Report | Raising America's Pay

The new overtime rule will directly benefit 12.5 million working people: Who they are and where they live

Raising America's Pay

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These tables give a detailed breakdown of EPI’s estimate that 12.5 million salaried workers will directly benefit from the Department of Labor’s new rule raising the salary threshold below which salaried workers are automatically eligible for overtime pay. According to our assessment, most of these 12.5 million workers will be newly eligible for overtime protections: they are currently ineligible for overtime pay because they are classified, or wrongly classified, as having job duties that preclude receiving overtime. The rest will have their rights strengthened (they are currently at risk of being classified or misclassified as ineligible for overtime). There is inherent uncertainty in these estimates because no data are available documenting who is currently eligible for or receiving overtime.

In other words, workers making at or above the old threshold could have been excluded from overtime protection if their jobs were determined to be executive, administrative, or professional (EAP) jobs. The new rule raises the threshold from $455 per week to $913 per week (in 2015 dollars). There are 12.5 million salaried workers making at least $455 but less than $913 per week, and under the Fair Labor Standards Act (FLSA), those workers could have been excluded from automatic overtime protection if they were classified, or incorrectly classified, as EAP employees.

FLSA overtime rules were established to make sure that no one but higher-level workers with control over their time or tasks works overtime without getting paid for it. Unfortunately, rule changes in 2004 regarding the “duties tests” used to determine who does relatively high-level work made it a lot easier to deprive many lower-level workers of overtime protection by tweaking their job descriptions. Employer willingness to push the limits of the law have resulted in widespread noncompliance and misclassification. Raising the threshold will return overtime protection to the employees who need it by preempting these malleable duties tests for the workers under the new threshold.

These tables describe the demographic, geographic, industry, and occupational composition of the workers who will directly benefit from the higher salary threshold. An EPI technnical paper, Estimating the Number of Workers Directly Benefiting from the Proposed Increase in the Overtime Salary Threshold, provides the detailed computational methodology for estimating the number of workers affected by raising the overtime threshold. The estimates consider all the workers who benefit from the federal salary threshold increase alone. (California and New York have overtime salary thresholds that are higher than the old federal threshold, so salaried workers there with incomes greater than $455 per week but less than the state thresholds were already technically covered–but the new federal threshold sets a national standard that guarantees a base level regardless of whether states pass or repeal overtime legislation.)

As the tables show, raising the overtime salary threshold will directly benefit a broad range of working people, including:

  • 6.4 million women, or 50.9 percent of all directly benefiting workers
  • 4.2 million parents and 7.3 million children (under age 18)
  • 1.5 million blacks (who make up 8.9 percent of the salaried workforce but 12.0 percent of directly benefiting workers), and 2.0 million Hispanics (who make up 11.8 percent of the salaried workforce but 16.0 percent of directly benefiting workers)
  • 3.6 million workers age 25 to 34 (who make up 22.9 percent of the salaried workforce but 28.7 percent of directly benefiting workers)
  • 4.5 million millennials, defined as workers age 16 to 34 (who make up 28.2 percent of the salaried workforce but 36.3 percent of directly benefiting workers)
  • 3.2 million workers with a high school degree but not more education (who make up 15.5 percent of the salaried workforce but 25.3 percent of directly benefiting workers)

Raising the threshold will affect workers in all states, with the biggest effects—in terms of states with the greatest share of salaried workers in that state who will directly benefit from raising the threshold­—in West Virginia (30.7 percent), Arkansas (30.6 percent), South Carolina (30.3 percent),  Florida (29.3 percent), Tennessee (29.2 percent), Idaho (29.1 percent), Georgia (28.2 percent), South Dakota (28.2 percent), Delaware (27.7 percent), and North Dakota (27.5 percent).

Of the major industries, the new threshold will have the biggest impacts—in terms of the greatest share of salaried workers in the industry who will directly benefit from the increase in the overtime threshold­—in agriculture, forestry, fishing, and hunting (39.7 percent); leisure and hospitality (37.3 percent); other services (33.2 percent); construction (32.6 percent); and public administration (32.5 percent).

