Primer: Overtime Pay Regulation

With upcoming rules, the Department of Labor will specifically try to help workers by raising the salary level test, which is the minimum weekly salary necessary to exempt a worker from overtime pay. A close examination of those impacted by the changes, however, reveals that very few will benefit and only a very small percentage of those affected are actually in poverty. That is because most salaried employees who work more than 40 hours each week actually earn more than any feasible new salary level test. Moreover, expanding overtime pay coverage will help very few children, mainly benefiting working men. With the additional cost created by overtime pay regulation, it is clear that expanding overtime pay is not an effective way to help those in need. Instead, policymakers need to address the root causes for stagnant wages: lackluster economic growth and a struggling labor market.

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