The U.S. Department of Labor issued a final rule today making changes to the regulations about who is eligible for overtime pay. Here’s why this matters:

How the overtime threshold works

Overtime pay protections are included in the Fair Labor Standards Act (FLSA) to ensure that most workers who put in more than 40 hours a week get paid 1.5 times their regular pay for the extra hours they work. Almost all hourly workers are automatically eligible for overtime pay. But workers who are paid on a salary basis are only automatically eligible for overtime pay if they earn below a certain salary. Above that level, employers can claim that workers are “exempt” from overtime pay protection if their job duties are considered executive, administrative, or professional (EAP)—essentially managers or highly credentialed professionals.

The current overtime salary threshold is too low to protect many workers

The pay threshold determining which salaried workers are automatically eligible for overtime pay has been eroded both by not being updated using a proper methodology, and by inflation. Currently, workers earning $684 per week (the equivalent of $35,568 per year for a full-time, full-year employee) can be forced to work 60-70 hours a week for no more pay than if they worked 40 hours. The extra 20-30 hours are completely free to the employer, allowing employers to exploit workers with no consequences.

The Department of Labor’s new final rule will phase in the updated salary threshold in two steps over the next eight months, and automatically update it every three years thereafter.

• Effective on July 1, 2024, the salary threshold will be raised to $844 per week.
  • This is the equivalent of $43,888 per year for a full-time, full-year worker.
  • In 2019, the Department updated the salary threshold to a level that was inappropriately low. Further, that threshold has eroded substantially in the last 4+ years as wages and prices have risen over that period, leaving roughly one million workers without overtime protections who would have received those protections under the methodology of even that inappropriately weak rule. This first step essentially adjusts the salary threshold set in the 2019 rule for inflation.
• Effective on January 1, 2025, the salary threshold will be raised to $1,128 per week.
  • This is the equivalent of $58,656 per year for a full-time, full-year worker.
  • This level appropriately sets the threshold at the 35th percentile of weekly wages for full-time, salaried workers in the lowest-wage Census region, currently the South.
• The salary threshold will automatically update every three years thereafter, based on the methodology laid out in the rule, to ensure that the strength of the rule does not erode over time as prices and wages rise.

The final rule will benefit 4.3 million workers

• 2.4 million of these workers (56%) are women
• 1.0 million of these workers (24%) are workers of color
• The largest numbers of impacted workers are in professional and business services, health care and social services, and financial activities.
• The 4.3 million represents 3.0% of workers subject to the FLSA.

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The labor market recovery from the pandemic recession has been tremendous and low-wage workers have been key recipients of those gains, with dramatically fast real wage growth between 2019 and 2023 as we found in our recent report. These gains were due in part to several large spending bills passed during the pandemic—including the vital American Rescue Plan—which provided relief to workers and their families to help them weather the recession and fed the surge in employment. After losing their jobs in record numbers during the initial shock of the pandemic, low-wage workers found better job opportunities and experienced unusually strong leverage to see fast wage growth as employers scrambled to hire workers in the recovery.

At the same time, 29 states and the District of Columbia raised their minimum wages between 2019 and 2023—either through legislation, ballot referendums, or indexing to inflation. We found that these state minimum wage increases also boosted low-end wage growth: 10th-percentile wages grew about 50% faster in states with minimum wage increases compared with states without any change in their minimum wage (see Figure A). It is also the case that low-wage workers experienced relatively fast wage growth in all states, regardless of changes to their minimum wage.

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U.S. employers have tremendous power over worker conduct. Under federal law, employers can require workers to attend “captive audience” meetings—and force employees to listen to political, religious, or anti-union employer views—on work time.

Fortunately, a growing number of states are now seeking to address the threat of political and religious coercion in the workplace. This month, Washington state Governor Jay Inslee signed the Employee Free Choice Act into law, making Washington the seventh state to protect workers’ rights to opt out of captive audience meetings. The Illinois legislature is now considering whether to send similar legislation to Governor J.B. Pritzker before month’s end. Washington and Illinois are among the 18 states that have so far introduced or enacted bills to protect workers from offensive or unwanted political and religious speech unrelated to job tasks or performance.

Importantly, these bills do not limit employer rights to express opinions, or even to invite employees to political or religious meetings during work time. Instead, this legislation is designed to prohibit employers from threatening, disciplining, firing, or retaliating against workers who choose to not attend mandatory workplace meetings focused on communicating opinions on political or religious matters.  