Occupations with the greatest share of salaried workers in the occupation who will directly benefit will be office and administrative support occupations (46.0 percent); transportation and material moving occupations (40.4 percent); farming, fishing, and forestry occupations (40.2 percent); construction and extraction occupations (38.9 percent); and service occupations (38.0 percent).

Text of the final rule can be found in U.S. Department of Labor, Wage and Hour Division, 29 CFR Part 541, “Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees.”

Figure A

Number of fathers, mothers, and their children covered under old and new overtime salary thresholds, 2015

Covered under $455 per week Covered under $913 per week
Mothers 998,000 3,120,000
Fathers 609,000 2,679,000
Children (under 18) 3,010,000 10,271,000
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Note: The sample reflects salaried (nonhourly) workers who are subject to the Fair Labor Standards Act (FLSA). This excludes certain groups of workers such as the self-employed, most federal workers, religious workers, many agricultural workers, and many transportation workers. The estimates consider all the workers who directly benefit from the federal salary threshold increase alone, and do not include a subset of salaried California and New York workers already covered by state thresholds higher than the old federal threshold.

Source: EPI analysis of the U.S. Department of Labor's proposed (July 6, 2015) and final (May 18, 2016) rule, "Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees," 29 CFR Part 541; and Current Population Survey Outgoing Rotation Group microdata, 2015

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Table 1

Salaried workers* directly benefiting from the increase in the overtime salary threshold to $913/week, by demographic, 2015

Group Total salaried workers* Directly benefiting salaried workers** Share of group’s salaried workers that are directly benefiting Group’s share of directly benefiting workers Group’s share of total salaried workforce
(A) (B) (C)=(B/A) (D)=(Bx/B1) (E)=(Ax/A1)
All (1) 53,717,000 12,502,000 23.3% 100.0% 100.0%
Gender
Male 28,495,000 6,133,000 21.5% 49.1% 53.0%
Female 25,223,000 6,369,000 25.3% 50.9% 47.0%
Race/ethnicity***
White 37,656,000 8,038,000 21.3% 64.3% 70.1%
Black 4,799,000 1,504,000 31.3% 12.0% 8.9%
Hispanic 6,359,000 2,006,000 31.5% 16.0% 11.8%
Asian 4,100,000 771,000 18.8% 6.2% 7.6%
Other 4,904,000 182,000 22.7% 1.5% 1.5%
Age group
16–34 15,130,000 4,535,000 30.0% 36.3% 28.2%
16–24 2,849,000 941,000 33.0% 7.5% 5.3%
25–34 12,280,000 3,594,000 29.3% 28.7% 22.9%
35–44 13,145,000 2,769,000 21.1% 22.1% 24.5%
45–54 13,221,000 2,739,000 20.7% 21.9% 24.6%
55–64 9,461,000 1,990,000 21.0% 15.9% 17.6%
65+ 2,760,000 469,000 17.0% 3.8% 5.1%
Educational attainment
Less than high school 1,853,000 693,000 37.4% 5.5% 3.4%
High school 8,312,000 3,158,000 38.0% 25.3% 15.5%
Some college 11,418,000 3,836,000 33.6% 30.7% 21.3%
College degree 19,007,000 3,658,000 19.2% 29.3% 35.4%
Advanced degree 13,128,000 1,157,000 8.8% 9.3% 24.4%

* The sample reflects salaried (nonhourly) workers who are subject to the Fair Labor Standards Act (FLSA). This excludes certain groups of workers such as the self-employed, most federal workers, religious workers, many agricultural workers, and many transportation workers.

** Directly benefiting salaried workers are those who will newly be guaranteed overtime protection by virtue of their salary alone under the higher overtime threshold, i.e., they make at least $455 a week (the old threshold) but less than $913 a week (the new threshold in 2015 dollars). This includes workers who are newly eligible (they were excluded from automatic overtime protection because they were classified, in some cases incorrectly, as executive, administrative, and professional or "EAP" employees); and workers whose rights are strengthened (they were at risk of being classified as EAP employees).

