California

Federal Overtime Pay Plan Affects Few in Silicon Valley

This week President Barack Obama trumpeted a new plan to boost overtime pay for millions of middle class workers.

Under the new plan, American workers earning an annual salary of less than $50,440 will qualify for overtime pay, a significant increase from the current salary requirement of $23,660.

The president announced that the proposed plan will affect 4.7 million people across the country. Will the new plan have any effect on Silicon Valley—a place synonymous with wealth, home to a dwindling middle class, and trademarked by tech titans like Facebook, Twitter and Google?

“The president is trying to help people. We understand that,” said Russell Hancock, CEO of Joint Venture Silicon Valley, a research and analysis firm in San Jose. “But it’s not going to make a significant dent in California, and certainly not in Silicon Valley.”

California boasts the highest number of individuals impacted by the announcement—420,000 people, according to state-by-state statistics released by the White House. But data from Joint Venture Silicon Valley shows that the number of individuals in the state who earn between $23,660 and $50,440 annually is actually four million.

The president’s new plan would only affect about ten percent of that population, since it doesn’t include hourly workers, contract workers (think Uber drivers) and those who already receive overtime.

The Joint Venture Silicon Valley data also shows that in Silicon Valley 157,000 individuals make the necessary salary to qualify for the president’s new overtime plan. If the calculation regarding statewide numbers rings true — 10 percent of qualified workers — then only 15,000 people in Silicon Valley will actually be impacted by the new plan.

Despite this, local workers who spoke with NBC Bay Area in downtown Palo Alto this week expressed enthusiasm over the president’s announcement.

“I worked a lot of overtime hours to put myself through school,” said Layla Sabourian, an entrepreneur.

“I’m glad to see there are laws like that protecting people.” Omar Bashir, a barber, stressed that the extra overtime cash could help make life a little easier.

“I think it’s great,” he said. “We have kids, health insurance, and life insurance. We need more money.”

Still, Russell Hancock says the president’s effort is well intentioned, but it will have a limited local impact thanks to Silicon Valley's shrinking middle class.

“The White House is targeting the middle class,” he said. “Our middle class is disappearing here, so their target isn’t here to begin with. That’s the problem.”

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