Overtime

It turns out that the average working American is working around 50 hours a week.  Almost 12 percent of Americans work more than 60 hours a week.  This is a problem, for several reasons.  First, we still have a high rate of unemployment, and I have said before that people working more than 40 hours a week are effectively stealing work from those working less than that (who want to work 40 hours a week).  Second, many of these workers are salaried, which means that no one is getting paid for this extra work.  In these cases, the extra hours are being stolen, without any benefit to the thief.  Some workplaces even mandate that salaried employees work more than 40 hours a week.  Hourly employees are legally entitled to extra pay for overtime hours, but this does not justify stealing work that is needed by others.  Ironically, hourly overtime costs the employer more, in addition to increasing unemployment.  This free labor and poorly distributed work is a big problem, even though it may not be obvious.  Given current unemployment as well as the 50 hour a week average of most U.S. workers, a redistribution of labor could easily solve unemployment entirely.

The first thing that needs to be done is the elimination of any unpaid labor (within an employer/employee relationship).  Salaries should only apply for the first 40 hours a week of work.  Even salaried workers should be entitled to overtime pay for any hours beyond 40 in a week.  This by itself would push businesses to hire more employees, instead of expecting free labor from salaried employees.

The second thing that needs to be done is fines for overtime.  Many states' labor laws technically forbid overtime, but they include clauses stating that overtime must paid at a higher rate when it does occur.  Federal labor law does not forbid overtime, but it also requires a higher pay rate for overtime.  In all cases, however, salaried employees are exempt.  Federal labor law needs to remove the salaried employee exemption, and it needs to turn the 40 hour a week limit into a hard limit.  No states with a hard limit actually enforce it, and there is no set penalty for violation of the limit (though, the limit does entitle an hourly employee to refuse to work overtime without threat of retribution).  In addition to a Federal hard limit, penalties need to be set and enforced for violation of that limit.  Fines for overtime would accomplish two useful things.  First, it would encourage employers to hire more employees instead of facilitating the theft of work.  Second, it would provide a source of funding for welfare to support those who are not able to find work because that work is being stolen by other people working overtime.

A more extreme third thing that could be done is fines for employees working more than 40 hours a week.  The point of this is to combat the likely response of getting a second job for people who loose overtime hours due to the first two things.  Again, this would both discourage working more than 40 hours a week, and it would provide a source of funding for welfare when people choose to work more hours anyway.

There is a fourth thing that needs to be done, and perhaps it should have been the first.  Overtime labor laws need to be strictly enforced.  Wage theft is becoming a major problem in the U.S., and a majority of it comes from unpaid work and overtime paid at a non-overtime rate.  There is a local business where I live that has a strategy for avoiding overtime pay that happens to be highly illegal.  This business logs hours based on client projects.  Employees are forbidden from working more than 8 hours a day and 40 hours a week on any one project.  The business owners seem to think that overtime pay is only necessary if overtime is worked all on one project.  This business has employees (as well as ex-employees) who are owed thousands or tens of thousands of dollar in unpaid overtime.  At least one has tried to report the situation to the state labor board but was told that they are too far behind to do anything about it.  Evidently this situation is common across the U.S.  In many cases, employees do not know their right, but in other cases, they fear retribution (also illegal) or state labor boards are understaffed (or, possibly, just lazy).


It is absurd that our country has set a 40 hour work week, but we have a high rate of unemployment largely because the average work week is actually 50 hours.  Enacting and enforcing laws that push this back down to 40 hours could increase the amount of available work by up to 20%, which would completely cover our unemployment with some to spare.  This would tip the economy to favor employees over employers, which would go a long way in increasing wages and reducing poverty.  Our economy needs us to eliminate unpaid overtime and dramatically reduce overtime overall.