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Why 10 million workers may benefit from Obama’s overtime push

On Thursday, President Obama will order the Labor Department to change the definition of overtime pay
Obama to unveil plan to overhaul overtime pay 01:34

Anyone wearing an "assistant manager" name tag knows that the job carries a nice title but doesn't necessarily come with commensurate pay.

One of the biggest issues for assistant managers and other white-collar workers is unpaid overtime. That's because those employees are often expected to work 60 or 70 hours a week, pushing their pay down to minimum-wage level once all their hours are included.

With President Barack Obama's plan to require businesses to pay more in overtime wages to executive or managerial employees, as many as 10 million workers could stand to benefit, according to Ross Eisenbrey of the liberal Economic Policy Institute. That would happen if the White House, which hasn't yet set out the details of the plan, requires overtime pay for white-collar workers earning less than $50,000.

"President Obama is right: Americans are working longer hours and American workers are more productive than ever, but it's not showing up in their pay," Demos senior policy analyst Amy Traub wrote to CBS MoneyWatch in an email. "The current rules are a sweet deal for businesses that are profiting from the extra work and also pocketing more of their employees' paychecks."

Under current Labor Department rules, workers earning $455 per week, or about $24,000 per year, don't have to receive overtime pay beyond that threshold.

But the rule has become out-of-touch with reality, writes Eisenbrey, the former commissioner of the U.S. Occupational Safety and Health Review Commission.

"Back in the days when the level was regularly adjusted, it was set at about $50,000-$60,000 a year in today's dollars, which is reasonable and was high enough to protect most secretaries from being classified as exempt administrators, for example, and research assistants from being classified as exempt professionals," he noted.

A threshold of $455 is "a joke," he added.

Conservatives and libertarians, however, take issue with Obama's plan, arguing that requiring higher pay for workers may result in pay reductions and job losses.

"If companies know they have to pay certain workers more money for overtime, they will either cut their base pay or cut a worker or two," Cato Institute senior fellow Daniel J. Mitchell told CBS Radio.

The argument echoes the rhetoric surrounding the president's push to boost the minimum wage. While many argue that raising the baseline pay will increase the standard of living for millions of workers and boost spending, others caution that forcing employers to pay more could mean job cuts and higher consumer prices.

Boosting overtime pay would help the economy by benefiting millions of middle-class families, Demos' Traub notes.

The current overtime rules are "hurting American workers and it harms our economy as a whole because working middle-class families don't have enough money to spend, and the lack of consumer demand is depressing job growth," she notes.

One thing is certainly true: Americans increasingly feel they're being pushed out of the middle class, partially because of stagnant wages. The number of Americans who say they're middle class -- considered the bedrock of the U.S. economy -- has shrunk to a low of 44 percent, down from 53 percent at the start of the 2008 recession, the Pew Research Center noted in January.

Could a change to overtime pay help strengthen the middle class? It's likely to not only help workers "get ahead," but also encourage employers to hire additional staff instead of asking employees to work "excessively long hours," Eisenbrey said.

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