*** Race/ethnicity categories are mutually exclusive (i.e., white non-Hispanic, black non-Hispanic, and Hispanic any race).

Note: Subtotals may not add up to totals due to rounding. The estimates consider all the workers who directly benefit from the federal salary threshold increase alone, and do not include a subset of salaried California and New York workers already covered by state thresholds higher than the old federal threshold.

Source: EPI analysis of the U.S. Department of Labor's proposed (July 6, 2015) and final (May 18, 2016) rule, "Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees," 29 CFR Part 541; and Current Population Survey Outgoing Rotation Group microdata, 2015

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Table 2

Number of mothers, fathers, and children newly covered by updated overtime salary threshold, by demographic, 2015

Covered under $455 Covered under $913 Newly covered under $913
Mothers 998,000 3,120,000 2,122,000
Fathers 609,000 2,679,000 2,070,000
Children (under 18) 3,010,000 10,271,000 7,261,000

Note: The sample reflects salaried (nonhourly) workers who are subject to the Fair Labor Standards Act (FLSA). This excludes certain groups of workers such as the self-employed, most federal workers, religious workers, many agricultural workers, and many transportation workers. The estimates consider all the workers who directly benefit from the federal salary threshold increase alone, and do not include a subset of salaried California and New York workers already covered by state thresholds higher than the old federal threshold.

Source: EPI analysis of the U.S. Department of Labor's proposed (July 6, 2015) and final (May 18, 2016) rule, "Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees," 29 CFR Part 541; and Current Population Survey Outgoing Rotation Group microdata, 2015

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Table 3

Salaried workers directly benefiting from the increase in the overtime salary threshold, by state, 2015

State Total salaried workers* Directly benefiting salaried workers** Share of state’s salaried workers that are directly benefiting State’s share of directly benefiting workers State’s share of total salaried workforce
(A) (B) (C)=(B/A) (D)=(Bx/B1) (E)=(Ax/A1)
United States(1) 53,717,000 12,502,000 23.3% 100.0% 100.0%
Alabama 632,000 167,000 26.4% 1.3% 1.2%
Alaska 90,000 16,000 17.6% 0.1% 0.2%
Arizona 999,000 258,000 25.8% 2.1% 1.9%
Arkansas 425,000 130,000 30.6% 1.0% 0.8%
California 6,005,000 1,076,000 17.9% 8.6% 11.2%
Colorado 1,033,000 248,000 24.0% 2.0% 1.9%
Connecticut 700,000 113,000 16.2% 0.9% 1.3%
Delaware 176,000 49,000 27.7% 0.4% 0.3%
District of Columbia 170,000 29,000 16.8% 0.2% 0.3%
Florida 3,645,000 1,068,000 29.3% 8.5% 6.8%
Georgia 1,748,000 493,000 28.2% 3.9% 3.3%
Hawaii 214,000 57,000 26.4% 0.5% 0.4%
Idaho 219,000 64,000 29.1% 0.5% 0.4%
Illinois 2,359,000 539,000 22.8% 4.3% 4.4%
Indiana 999,000 248,000 24.9% 2.0% 1.9%
Iowa 493,000 124,000 25.2% 1.0% 0.9%
Kansas 449,000 98,000 21.7% 0.8% 0.8%
Kentucky 591,000 149,000 25.1% 1.2% 1.1%
Louisiana 710,000 174,000 24.5% 1.4% 1.3%
Maine 191,000 46,000 24.2% 0.4% 0.4%
Maryland 1,156,000 233,000 20.2% 1.9% 2.2%
Massachusetts 1,454,000 262,000 18.0% 2.1% 2.7%
Michigan 1,366,000 275,000 20.1% 2.2% 2.5%
Minnesota 961,000 158,000 16.4% 1.3% 1.8%
Mississippi 349,000 88,000 25.3% 0.7% 0.6%
Missouri 979,000 257,000 26.3% 2.1% 1.8%
Montana 126,000 33,000 26.4% 0.3% 0.2%
Nebraska 314,000 81,000 25.8% 0.6% 0.6%
Nevada 428,000 115,000 26.9% 0.9% 0.8%
New Hampshire 253,000 54,000 21.5% 0.4% 0.5%
New Jersey 2,050,000 410,000 20.0% 3.3% 3.8%
New Mexico 242,000 61,000 25.3% 0.5% 0.5%
New York 4,157,000 982,000 23.6% 7.9% 7.7%
North Carolina 1,653,000 425,000 25.7% 3.4% 3.1%
North Dakota 122,000 34,000 27.5% 0.3% 0.2%
Ohio 1,677,000 351,000 20.9% 2.8% 3.1%
Oklahoma 587,000 154,000 26.2% 1.2% 1.1%
Oregon 568,000 124,000 21.9% 1.0% 1.1%
Pennsylvania 2,035,000 459,000 22.6% 3.7% 3.8%
Rhode Island 169,000 37,000 21.8% 0.3% 0.3%
South Carolina 724,000 219,000 30.3% 1.8% 1.3%
South Dakota 115,000 32,000 28.2% 0.3% 0.2%
Tennessee 993,000 290,000 29.2% 2.3% 1.8%
Texas 4,906,000 1,244,000 25.4% 9.9% 9.1%
Utah 493,000 119,000 24.1% 1.0% 0.9%
Vermont 109,000 25,000 22.9% 0.2% 0.2%
Virginia 1,578,000 333,000 21.1% 2.7% 2.9%
Washington 1,146,000 232,000 20.2% 1.9% 2.1%
West Virginia 215,000 66,000 30.7% 0.5% 0.4%
Wisconsin 866,000 187,000 21.6% 1.5% 1.6%
Wyoming 80,000 20,000 24.6% 0.2% 0.1%

