Georgia’s decision to join a 21-state lawsuit to stave off the U.S. Department of Labor’s new overtime rule is more than a
matter of political philosophy.
If the new rule goes into effect as planned on December
1, a significant number of the current 137,000 state employees will become
eligible for overtime as the threshold for exemption from overtime pay moves up
from the current $455 to $913 per week.
In a study conducted in the first quarter of 2016, the
average weekly wage for a state employee in Georgia stood at $868. Even with
the 3 percent pay raise granted effective July 1 raising the average
wage to $894, the average state employee's weekly wage would still fall $19 below the planned
new weekly wage threshold meaning that thousands of state employees would
become newly eligible for overtime pay.
Taking the data from the first quarter and adding 3
percent to the average rates, only eight counties – Carroll, Chatham, Clarke, Fulton,
Heard, Lamar, Peach, and Richmond – show average wages for state employees
exceeding the new exemption threshold of $913.
In contrast, in 135 counties the average state employee’s
salary fell below the exemption threshold. Sixteen counties did not report
wages for state employees separately.
Impact on state budget
The level of impact on Georgia’s budget depends on how
the state reacts to the new rule.
In the statement announcing the lawsuit, Georgia Attorney
General Sam Olens stated that
“The rule will
force many state and local governments to substantially increase their
employment costs. Some governments may be forced to eliminate some services and
even lay off employees.”
The state could minimize impact by tightening up rules on
overtime but this might impact state services, especially in times of
emergencies such as ice storms or other natural disasters where state workers
are expected to put in extra hours.
Georgia could also raise its personnel budget to cover
increased overtime costs, but with other costs rising, such as Medicaid, this
will make balancing the 2018 budget more difficult.
Georgia state
employees relatively low paid compared to other industries
Part of the reason the state is so impacted by the new
rule is that state employment is a relatively low paid form of work compared to
a number of other important industries in Georgia.
For example, while state employees averaged $868 per week
in the first quarter of 2016, the average weekly wages for construction workers
was $1,009. Workers employed in the insurance industry in the state averaged
$1,694 and those employed in the real estate industry averaged $1,110 per week.
Among the industries paying on average less than state
employment were arts and entertainment ($602), retail ($565), hotels ($473),
and food and drinking establishments ($313). Average pay excludes tips, which
explains the relatively low pay in the food and drinking industry where many
workers’ pay is subsidized by customer tipping.
Averaging $739 per week, local government workers in the
state make slightly less than state employees.
If Georgia does not win the lawsuit and the new rule goes
into effect December 1, the state will have to reconsider its current approach
to human resources and make changes to ensure that personnel costs do not go up
substantially to avoid a budget problem next year.
