Taking into account the inflation and the fact that the threshold was adjusted only once since 1975 from 250$ per week to $455 in 2004, the new regulation of overtime pay is highly needed. The aforementioned adjustment in 2004 allowed employers through "duties test" to prevent many employees such as executives, professionals, and administrative, from being eligible for that overtime payment. Furthermore, through time and annual salary increases, the share of workers who are eligible for overtime pay has significantly decreased, according to the Labor Department, 60% of salaried workers were eligible for overtime while currently only 7% of them are qualified. This created a gap in annual pay among employees and necessitated such new regulation
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Even though these numbers are large on the micro level, however, the aggregate economic effect would not be of significant impact as compared to about $8 trillion annual wages in the United States.
The expected economic consequences of the new regulation is as follows:
• Lower employment rate through creating more jobs
Many employers, to avoid paying eligible employees the overtime payment, would prefer to hire additional employees (full- or part-timers). According to National Retail Federation, Goldman Sachs, and the Economic Policy Institute, at least 120,000 new jobs would be created.
• Stronger overtime protections for exempted workers such as executives, professionals, and administrative
Raising the cutoff point of eligibility would make it easier for workers who are already eligible for overtime pay but exempted under the "duties test" to prove their eligibility and get their salaries increased.
• Higher salaries for workers with salaries near the new cutoff …show more content…
• Granting employees protection from excessive unpaid overtime
As per the new rule, any worker earning less than $47,476 a year would be eligible for overtime payment regardless of whether he failed the "duties test" or not. Therefore, these workers would be protected from being worked unpaid hours or get paid for them.
To conclude with, the new regulation would be decrease the wealth inequity and will help to inject some extra spending money into the economy, which would foster economic growth in the long
Even though these numbers are large on the micro level, however, the aggregate economic effect would not be of significant impact as compared to about $8 trillion annual wages in the United States.
The expected economic consequences of the new regulation is as follows:
• Lower employment rate through creating more jobs
Many employers, to avoid paying eligible employees the overtime payment, would prefer to hire additional employees (full- or part-timers). According to National Retail Federation, Goldman Sachs, and the Economic Policy Institute, at least 120,000 new jobs would be created.
• Stronger overtime protections for exempted workers such as executives, professionals, and administrative
Raising the cutoff point of eligibility would make it easier for workers who are already eligible for overtime pay but exempted under the "duties test" to prove their eligibility and get their salaries increased.
• Higher salaries for workers with salaries near the new cutoff …show more content…
• Granting employees protection from excessive unpaid overtime
As per the new rule, any worker earning less than $47,476 a year would be eligible for overtime payment regardless of whether he failed the "duties test" or not. Therefore, these workers would be protected from being worked unpaid hours or get paid for them.
To conclude with, the new regulation would be decrease the wealth inequity and will help to inject some extra spending money into the economy, which would foster economic growth in the long