Why You Might Get a Hefty Raise this Summer

If you’re one of millions of Americans who works more than 40 hours a week on a salary of less than $50,000, then you may in for a big raise courtesy of the Department of Labor.

The Department of Labor is widely expected to revamp its overtime rule this summer, pushing up the threshold for time-and-a-half overtime pay to include employees earning less than $50,440 annually. The move could have a major impact on the middle class. It's projected to impact nearly 6 million workers, namely women and minorities, who make up a higher percentage of low-wage jobs, according to the Wall Street Journal.

The policy governing overtime rules hasn’t been updated since 1975 when the salary threshold was set at $23,660 per year, a threshold that is now below the poverty line, guaranteeing that only 8 percent of salaried workers qualify for overtime pay, according to a report by the Institute for Women’s Policy Research.

According to the report, while more women would become eligible for overtime pay under the proposed rule change, men are more likely to benefit from it because they work an average of one more hour of overtime per week.

Last year, the Department of Labor proposed raising the salary threshold to $50,440 annually.

The contentious rule change has been the subject of debate for years, and the outcome of the change is subject to immense speculation. Will employees hire more staff to avoid overtime pay? Will they give raises to employees to get them to the $50,440 threshold to avoid paying overtime? Will employees be more inclined to work more than 40 hours per week thanks to the prospect of overtime?

The Institute for Women’s Policy Research sees cause for celebration.

“Raising the overtime threshold, in addition to benefiting families, is likely to strengthen the economy overall,” the report found. “A higher overtime threshold could lead employers to hire more employees or increase the hours of part-time workers. And to the extent that more workers receive overtime pay, these increased earnings could lead to increased consumer spending and stronger economic growth.”