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Below, EPI senior economist Elise Gould offers her insights on the jobs report released this morning, which showed 303,000 jobs added in March. Read the full thread here. 

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U.S. labor market strength in the recovery has been extraordinary because policymakers addressed the pandemic and subsequent recession at the scale of the problem. Unemployment has been at or below 4.0% for 27 months running, the longest such stretch since the late 1960s. Low-wage workers experienced an unprecedented surge in wage growth over the last four years, as shown in our new report.

These historically robust outcomes extended to Black and Hispanic workers. In 2023, the share of Black and Hispanic people ages 25-54 with a job hit an all-time high. Further, real wage growth among Black and Hispanic workers experienced a significant turnaround from the stagnant wage growth they suffered in much of the prior four decades.

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This piece was published in collaboration with the Albert Shanker Institute.

For some students and workers, hair is a trivial wardrobe decision, while for many Black and Brown people, their hairstyle can be a consequential element of class participation and a job offer. School dress codes and “business appropriate” dress often put high stakes and severe restrictions on how Black and Brown people can express their culture and identity through their hair.

Over the last several years, lawmakers in 24 states have sought to combat this problem by passing the “Creating a Respectful and Open World for Natural Hair” (CROWN) Act. The CROWN Act is a law that protects against discrimination based on hairstyle and texture in schools, workplaces, and beyond by extending the definition of racial expression to include wearing braids, locs, twists, and other culturally significant hair styles.

Yet the recent court case of Texas high school junior Darryl George reveals that even in states that have adopted versions of the CROWN Act, as Texas has, Black and Brown people can still face educational and career disadvantages for their hairstyles when discriminatory systems—in this case a school dress code—are validated by judicial interpretation that ignores the intent of the law.

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This piece was originally published in Democracy Journal. 

In the decades following World War II, the U.S. economy thrived. Economic growth was strong and the fruits of that growth were broadly shared. Not everything in the economy was perfect in the 1950s and ’60s—far from it. There were massive inequities by race and gender, marked by the exclusion of people of color and women from countless labor market opportunities. Nevertheless, a crucial dynamic was in place: As the economy grew, workers all across the wage distribution—low-wage, middle-wage, and high-wage—saw gains. Racial and gender gaps shrank. Growth was strong, and living standards improved across the board.

This positive dynamic was not a foregone conclusion. It was the result of “middle-out” policy choices that ensured that economic growth was both robust and broadly shared (though the term “middle-out” would not be coined until much later). Macroeconomic policymakers targeted sustained low unemployment, the federal minimum wage increased rapidly and regularly and was well enforced, the federal government actively safeguarded workers’ rights to unionization and collective bargaining, and regulations protected many other labor rights.

Starting in the late 1970s, however, policy began to shift in an ill-fated direction. As a neoliberal paradigm took hold and trickle-down economics secured its dominance among members of both parties as the proper way to manage the economy, policymakers went about dismantling the policy bulwarks that were the crucial foundation of robust, broadly shared growth. Macroeconomic policymakers began to tolerate excess unemployment, increases in the federal minimum wage became smaller and rarer, lawmakers failed to update labor law to keep up with relentless attacks on unionization and collective bargaining, and anti-worker deregulatory pushes succeeded again and again.

We all know what happened in those years. Workers lost ground dramatically. In the earlier era, from the postwar period through the late 1970s, productivity had grown 2.5% per year on average, while the typical worker’s compensation grew at an average of 2.4%. This parity led to life-changing improvements in living standards for working people from generation to generation. But as the policy regime shifted away from the middle-out economics of the New Deal to neoliberal economics, productivity growth slowed dramatically and compensation growth for typical workers absolutely tanked. From 1979 to 2022, productivity grew 1.2% per year on average—less than half the pace of the prior period—and the typical worker’s compensation grew by an average of just 0.3%. And—after improving in the earlier period—the Black-white wage gap widened.

In 2022, “production and nonsupervisory employees”—a Bureau of Labor Statistics designation covering some 80% of the workforce—earned an average of $57,300. If productivity and pay had not diverged since the late 1970s, and instead the average wage for this group had grown at the rate of productivity, a typical worker would have been making $82,000—a 43% bump that would equate to nearly $25,000 annually. That would be a life-changing amount of money for working families.

