Overtime Pay Rates and Unemployment

Report Outline
Plan to Boost Pay For Overtime Work
Premium Pay: Purposes and Effects
Unemployment and Workers' Leisure Time

Plan to Boost Pay For Overtime Work

Use of Overtime Penalty to Create New Jobs

He johnson administration's bill on overtime pay, though unlikely to be enacted during the present session of Congress, embodies a concept that will be a matter of controversy for a long time to come. The proposal is that overtime work can be made so costly for employers that they will hire additional workers at regular wage rates rather than pay the penalties required for overtime work. It amounts in effect to a share-the-work plan aimed to help solve the problem of persistent unemployment.

The bill now before Congress would amend the Fair Labor Standards Act of 1938 to require employers in selected industries to pay double the basic wage rate for hours worked in excess of 40 a week; under existing law, employers subject to the Fair Labor Standards Act are required to pay for overtime work at one and one-half the regular wage rate. Hearings before a House Labor subcommittee, which opened on Feb. 17, were scheduled to continue for only five days, but so many requests to be heard were received from employers and employer organizations—all adamantly opposed to the bill—that the hearings were extended for an additional period of seven weeks. They are now due to close on April 10.

Forming of the Battle Lines on Overtime Pay

Despite current opposition, the overtime pay issue is apt to gain increasing prominence as a potential means of curbing unemployment caused by automation. Labor leaders appear determined to seek higher overtime pay through both collective bargaining and legislation; labor objections to the pending bill have been limited to date to a complaint that it does not go far enough. More will be heard of the overtime pay question as negotiations for new labor contracts in big industries get under way.