WASHINGTON -- Concerned the White House may bend to Republicans and business groups, House Democrats are urging President Barack Obama to "make the bold choice" and aggressively expand overtime pay for the nation's salaried workers, according to a letter from lawmakers viewed by The Huffington Post.
Last year, Obama directed the Labor Department to revise the rules governing overtime in order to raise wages for Americans, and the agency is expected to release its proposal next month. A key question is where the administration will set the so-called salary threshold, which will ultimately determine how many workers will be eligible for time-and-a-half pay when they work more than 40 hours in a week.
As HuffPost recently reported, there are serious concerns among Democrats that Obama will set a low threshold in hopes of avoiding a fight -- or a budget rider -- from Republicans in Congress. Several possible thresholds have been proposed, and which one the administration chooses will make or break overtime pay for millions of Americans.
In a Monday letter authored by Rep. Mark Takano (D-Calif.) and signed by 30 of his colleagues, Democrats are suggesting that Obama set the salary threshold at $69,000. That means any salaried worker earning less than that amount in a year would be guaranteed overtime eligibility. The current threshold, set by the George W. Bush administration, is a low $23,660, which is why just 11 percent of salaried workers now qualify for time and a half.
The Obama administration is rumored to be eyeing a threshold of about $42,000 -- a good deal higher than Bush's, but significantly lower than what Democrats are calling for.
"The economy is growing at its fastest rate in a decade and more than 10 million private sector jobs have been created since you took office. Unfortunately, that recovery has not been shared equally by all Americans," Takano's letter to the president reads. "We urge you to make the bold choice and substantially raise the income threshold for overtime pay for salaried workers."
The $69,000 proposal would cover the same percentage of the workforce as the threshold did in 1975. It was originally put forth by the venture capitalist Nick Hanauer, who says that a broad expansion of overtime pay is critical to restoring wages and leisure time for the middle class. According to an analysis by Ross Eisenbrey of the Economic Policy Institute, setting a threshold of $69,000 would render more than 10 million workers newly eligible for overtime pay. Eisenbrey himself has made the case for a threshold of $51,168, which would affect an estimated 6.1 million workers.
By contrast, a threshold of $42,000 would make only 3.5 million workers newly eligible, EPI's analysis found.
"What I think is going on is the White House is negotiating with itself," Hanauer recently told HuffPost. "They're likely to offer a compromise that they think their opponents won't hate, in this naive view ... Why not bring the threshold up to where it should be and where it once was, given that the amount of resistance you'll run into is equal in either case?"
The stakes are high for workers who fall between the various proposals. The salaried workers who are exempted under the current rules can be required to work exceptionally long hours -- 60, 70 or even 80 hours a week -- without receiving any additional pay beyond their base salary. The system thereby encourages businesses to heap work on salaried employees, since their extra labor essentially comes for free, rather than hiring more hourly employees and spreading the work around.
By expanding the number of workers who earn overtime, the Obama administration will be forcing more businesses to make a choice: Either pay workers more money for their extra labor, or get their hours down to a reasonable level so that you don't have to pay the time-and-a-half premium.
Congressional Democrats have urged Obama in the past to be aggressive on overtime pay reform. Last year, Sen. Tom Harkin (D-Iowa), now retired, proposed a bill with other Senate Democrats that would have set the threshold at $56,680 and then tied it to an inflation index.
"Plain and simple, if you have to work more, you should be paid more," Harkin said at the time.
Correction: The original post incorrectly described the $69,000 figure as an inflation-adjusted version of the 1975.