One of the core pillars of middle-out economics is empowering workers—giving them the tools they need to claim their fair share of economic growth. It’s worth emphasizing that there is no silver bullet here: There was a sweeping transformation to neoliberal economics, and we need another sweeping transformation to set us on a path of robust, broadly shared growth. In what follows, I detail some middle-out economic policies that will help close the productivity-pay gap, and what they would mean for working people.

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This is an excerpt from an op-ed that originally published in CNN. Read the full op-ed here.

The federal estate tax should be an effective tool to slightly level the playing field between those who inherit wealth and those who have to work for a living. It should also ensure that family dynasties who’ve amassed enormous fortunes pay their fair share in taxes.

But because policymakers have repeatedly doubled and tripled the immense sums that can be passed on before the tax kicks in, the estate tax today affects almost no one.

The estate tax exemption—the value of an estate that a mega-millionaire can own before facing taxes—has grown so much over the past quarter century that just eight of every 10,000 people who died in 2019 left behind an estate that was large enough to be subject to the tax, currently at 40%.

Read the full op-ed here.

March 12 is Equal Pay Day, a reminder that there is still a significant pay gap between men and women in our country. The date represents how far into 2024 women would have to work on top of the hours they worked in 2023 simply to match what men were paid in 2023. Women were paid 21.8% less on average than men in 2023, after controlling for race and ethnicity, education, age, and geographic division. 

There has been little progress in narrowing this gender wage gap over the past three decades, as shown in Figure A. While the pay gap declined between 1979 and 1994—due to men’s stagnant wages, not a tremendous increase in women’s wages—it has remained mostly flat since then.

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Below, EPI economists offer their insights on the jobs report released this morning, which showed 275,000 jobs added in February.

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Workers want unions now more than they have in a generation. Evidence suggests more than 60 million non-union workers would like a union at their workplace. The National Labor Relations Board (NLRB)—the agency established by Congress in 1935 to protect workers’ organizing rights—is handling more union representation elections and unfair labor practice charges than they have in years.

So how have companies responded to this surge in worker organizing?

Some have honored their workers’ choice and tried to start a positive labor-management relationship, as Microsoft, New Flyer, Ben & Jerry’s, and other companies have done. These companies see the value of a constructive relationship with their employees to their bottom line.

Others have taken the opposite tack—to the extreme. Led by Elon Musk’s SpaceX, and joined by Amazon, Trader Joe’s, and Starbucks, these companies are engaged in a legal battle trying to have the NLRB declared unconstitutional, by resurfacing long-rejected constitutional arguments about the agency’s structure. If they succeed, it would kneecap the agency and its operations at the very time workers need it the most.

Why are these companies taking this scorched-earth approach? What is motivating these attacks? 

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The immigrant share of the labor force reached a record high of 18.6% in 2023, according to our analysis of Current Population Survey (CPS) data from the Bureau of Labor Statistics.1 Anti-immigration advocates have been out in full force, using this as a talking point for deeply misguided commentary and analysis that roughly translates to “immigrants are taking all our jobs.” 

The reality is that the economy does not have a fixed number of jobs, and what we see today is a growing economy that is adding jobs for both immigrants and U.S.-born workers. Here are six key facts that show immigrants are not hurting the employment outcomes of U.S.-born workers.

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This week, Michigan’s 2023 repeal of a so-called “right-to-work” (RTW) law takes effect. Meanwhile, New Hampshire’s state legislature is once again debating a RTW bill at a moment when it could not be clearer that RTW laws damage states’ economies by accelerating income inequality and reducing job quality, without delivering any job growth.  

RTW laws—and the phrase “right to work” itself—are intended to deceive and confuse. The misleadingly named policy is designed to make it more difficult for workers to form and sustain unions and negotiate collectively for better wages, benefits, and working conditions.

As Martin Luther King, Jr. pointed out in 1961, “right to work” is a “false slogan” since RTW laws provide neither rights nor work and are in fact designed “to rob us of our civil rights and job rights [and] to destroy labor unions and the freedom of collective bargaining by which unions have improved wages and working conditions of everyone.” Decades later, research bears out King’s contention that “wherever these laws have been passed, wages are lower.”