* The sample reflects salaried (nonhourly) workers who are subject to the Fair Labor Standards Act (FLSA). This excludes certain groups of workers such as the self-employed, most federal workers, religious workers, many agricultural workers, and many transportation workers.

** Directly benefiting salaried workers are those who will newly be guaranteed overtime protection by virtue of their salary alone under the higher overtime threshold, i.e., they make at least $455 a week (the old threshold) but less than $913 a week (the new threshold in 2015 dollars). This includes workers who are newly eligible (they were excluded from automatic overtime protection because they were classified, in some cases incorrectly, as executive, administrative, and professional or "EAP" employees); and workers whose rights are strengthened (they were at risk of being classified as EAP employees).

Note: Subtotals may not add up to total due to rounding. The estimates consider all the workers who directly benefit from the federal salary threshold increase alone, and do not include a subset of salaried California and New York workers already covered by state thresholds higher than the old federal threshold.

Source: EPI analysis of the U.S. Department of Labor's proposed (July 6, 2015) and final (May 18, 2016) rule, "Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees," 29 CFR Part 541; and Current Population Survey Outgoing Rotation Group microdata, 2015

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Table 4

Salaried workers directly benefiting from the increase in the overtime salary threshold, by major industry, 2015

Total salaried workers* Directly benefiting salaried workers** Share of industry’s salaried workers that are directly benefiting Industry’s share of directly benefiting workers Industry’s share of total salaried workforce
(A) (B) (C)=(B/A) (D)=(Bx/B1) (E)=(Ax/A1)
All (1) 53,717,000 12,502,000 23.3% 100.0% 100.0%
Agriculture, forestry, fishing, and hunting 333,000 132,000 39.7% 1.1% 0.6%
Mining 390,000 62,000 15.9% 0.5% 0.7%
Construction 2,395,000 780,000 32.6% 6.2% 4.5%
Manufacturing 5,419,000 1,141,000 21.1% 9.1% 10.1%
Wholesale and retail trade 5,435,000 1,698,000 31.2% 13.6% 10.1%
Transportation and utilities 1,999,000 557,000 27.8% 4.5% 3.7%
Information 1,489,000 319,000 21.4% 2.5% 2.8%
Financial activities 5,315,000 1,238,000 23.3% 9.9% 9.9%
Professional and business services 7,543,000 1,567,000 20.8% 12.5% 14.0%
Educational and health services 16,311,000 2,568,000 15.7% 20.5% 30.4%
Leisure and hospitality 2,572,000 959,000 37.3% 7.7% 4.8%
Other services 2,061,000 684,000 33.2% 5.5% 3.8%
Public administration 2,456,000 798,000 32.5% 6.4% 4.6%

* The sample reflects salaried (nonhourly) workers who are subject to the Fair Labor Standards Act (FLSA). This excludes certain groups of workers such as the self-employed, most federal workers, religious workers, many agricultural workers, and many transportation workers.

