Jeff Grabelsky, associate director of The Worker Institute at Cornell University’s ILR School, comments on President Obama’s decision to expand eligibility for overtime pay for several million employees now exempted from the Fair Labor Standards Act. He says that the exercise of executive authority to change overtime regulations could have widespread impact on the economy.
“The president’s decision could raise the pay of several million workers who may currently be misclassified as managers by employers hoping to avoid overtime requirements. Along with efforts to increase the federal minimum wage to $10.10 per hour, this executive order could help address the crisis of growing income inequality in the U.S. “Despite the fact that corporate profits have nearly doubled since the Great Recession ended in June 2009, workers have continued to suffer from wage stagnation. In fact, the share of gross domestic income that went to workers fell to a record low in 2012, just 42.6 percent. “Growing income inequality is a persistent problem in the United States and contributes to anemic economic growth. Every policy intervention that can help reverse that trend – more robust labor standards, stricter regulatory enforcement, raising the minimum wage, properly classifying employees – should be pursued. Obama’s decision is a good one.”