RTW laws are historically rooted in racism and designed to maintain unequal power. When private-sector workers first gained legal protection to unionize following passage of the federal National Labor Relations Act in 1935, unionization rates grew quickly. In response, opponents waged anti-union, explicitly white supremacist campaigns to limit worker power and maintain Jim Crow labor relations. These campaigns pursued state legislation as a means to constrain workers’ newly won federal union rights via RTW policies, and especially to block multiracial union organizing. RTW laws have since spread to 27 states and continue to generate economic outcomes that disadvantage all workers.

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Click here for the latest version of our 50-state maps showing legislation to roll back or strengthen child labor protections.

Child labor remains a top issue in 2024 state legislative sessions amid soaring violations and widespread abuse of child labor laws in multiple sectors of the economy. On one hand, the coordinated, industry-backed effort to roll back child labor protections state by state has continued to expand. At the same time, some state legislators are proposing legislation to strengthen the rights of young workers and the laws designed to safeguard their health and education.

Since 2021, 28 states have introduced bills to weaken child labor laws, and 12 states have enacted them. By contrast, 14 states have introduced bills to strengthen child labor protections already in 2024—up from 11 states in all of 2023—as more state lawmakers recognize the need to address increasing violations and threats to current state and federal standards.

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Below, EPI economists offer their insights on the jobs report released this morning, which showed 353,000 jobs added in January.

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Despite consumer sentiment about the economy improving through the end of 2023, there is still a disconnect between how people feel about the economy and what the data show. Consumer spending was up in 2023, especially through the holiday season, yet inflation anxiety and recession fears were still present. Where does this disconnect come from? Are people simply wrong about the economy, or are the numbers lying to us?

We can square this circle by acknowledging that two things can be true at once: The economic data showing low unemployment, rising wages, and slowing inflation are indeed accurate evidence that the economy is not in a crisis, and yet people’s anxieties reflect legitimate economic concerns. Those anxieties highlight a series of structural issues that have plagued the U.S. economy for decades. It is precisely because we are not currently in an acute crisis like a recession that people have the latitude to identify these chronic economic conditions that deserve to be addressed.

Let’s start by looking at what economists mean when rightly pointing out how strong our economy is right now, especially when compared with the past few years. Then, we can dig into the chronic problems that have been facing the U.S. economy for decades.

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Over the past six months, core inflation has risen exactly in line with the Federal Reserve’s long-run 2% inflation target. When this key measure of inflation (which excludes volatile food and energy prices) is neither above nor below this target, this is a good sign that the Fed’s policy should be roughly neutral—aiming to neither increase nor depress economic activity.

Yet Fed interest rate policy today is nowhere near neutral—instead it is putting a stiff drag on potential growth. The Fed’s main policy instrument—the federal funds rate—stands between 5.25 and 5.5%, its highest level since at least the business cycle peak of 2007 (and maybe even the peak of 2000). There are a lot of debates among economists about the correct “neutral” level of interest rates in the economy (and even debates about whether it exists or is a useful guide to policy at all), but nobody thinks today’s rates are even close to neutral. Instead, interest rates closer to 2.5-3% are likely needed to keep monetary policy from continuing to threaten growth. (Rates lower than this would likely start providing some stimulus to the economy, which does not seem needed at the moment.)

Given that inflation has been brought all the way back down to the Fed’s target, further economic cooling is no longer needed, and the Fed should move quickly to a more neutral stance.

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Unions and collective action have long served as a vehicle for ensuring prosperity for working families and creating a more equal economy. Despite these critical functions, workers engaged in collective action, like strikes, have historically been barred from accessing safety net programs like unemployment insurance (UI). In a welcome development, state lawmakers are beginning to rethink this convention, recognizing the dual roles of UI in stabilizing the economy and unions in securing broad-based economic growth.

A growing number of states are proposing legislation to extend unemployment insurance to striking workers

In just the past two years, lawmakers in nine states have introduced legislation aimed at granting or enhancing striking workers’ access to UI. As shown in Table 1, New York and New Jersey are currently the only two states where striking workers can apply for UI benefits following a 14-day waiting period. This month, New York legislators proposed a further reduction to seven days.  

