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News from EPI Workers will lose out on $1.2 billion under Trump administration overtime proposal

In 2016, the Obama Labor Department issued a rule that would have raised the threshold under which almost all workers are entitled to overtime to $47,476 a year. But just before the rule was set to go into effect, a district court judge in Texas blocked the rule nationwide. In March of this year, the Trump administration released a proposal to set the threshold at $679 per week, or $35,308 for a full-year worker, in 2020. The adoption of this proposal would leave behind millions of workers who would have gotten new or strengthened overtime protections under regulations finalized in 2016.

In an updated analysis, EPI Policy Director Heidi Shierholz shows that workers will earn $1.2 billion dollars less a year under the Trump administration’s proposal than they would have earned under the 2016 rule. These annual earnings losses will grow to $1.6 billion (in inflation-adjusted terms) over the first 10 years of implementation due to the fact that the Trump administration proposal does not include automatic indexing.

“The 2016 rule’s threshold was painstakingly researched and economically justified,” said Shierholz, who served as chief economist at the Department of Labor during the 2016 rulemaking process. “Given how much in earnings workers will lose out on, and how many workers will be left behind under this proposal, we encourage the department to drop this rule-making and instead defend the 2016 threshold. The department’s new proposed rule—which is based on the notion that someone struggling on $35,000 a year is a highly paid executive who doesn’t need or deserve overtime protections—flies in the face of the principles embodied in the Fair Labor Standards Act and should be abandoned.”

Shierholz’s calculation includes both wages lost by workers who would have gotten new protections under the 2016 rule but would not get new protections under the Trump proposal, and wages lost by workers who would get new protections under either the Trump proposal or the 2016 rule but who would have gotten a larger raise under the 2016 threshold than under the 2019 proposal. The calculation does not include earnings losses by those who would have gotten strengthened protections under the 2016 rule but would not get them under the Trump proposal.