** Directly benefiting salaried workers are those who will newly be guaranteed overtime protection by virtue of their salary alone under the higher overtime threshold, i.e., they make at least $455 a week (the old threshold) but less than $913 a week (the new threshold in 2015 dollars). This includes workers who are newly eligible (they were excluded from automatic overtime protection because they were classified, in some cases incorrectly, as executive, administrative, and professional or "EAP" employees); and workers whose rights are strengthened (they were at risk of being classified as EAP employees).

Note: Subtotals may not add up to total due to rounding. The estimates consider all the workers who directly benefit from the federal salary threshold increase alone, and do not include a subset of salaried California and New York workers already covered by state thresholds higher than the old federal threshold.

Source: EPI analysis of the U.S. Department of Labor's proposed (July 6, 2015) and final (May 18, 2016) rule, "Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees," 29 CFR Part 541; and Current Population Survey Outgoing Rotation Group microdata, 2015

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Table 5

Salaried workers directly benefiting from the increase in the overtime salary threshold, by major occupation, 2015

Total salaried workers* Directly benefiting salaried workers** Share of industry’s salaried workers that are directly benefiting Industry’s share of directly benefiting workers Industry’s share of total salaried workforce
(A) (B) (C)=(B/A) (D)=(Bx/B1) (E)=(Ax/A1)
All (1) 53,717,000 12,502,000 23.3% 100.0% 100.0%
Management, business, and financial occupations 14,167,000 2,549,000 18.0% 20.4% 26.4%
Professional and related occupations 19,690,000 2,353,000 12.0% 18.8% 36.7%
Services occupations 4,199,000 1,595,000 38.0% 12.8% 7.8%
Sales and related occupations 5,281,000 1,627,000 30.8% 13.0% 9.8%
Office and administrative support occupations 4,987,000 2,294,000 46.0% 18.3% 9.3%
Farming, fishing, and forestry occupations 243,000 98,000 40.2% 0.8% 0.5%
Construction and extraction occupations 1,426,000 554,000 38.9% 4.4% 2.7%
Installation, maintenance, and repair occupations 1,073,000 403,000 37.6% 3.2% 2.0%
Production occupations 1,315,000 489,000 37.1% 3.9% 2.4%
Transportation and material moving occupations 1,337,000 540,000 40.4% 4.3% 2.5%

* The sample reflects salaried (nonhourly) workers who are subject to the Fair Labor Standards Act (FLSA). This excludes certain groups of workers such as the self-employed, most federal workers, religious workers, many agricultural workers, and many transportation workers.

** Directly benefiting salaried workers are those who will newly be guaranteed overtime protection by virtue of their salary alone under the higher overtime threshold, i.e., they make at least $455 a week (the old threshold) but less than $913 a week (the new threshold in 2015 dollars). This includes workers who are newly eligible (they were excluded from automatic overtime protection because they were classified, in some cases incorrectly, as executive, administrative, and professional or "EAP" employees); and workers whose rights are strengthened (they were at risk of being classified as EAP employees).

Note: Subtotals may not add up to total due to rounding. The estimates consider all the workers who directly benefit from the federal salary threshold increase alone, and do not include a subset of salaried California and New York workers already covered by state thresholds higher than the old federal threshold.

Source: EPI analysis of the U.S. Department of Labor's proposed (July 6, 2015) and final (May 18, 2016) rule, "Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees," 29 CFR Part 541; and Current Population Survey Outgoing Rotation Group microdata, 2015

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