New overtime rule may benefit millions of millennials
WASHINGTON — Burning the midnight oil may be about to pay off for millions of millennials.
The White House has announced a new rule that will boost the number of Americans who qualify for time-and-a-half pay whenever they work more than 40 hours in a week. Among the biggest beneficiaries may be young employees — toiling at startups and ad agencies or serving as restaurant managers, for example — who haven’t been getting extra compensation for working extended hours.
The rule, effective Dec. 1, will double the salary cap for overtime eligibility to $47,476 a year from the current $23,660.
That means employees who earn annual salary at $47,476 or less will automatically be eligible for overtime wages — just like hourly workers, who already qualify.
Workers of all ages stand to benefit, but young workers, especially, can expect a boost, said Ross Eisenbrey, vice president of the left-leaning Economic Policy Institute.
‘‘Millennials are disproportionately affected by the overtime rule because they tend to be in the lower end of the wage spectrum,’’ said Eisenbrey, who testified at a congressional hearing last week on the rule’s potential effects. They make up 36.3 percent of the newly covered, he said. According to his calculations, the share of salaried 25- to 34-year-olds benefiting from overtime protections will jump from 9.1 percent to 38.4 percent. For 16- to 24-year-olds, it will go from 31 percent to 64.1 percent.
That translates to more than 4.5 million newly benefiting workers between 16 and 34 (and another 8 million who are 35 or older).
Hourly workers, who already get overtime benefits, represent 58.5 percent of the US labor force.
The rule marks the first adjustment to overtime in more than a decade. The cap was last updated in 2004. The Obama administration says inflation has been cutting into the real value of the threshold.
Still, some say the rule could have unintended consequences. Researchers at George Mason University argue employers will cut base salaries to account for the overtime pay. Companies might also replace these workers with a smaller number of higher-skilled employees who earn salaries above $47,476 a year, the researchers said.