The Importance Of Overtime Pay

The extra-pay-for-extra-work idea has fallen out of fashion in most salaried, non-unionized workplaces, largely because it's no longer legally required.

In Politico Magazine, Nick Hanauer writes of the hallowing out of the middle class:

In 1975, more than 65 percent of salaried American workers earned time-and-a-half pay for every hour worked over 40 hours a week. Not because capitalists back then were more generous, but because it was the law. It still is the law, except that the value of the threshold for overtime pay-the salary level at which employers are required to pay overtime-has been allowed to erode to less than the poverty line for a family of four today. Only workers earning an annual income of under $23,660 qualify for mandatory overtime.

Overtime, Hanauer says, "is absolutely essential to creating a broad and thriving middle class."

This has been true in my own experience. In my former job as a Reuters journalist, I qualified for overtime pay for work I did above 35 hours a week. I frequently put in 40+ - 45+ if you consider I rarely took a lunch "hour". It's hard to account for all of those hours in the age of the web journalist (when I check the notifications for the Reuters twitter account I ran in bed on my phone while also browsing my own personal account, am I working? What about when I eat lunch at my desk but am flipping between Amazon and my work?). So I often billed for about 40 hours, but sometimes a little under.

I always noticed when my paycheck was larger, but because I had direct deposit, I never really checked to see exactly how much it added to my pay on my payslip.

So I went back to my last paycheck and looked at the year-to-date totals. In the first three quarters of 2014 (I left for BI in late September) overtime added 13.73% to my salary. Without totally revealing my salary, let's say that it came out to be less than the price of a car, but was enough for a new bike, a couple of weekend trips, and a new TV.

The thing about overtime (in my experience) is you can't always count on it, so it can be hard to factor into your monthly fixed costs. That means that when it does come, it often goes straight to either savings or consumption. I didn't rely on it, but it allowed me to have a little bit of cushion in my life. And I put a lot of that money back into the economy (let's discuss what it did for Reuters' budget another day).

If it can do that for a single person with very few expenses beyond rent, travel, and health insurance, imagine what it could do for the average American family.