Overtime Pay Going Up for More Than a Million Workers
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Here's your Money Briefing. I'm J.R. Whalen at The Wall Street Journal in New York. More than a million Americans will soon be eligible for overtime pay, even some salaried workers. We'll explain in a moment. First, some money and market news you should know. With unemployment rates at 50-year lows, U.S. workers have been job-hopping more.
What is the new overtime rule and who will it affect starting Jan. 1?
switching for better pay. Those pay bumps were often out of reach for lower-paid workers until now. The New York Fed says that more than 1 in 10 heads of household earning $60,000 or less switched jobs in April, May, June, or July, about twice the rate from the same period a year ago, and higher than it's been in five years. The unemployment rate among Americans without a high school diploma has dropped over the past three years, and the rate for black women fell in August to the lowest level on record. The recent uptick in home sales looks like it'll continue. Homebuyers cashing in on mortgage rates that have fallen below 4% are also seeing prices level off. Nationwide, home prices rose just over 3% in July.
That was unchanged from the previous month. And even though home prices have risen from over a year ago, they're going up at a more modest pace.
A new rule that goes into effect January 1st would allow about a million people to collect more overtime pay. So which industries are affected? Let's check in with Wall Street Journal reporter Andrew Ackerman for some answers. So, Andrew, which industries are impacted by this new law?
It's going to affect 1.3 million people. They're in retail and fast food industries. Clothing retail employees made an average of 488 per week. Fast food workers earned 1%. $385 per week on average. And this rule basically targets people who it's going to help people who make $684 a week or less.
So does this new rule bring any new industries into the fold or does the scope of industries impacted stay the same?
My understanding is that the scope stays the same. It's the same type of hourly workers. In a variety of different industries, the threshold increases significantly from about $23,000, $24,000 to $35,000, $36,000. And so that just sweeps in over a million people who weren't covered by the previous salary threshold.
Now, overtime has typically been for hourly workers, but this rule also affects some managers and other salaried employees, right?
Yeah, there's a separate provision of this separate category of workers that would also see a modest increase in the threshold. That's for called highly compensated employees, basically people who manage at least two people or or supervise at least two people or have a role in managing the company. They would see basically that that threshold rise increases from about one hundred thousand dollars to one hundred and seven thousand dollars. The Trump administration had proposed increasing that threshold. much higher it was going to be 147 000 which would have presumably encompassed a lot more employees but they they basically they increased it only slightly saying that that their proposal was it just was too high an overtime overhaul was on a path to becoming law during the obama administration but it was struck down in the courts should we be expected to see that happen again
Yeah, it's not clear if there will be a court challenge. It's very possible that workers' unions may challenge this rule. We don't have clarity for sure, but just given the fact that this was heavily litigated in 2016 when the Obama administration completed it, successfully litigated by business groups in some states, I think it's fair to assume that that's likely or at least a possibility.
Now, there's been a big push to increase the federal minimum wage, and a number of states have already bumped up their minimum wage as well, but not without months of protests and legislative battles. Were there similar struggles that got us to passage of this overtime rule?
I think there's been a recognition that the threshold set in 2004 is outdated and does need to reflect. you know, overall growth in wages and salaries.
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