A proposal to extend overtime pay eligibility to millions of workers would have its biggest impact on single mothers and women of color, according to a study published Tuesday by the Institute for Women’s Policy Research (IWPR) and the advocacy group MomsRising.
President Barack Obama proposed altering Department of Labor policy regarding overtime eligibility in late June. Under the planned change, workers earning $970 per week or less would be automatically eligible for overtime pay for hours worked in excess of 40 per week. Currently, federal rules require employers to provide overtime benefits only for those earning $455 per week or less.
Changing overtime rules could make an estimated 5.9 million workers newly eligible for time-and-a-half pay. From an analysis of 2014 data from the Census Bureau and the Bureau of Labor Statistics, researchers from IWPR and MomsRising estimated that 54 percent of the workers newly eligible for overtime would be women. Single mothers, black women and Latinas would disproportionately benefit compared with other demographic groups.
Among single mothers who are currently exempt from federal overtime rules, 44 percent would become eligible, according to the report. For black women and Latinas, the figures were 46 percent and 48 percent, respectively.
“The women workers who are typically the most economically vulnerable to low income and high unemployment … these are the very women who are most likely to gain coverage under this new rule,” said IWPR economist Heidi Hartmann on a Tuesday conference call with reporters.
In March 2015 the National Partnership for Women and Families estimated that black women earn 64 cents on the dollar and Latinas earn 56 cents on the dollar compared with the average earnings for white, non-Hispanic men. A 2014 white paper by the Women’s Legal Defense and Education Fund found that 39 percent of single working mothers were in low-wage jobs in 2009, with low wages defined as “an hourly wage less than two-thirds of the median hourly wage."
New overtime rules could increase earnings for some of those women or lead managers to limit their time on the job to 40 hours per week. Even if newly eligible employees put in less time, Hartmann said, “there are going to be more payments to workers” because employers might then hire additional part-time employees to make up for the lost hours.
Industry groups, including the International Franchise Association, oppose expanding overtime rules because they say it would limit career opportunities for newly eligible workers.
"Women and working families are increasingly working hard and earning success in franchising as managers and small business owners — something that the overtime rule will flip on its head due to the perverse incentives it creates for employers to shift workers from salaried to hourly and impose new labor costs on small business owners," said association spokesman Matthew Haller in an email.