By now, you’ve heard that the Trump administration has proposed raising the overtime threshold to $35,308. Maybe you’ve seen traditionally left-leaning outlets hailing this as a rare win for workers from the Trump White House, or a much-needed revision of an outdated labor policy.
Let me tell you why that’s bogus.
It’s true that we desperately need to revise the overtime threshold, which has been stuck at a pathetic $23,660 for the past 15 years. But the threshold—that is to say, the salary below which you must legally be paid time-and-a-half for every hour worked over 40 hours per week—should be drastically higher than the Trump threshold. At the minimum, it should be doubled.
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We must restore the expectation of overtime pay for the vast majority of Americans, the way it was when our economy was at its strongest. At one time, back in the 1970s, 65 percent of all American workers enjoyed robust overtime protections. Now, that number is below 7 percent.
Overtime pay is the single most important protection for salaried workers in America for two reasons. First, it establishes value for time worked. Too many workers are putting in too many hours for absolutely no pay. As it stands now, if you earn 11 bucks an hour as a barista and your employer gives you keys to the coffee shop and moves you to a $24,000 per-year salary, they can call you an assistant manager and work you for as many hours a week as you can bear—without paying a penny over your weekly wage.
And second, overtime protections establish value for time not worked. Under a strong overtime threshold, your employer would have to think twice before asking you to work over 40 hours a week, because he’d be paying you time and a half for each hour worked. So either you would get back all the extra time that you previously worked for free, or you would be paid more for your sacrifice.
And employers who don’t want to pay the higher wages to workers have an easy solution: they could simply hire more workers at the normal wage, thereby saving money and equitably distributing the workload. When you consider that the average American with a full-time job puts in 49 hours a week, and then add up all that unpaid overtime, employers are now squeezing five jobs’ worth of work out of every four workers, increasing their profits with “efficiencies” while robbing the economy of millions of jobs.
A higher threshold is better for everyone. Businesses profit from a consumer base that enjoys higher paychecks, and communities flourish because people volunteer at nonprofits, better themselves through education and additional training, or simply spend time with their families.
You might recall that in 2015, President Obama’s Department of Labor proposed raising the threshold to $47,892. But the proposal was abandoned by the incoming Trump administration. Let me be clear: Even the Obama threshold wasn’t bold enough. In fact, to match the standards workers enjoyed in 1975, it would now have to stand at around $75,000. (And maybe it’s time to discuss as a nation whether it’s ever acceptable to ask your employees to work extra time for free—no matter what their salary may be.)
Luckily, as they do every time the federal government fails to stand up for workers, leaders in our states are stepping forward and insisting that every worker’s time counts. California leads the nation with a $49,920 threshold that is moving quickly to $62,400, and both Washington state and Pennsylvania are in the process of restoring their threshold to something that is hopefully far above Trump’s proposed standards. It’s up to you to contact your state and federal representatives and demand an overtime threshold that respects your time, and which compensates you for every hour you’ve worked.
But more importantly, it’s time for Democrats to listen.
Just because Trump is intent on screwing workers doesn’t mean Democrats have to go along. We have a federal system and we should use it. In those states like Washington and Pennsylvania with rulemaking authority on overtime, governors must act. In other states, it’s up to Democratic legislators to fight for workers.
The 40-hour workweek—“minimum wage and maximum hours”—has long been the backbone of the American social contract. Without that basic understanding, all the other norms that have ensured a strong middle class begin to slip away. For too long, employers have devalued the real price of work. It’s time to give a real raise to the hardworking American middle class by restoring the overtime threshold to its historical levels.
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Nick Hanauer is a serial entrepreneur and venture capitalist, and the founder of Civic Ventures, a Seattle-based public policy incubator. You can follow Nick Hanauer on Facebook and Twitter, or subscribe to his podcast Pitchfork Economics.
