President Obama's Overtime Pay Gambit

Photo Credit: APIf you take an economics course, you may learn about the different events that can cause an increase in workers’ pay. The demand for the product a worker makes may rise, causing the demand for workers to go up. The supply of workers may decline, causing employers to bid up wages to keep the ones they have.

But there’s one event the textbooks don’t cover: The president of the United States gives you a raise. Many workers will get news to the effect that he has done just that. But it’s not as simple as it sounds.

President Obama thinks American companies are not paying their employees as much as they deserve. A White House fact sheet asserts that he intends to “make sure millions of workers are paid a fair wage for a hard day’s work.”

So he’s proposed an increase in the minimum wage, which Congress is not likely to approve. He’s also decided that more workers are entitled to time-and-a-half pay when they work overtime — a decision he can implement without legislation.

A 1938 law stipulates that hourly employees who put in more than 40 hours a week have to get a 50 percent premium for the additional hours. Under current rule, those making less than $455 a week are automatically covered, even if they are on salary. The president, however, plans to raise that threshold to expand the number of salaried workers who are guaranteed extra compensation.

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