Labor Secretary Alex Acosta said he wouldn’t appeal the decision.
Instead, Acosta devised another plan that would be more palatable for businesses, according to critics.
“[This] is part of a growing list of policies from the Trump administration aimed at undermining the economic stability of America’s working people,” Richard Trumka, President of the AFL-CIO labour federation, the largest federation of unions in the US, tweeted in March after the Trump administration made public its new version of the rule.
Nationwide needs
Shierholz claims the 2016 rule struck down by the court in Texas was “highly appropriate, albeit conservative”.
“The 8.2 million workers left behind by this proposal are made up of 3.1 million workers who would have gotten new overtime protections under the 2016 rule and another 5.1 million workers who would have gotten strengthened overtime protections under that rule,'' Shierholz wrote in her comments on the new rule.
The Trump administration considers someone “making $35,568 a year is a well-paid executive”, which is not the case, Shierholz said.
The rule will go into effect nationwide, and most major metropolitan areas require a much higher salary to live comfortably.
To own a modest home in New York City, a person would need a salary of $103,887. In Dallas, Texas, the salary would be $68,158.
To live comfortably in Cleveland, Ohio, a city known for its low cost of living, a homeowner needs a salary of $55,139. In Atlanta, Georgia, a city that is becoming a major arts and entertainment hub in the US, a person, whether homeowner or renter, needs to earn roughly $88,000.
The new rule disadvantages all types of people, but especially women and people of colour, Shierholz said.
“The 8.2 million workers left behind include 4.2 million women, 3.0 million people of color, 4.7 million workers without a college degree, and 2.7 million parents of children under the age of 18. Of the 2.7 million parents left behind, more than half (1.4 million) are mothers.”
Shierholz concluded by saying the Trump administration: “Could have defended the 2016 rule, and supported middle-class workers and their families. Instead, once again, President Trump has sided with the interests of corporate executives over those of working people."
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