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At a moment when affordability is top of mind for families all across the country, policymakers are surfacing a range of ideas to combat rising costs. But it’s important to remember that prices are only half of the affordability equation. Workers’ incomes are the other half [ [link removed] ].
Beginning this month, 19 states [ [link removed] ] raised their minimum wages, with 13 increasing because of annual inflation adjustments. While these are welcome steps forward, it’s hard to miss a glaring gap: Only 5 [ [link removed] ] of those 19 states are also adjusting overtime salary thresholds, which are core protections for middle-class workers.
States have raised the minimum wage because they recognize two simple facts: (1) The federal minimum wage rate is not sufficient in their state, requiring a higher standard to protect workers, and (2) state minimum wage rates need to keep pace with inflation in order for them to remain effective.
Among states that have long had the clarity to recognize these simple truths, it’s particularly puzzling that the majority have failed to apply the same logic to their overtime laws. By failing to revise the salary thresholds under which most employees are entitled to overtime pay, most states let middle-class workers begin 2026 with an exacerbation of the affordability crisis. But it doesn’t need to be this way.
Background on Overtime
The vast majority of employees are covered by the Fair Labor Standards Act and may be entitled to overtime pay (1.5 times their regular rate of pay) when they work over 40 hours in a week. This federal law, however, exempts individuals from overtime if they are in certain occupations, such as doctors and lawyers, as well as individuals who are “employed in a bona fide executive, administrative, or professional capacity [ [link removed] ].” Under long-standing federal regulations, someone meets this exemption if they (1) are paid on a salaried basis, (2) earn more than a minimum salary level, and (3) meet a set of criteria indicating that they indeed perform specific executive, administrative, or professional activities on the job.
This exemption is premised, in part, on the idea that “exempt workers typically earn salaries well above the minimum wage and are presumed to enjoy other privileges to compensate them for their long hours of work” [emphasis added], such as better fringe benefits and opportunities for advancement, as the Department of Labor has explained [ [link removed] ].
Like the federal minimum wage, the federal overtime salary threshold hasn’t adequately kept up with rising incomes, despite efforts by the Obama and Biden administrations. The result is that with each passing year, more employees are working long hours without receiving time-and-a-half pay.
When State Minimum Wages Rise but Overtime Doesn’t
Raising minimum wages and ensuring strong overtime protections are a cornerstone of employment protections in the US and help ensure a basic standard of living and fairness for workers. One can intuitively understand why many states have set higher minimum wages to better align with local labor markets and the cost of living in their state. That’s why it’s all the more baffling when states that have consistently set their minimum wage rate well above the federal level (a paltry $7.25/hr) ignore their overtime salary thresholds or peg their standard to the insufficient federal regulations.
Take New Jersey for example. In 2026, the minimum wage in New Jersey automatically increased [ [link removed] ] to $15.92 per hour to keep up with inflation. However, the state’s overtime laws do not function the same way. Instead, New Jersey regulations governing who is eligible for overtime simply adopt [ [link removed] ] the federal regulations. The result is a glaring disconnect between what the state recognizes as an adequate minimum wage and who is eligible for overtime pay. Remember that explanation from the Department of Labor that says “exempt workers typically earn salaries well above the minimum wage”? Not so in New Jersey.
In fact, the difference is less than $50 a week! A minimum-wage worker in New Jersey working 40 hours a week will earn $636.80 per week (or about $33,114 annually) in 2026. Yet, the overtime salary threshold in New Jersey is still stuck at the low federal level of $684 per week (or $35,568 annually). For many workers in New Jersey, where average wages are higher than the national average, the relevance of an overtime salary threshold is all but nonexistent.
Consider the more than 55,000 first-line supervisors of retail sales and food service workers in New Jersey, like those at Walmart or McDonalds. These supervisors, who are often salaried and many work more than 40 hours a week, should be entitled to overtime protections given their relatively low salary. In fact, that’s exactly how it plays out right across the border in New York, where the average worker in these occupations earns roughly the same amount [ [link removed] ] as someone in New Jersey.
Yet, because the salary threshold in New York is higher, at $1,199 per week or $62,348 annually (and even higher in the New York City region), the majority of these New York workers will automatically be covered by overtime protections, since most earn less than the threshold. All the while, in New Jersey, these relatively lower-salaried workers too often don’t receive overtime pay because they earn more than the outdated salary threshold in their state ($35,568 annually) and might perform certain managerial activities in their job.
Outdated Overtime Rules Are Holding Workers Back
But it’s not just supervisors in retail or food service industries who are left behind in New Jersey. Workers across a range of occupations—such as social workers, health technicians, human resource specialists, and certain workers in the construction, manufacturing, and hospitality sectors—are too frequently ineligible for overtime pay.
New Jersey is far from the only state in which overtime laws are in dire need of updating. Virginia similarly pegs its overtime protections to federal standards, even as its minimum wage rose to $12.77 in 2026, 76 percent above the federal minimum wage rate. In Minnesota, overtime rules are so outdated that they serve no real purpose, since the standards on the books are less generous than the federal protections.
Policymakers are right to focus on making life more affordable for families across the country. But those who are serious about providing real results must pull all the policy levers available to them, including those that have been sitting right in front of us for nearly 90 years.
In many states, governors and legislators who want to deliver for workers in the short term have an obvious opportunity available: Update overtime standards to ensure workers are paid fairly for the hours they work.
Fireside Stacks is a weekly newsletter from Roosevelt Forward about progressive politics, policy, and economics. If you enjoyed this installment, consider sharing it [ [link removed] ] with your friends.

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