However, not all legislative efforts have been successful. The Connecticut Senate rejected a bill that would have permitted striking workers to access UI after 14 days, while California Governor Gavin Newsom vetoed a similar bill that passed in the state legislature. Presently, Massachusetts and Pennsylvania legislators are considering laws with 30-day waiting periods, Illinois and Ohio are considering bills with 14-day waiting periods, and Washington is considering a bill with a seven-day waiting period.

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2024 is the last opportunity for state and local governments to make spending decisions on funds provided by the American Rescue Plan Act (ARPA). Many states, localities, and school districts still have considerable unspent ARPA funds. At a time when the public sector has still not fully recovered from the job losses of the pandemic, governments should use remaining ARPA funds to shore up public services and invest in education.

ARPA allocated $350 billion to state and local governments (State and Local Fiscal Recovery Funds, or SLFRF). While governments do not need to spend those funds until 2026, they must be obligated by December 31, 2024. ARPA also provided an additional $122 billion to school districts and state education authorities (Elementary and Secondary Schools Emergency Relief, or ESSER III). That money must be obligated by September 30, 2024, and must be spent by January 28, 2025.

The latest SLFRF spending data, covering the period ending June 30, 2023, show that roughly half of fiscal recovery funds had yet to be spent. The amount is even higher for local governments, with more than 56% of funds unexpended.

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In 2023, the issue of child labor re-emerged as a national crisis. Federal data on the rise of child labor violations and numerous investigative reports of widespread illegal youth employment garnered sustained media attention, sparking outrage from the public and lawmakers alike. At the same time, EPI has documented an ongoing, coordinated effort to roll back existing child labor protections that is gaining momentum in states across the country. Legislative proposals to weaken child labor protections—some of which have already been enacted—allow employers to hire teens for more dangerous jobs or extend the hours young people can work on school nights.

What has received far less attention is the long-standing system of pay discrimination against young workers under federal and state laws. These laws allow employers to pay youth less than adults in the same jobs and, in many cases, exclude young workers from the minimum wage protections that cover most adult workers.

In states across the country, advocates and lawmakers are working to eliminate subminimum wages for low-wage tipped or disabled workers. Amid increased child labor violations and a growing movement to roll back protections for working youth, lawmakers should also work to eliminate youth subminimum wages. Age-based pay discrimination is unfair and harms workers of all ages.

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Below, EPI senior economist Elise Gould offers her insights on the jobs report released this morning, which showed 216,000 jobs added in December. Read the full thread here.

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On January 1, 22 states will increase their minimum wages, raising pay for an estimated 9.9 million workers. In total, workers will receive $6.95 billion in additional wages from state minimum wage increases. In addition, 38 cities and counties will increase their minimum wages on January 1 above their state’s wage floors, adding to the number of workers likely to see increased earnings. In the absence of federal action, states and localities continue to take the lead in advancing fairer wage floors via legislation, ballot measures, and automatic inflation adjustments.

The minimum wage continues to be a vital policy for creating a more equitable economy. According to our analysis:

• Women make up more than half (57.9%) of workers getting an increase on January 1.
• The minimum wage increases will also disproportionately benefit Black and Hispanic workers. Black workers make up 9.0% of the wage-earning workforce in the states with increases, but are 11.1% of the affected workers. Similarly, Hispanic workers are 19.6% of the workforce in these states, but 37.9% of the workers receiving wage increases.
• These increases will also bring important benefits to working families. More than a quarter (25.8%) of affected workers are parents, or more than 2.5 million people. In total, 5.6 million children live in households where an individual will receive a minimum wage increase.
• The increases will provide critical support to workers and families in need. Almost one in five (19.7%) workers getting a raise have incomes below the poverty line, and nearly half (47.4%) have incomes below twice the poverty line.
• More than half (51%) of workers getting minimum wage increases are in California, Hawaii, and New York, all high cost-of-living states.

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The Biden administration has issued a proposed rule setting minimum hours of care by registered nurses and nurse aides in nursing homes. Since nursing home owners can boost profits by reducing staffing levels to dangerous levels, this is a critical step toward protecting residents and workers.

The industry lobby says that low staffing levels aren’t due to profit-seeking, but rather a shortage of workers. However, the supposed “shortage” is self-inflicted. As we explained in a public comment on the proposed rule, nursing home workers are grossly underpaid and overworked. Declines in nursing home employment also reflect a shift toward home- and community-based services (HCBS) that accelerated in the wake of the COVID-19 pandemic, which devastated nursing home residents and staff.

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