By Anna Chu
Center for American Progress Action Fund
My family clawed their way into the middle class. They immigrated to the United States from China 30-some years ago with little more than the clothes on their back. While my dad had carpentry skills that he parlayed into a small business, the majority of my aunts and uncles found themselves arriving in America speaking little English, without any special skillset and already in their mid- to late-20s.
It was a scary scenario, but they were willing to work hard at a time when hard work paid off. But perhaps even more critical was that my aunts and uncles were able to find good union jobs with overtime pay that allowed them to join the middle class and realize their American Dream.
The overtime rule meant my aunts and uncles were able to boost their paychecks by working more and earning time-and-a-half pay for any work beyond the 40 hour workweek. Because they knew their hard work would pay off, they sought out as much overtime as they could and signed up for every shift imaginable — nights, weekends, holidays — to build a better life for them and their families.
Americans who are willing to work hard should be fairly compensated for their work and be able to join the middle class. But that is rarely the case anymore.
The workplace has changed dramatically over the years and workers are bearing the brunt of it. Union-membership rates have declined significantly while workplace standards have eroded. For example, if the minimum wage had kept pace with inflation since 1968, it would be nearly $10 in 2014.
But minimum wage is not the only workplace standard that is failing workers: overtime standards have also fallen.
Overtime standards are currently guaranteed to hourly workers and salaried workers who make less than to $455 a week, or a little over $23,600 a year. This threshold is tremendously low and has failed to keep up with inflation: If the overtime threshold had kept up with inflation since 1975, it would be more than $51,000 today.
Today, only 8 percent of full-time, salaried workers qualify for overtime pay, compared to more than 60 percent who qualified just four decades ago. Even though Americans are working just as hard as ever, many still can’t get ahead because their hard work is not paying off.
When workplace standards like minimum wage and overtime pay are allowed to deteriorate, wages for working and middle class families stagnate. Combined with the rising costs that families have experienced over the past three decades — including skyrocketing costs in housing, child care, higher education, health care, and retirement — families today are being squeezed more than ever.
Fortunately, there is a silver lining: The Obama administration recently announced that it is moving forward with a rule to raise the overtime threshold to $50,440, which means that nearly 5 million new workers will be eligible for overtime pay. Along with measures like raising the minimum wage, stronger overtime standards could go far in boosting wages for working and middle class families.
My aunts and uncles were fortunate — they had a union to fight for them and were able to earn overtime pay. That’s how they joined America’s middle class. But for too many families today, middle-class security remains out of reach due to outdated workplace policies. Raising overtime standards is a critical step to creating an economy that works for everyone, not just the wealthy few.
Anna Chu, a native of San Francisco, is the vice president of policy and research at the Center for American Progress Action Fund. She wrote this article for the Mercury News and CAPAF distributed to other media.
The Center for American Progress Action Fund is the sister advocacy organization of the Center for American Progress. The Action Fund transforms progressive ideas into policy through rapid response communications, legislative action, grassroots organizing and advocacy, and partnerships with other progressive leaders throughout the country and the world. The Action Fund is also the home of the Progress Report.