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May 30 2019

Policy Focus: Overtime Pay

by Patrice Lee Onwuka

The current U.S. labor market is near full employment, and the economy boasts over 7 million unfilled jobs. Competition for workers is driving wages higher. Families at every income level also enjoy
bigger paychecks thanks to the recent federal tax cuts.
 
Some policymakers desire to increase take-home pay further and propose expanding overtime pay to more workers. However, not all workers desire more pay; increasingly, American workers want greater job flexibility and will make the tradeoff in pay for flexible arrangements.
 
In 2018, the Trump Administration proposed updating the threshold at which salaried workers become eligible to receive overtime from $23,660 to $35,308 annually. This is a more modest increase than the $47,000-per-year salary threshold proposed by the Obama Administration in 2015, but it would still expand overtime pay to 1.3 million U.S. workers and transfer over $400 million each year from employers to workers.
 
Advocates believe expanding overtime will fairly compensate salaried workers who clock long hours without increased wages, spur hiring, and increase hours for part-time workers. However, as with other regulations that raise labor, compliance, and litigation costs, employers will likely respond in ways that ultimately reduce pay and benefits and phase out the flexible work arrangements that workers value.
 
Workers want to negotiate the salaries and schedules that meet their needs. Policymakers should be mindful that raising the overtime threshold could reduce the flexibility that workers demand, and should consider other avenues to boost wages for hard work.
 

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Independent Women's Forum is an educational 501(c)(3) dedicated to developing and advancing policies that aren’t just well intended, but actually enhance people’s freedom, choices, and opportunities. IWF is the sister organization of the Independent Women’s Voice.​
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