CBO Report Confirms What We Already Knew about the Overtime Rule

 

David Weil and Heidi Shierholz at the US Department of Labor blog:

CBO Report Confirms What We Already Knew: In May, the Department of Labor published a final rule that will extend critical overtime protections to millions of workers. The rule updates the salary threshold below which most salaried workers are overtime eligible (and above which they may be exempt from overtime depending on their duties). ...

Yesterday, the Congressional Budget Office released a study of the economic impact of reversing these updates to the overtime regulations and taking away these important protections. The CBO report confirms what we already knew – that the rule will increase earnings for middle-income Americans.

Here are our takeaways from the report:

1. ...reversing the rule would strip nearly 4 million workers of overtime protections. ...
2. ...reversing the rule would reduce workers’ earnings while increasing the hours they work. ...
3. At a time when income inequality is already of great concern, CBO finds that reversing the rule would primarily benefit people with high incomes. ...
4. ...reversing the rule would not create or save jobs. ...
5. ...an important indirect benefit of the update to the overtime regulations that would be lost if it were reversed: strengthened overtime protections for overtime-eligible workers earning between the old and new salary threshold. ...
6. CBO likely overestimates the amount of money businesses would save if the rule were reversed. ...
7. CBO does not mention key benefits of the update to the overtime regulations that would be lost if it were reversed. ...
8. CBO believes that a substantial part of the savings to employers arising from reversing the update to the overtime regulations will be passed on to consumers in the form of lower prices.  ... Given the range of uncertainty in these estimates, while it is clear that real family incomes would increase for the highest income Americans, it is less clear that family income for other groups would change significantly — except for those households with workers directly affected by loss of overtime coverage, whose incomes would fall.

The bottom line is that today’s report confirms what we already knew: the overtime rule restores the promise that a long day’s work should be rewarded with fair pay. At a time when income inequality is already of great concern, the report also concludes that reversing the rule would primarily benefit people with high incomes. ...