Time For Overtime

Overtime pay has eroded to now completely exclude middle class Americans. President Obama can change that, and he should.

The Right To Overtime Pay No Longer Exists For The Middle Class

Here’s a story we all know: Americans are working hard but earning less. But there’s a policy we don’t often talk about that has had a substantial effect on this trend: overtime pay. In 1975, more than 65 percent of salaried workers earned time-and-a-half pay for every hour worked over 40 hours per week. Today, just 11 percent do.

Overtime is still the law, but it has been allowed to erode for decades. Now, by definition, it no longer covers the middle class. Only workers earning less than $23,660 per year — below the poverty line for a family of four — qualify for mandatory overtime pay.

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We would describe why that hurts middle class families and hurts the economy overall, but we think billionaire venture capitalist and champion for middle-out economic policies Nick Hanauer says it better in a new piece for Politico Magazine:

In the absence of a law requiring me to pay you overtime if you earn under a certain amount, you end up working harder—and the harder you work, the fewer employees I need. The fewer employees I need, the higher the unemployment rate. The higher the unemployment rate, the more leverage I have to “encourage” you to “do what it takes” to keep your job. And so you work even more hours, pushing unemployment up and wages down. And that, my friends, is one of the little tricks that keeps you poor and me rich.

There’s a solution to this problem — and it’s something that President Obama can do with or without help from Republicans in Congress. The President has the power to raise the income threshold for overtime on his own. If he restored federal overtime standards to where they were at their 1975 peak, that would cover workers earning up to $69,000. That comes out to 10.4 million more working Americans who would have more money in their pockets or more time to spend with friends and family.

BOTTOM LINE: Americans are working harder and longer to stretch their earnings just to keep up with the cost of living. Meanwhile, overtime pay has been allowed to erode to the point where it no longer covers anyone in the middle class. President Obama has the power to change that by strengthening overtime protections and giving the middle class and our economy a boost it needs and deserves.

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