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Obama Reform Overtime Wages without Congressional Approval

Obama Reform Overtime Wages without Congressional Approval

Part of the reason why workers in 1975 earned a much higher wages when adjusted for inflation is that they earned overtime pay. Seriously, you have to read this Politico article. My friend Sergio Lins Andrade shared it with me via Twitter. Almost anyone in a salaried job has frequently worked beyond the standard 40 hour work week. It turns out that CEOs are exploiting the trend of increasing worker productivity to mean requiring workers to complete workloads that require long work weeks. Employees, fearful of losing their jobs, comply with the demands. It has the net effect of lowering their effective wages. In addition, it contributes to the unemployment rate because CEOs are able to get away with not employing as many new workers as they should. Instead, they get their existing workers to work more for free.

What many people do not realize is that overtime pay is the middle class’ equivalent of the minimum wage. President Obama can do something about this unilaterally and without usurping congressional authority. It turns out that overtime standards are under the president’s authority to alter. If he were to restore the overtime threshold to 1975 levels, workers earning under $69,000 a year would be qualified to earn overtime wages. Currently, the threshold is a meager $23,660/yr. If the president were to do this, employers would shift from prodding their employees to give them free labor in excess of 40 hours a week and instead hire additional workers, by the millions. In turn, this would force real wages up for employees and empower the middle class once more.