RESOLVING THE LEDGER
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0 Share Newsweek is a Trust Project member See more of our trusted coverage when you search. Prefer Newsweek on Google to see more of our trusted coverage when you search. Millions of American workers would see significantly larger paychecks for working extra hours under a new bill before Congress.
Senator Ruben Gallego, an Arizona Democrat, has introduced the Double the Wage for Overtime Act of 2026, which would increase the federal overtime pay rate from the current "time-and-a-half" standard to double a worker's regular hourly wage for all hours worked beyond 40 in a week.
“Workers have not seen their overtime rate double in nearly 90 years. And at a time when families are stretching every dollar to afford their needs, increasing the overtime rate will put more money in their pockets,” Gallego said in a statement.
If enacted, the proposal would amend the Fair Labor Standards Act, which has required employers to pay eligible workers 1.5 times their normal rate for overtime hours since 1938. The change would take effect 180 days after enactment.
The new bill has been proposed at a time when many Americans are feeling the pressure from higher living costs while also facing stagnant wage growth.
Lawmakers in favor of the bill argue that workers who spend more time on the job should receive substantially greater compensation, but critics have concerns about how higher labor costs could affect businesses with narrow profit margins.
According to Gallego's office, 13.4 million workers could benefit from the legislation.
For example, under current law, an employee earning $25 an hour who works 10 overtime hours per week is paid at $37.50 per hour. Under the proposed legislation, they would be paid at $50 per hour. The difference would amount to about $6,500 in additional annual income for that worker.
“This proposal would make overtime pay more valuable for workers by excluding some overtime earnings from federal taxation and allowing employees who put in extra hours to keep more of what they earn without requiring an increase in base wages,” Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek . “For workers, that could provide meaningful relief during periods of higher inflation and encourage additional labor-force participation.”
For employees in sectors that frequently rely on overtime, such as manufacturing, transportation, logistics, healthcare, warehousing, construction and public safety, the change could lead to a major increase in take-home pay.
The economics behind it are less clear. Economists generally view higher worker earnings as supporting consumer spending because lower- and middle-income households tend to spend a larger share of any additional income they receive.
Increased spending can also boost demand across local economies. However the businesses facing higher labor bills may also respond by raising prices, cutting hours or hiring additional workers instead of relying on overtime.
“Doubling overtime pay would put real money in workers' pockets fast. That $6,500 example isn't cherry-picked, it's just what the math does when you go from time and a half to double time,” Michael Ryan, a finance expert and the founder of MichaelRyanMoney.com, told Newsweek . “The catch is what happens next. Employers don't treat overtime pay as free money, they treat it as a lever.
“I remember when the Obama-era overtime rules expanded who qualified in 2016, a lot of businesses didn't pay more. They just capped hours at 40 and hired part-timers instead. Expect the same playbook here, especially in retail, restaurants, healthcare and nonprofits running on fixed budgets.”
The legislation would likely create competing incentives for employers, experts said. Some businesses may continue offering overtime and simply absorb or pass along the higher costs. Others may seek to limit overtime hours altogether and instead hire additional workers.
“The workers most likely to benefit are the ones whose hours can't easily be capped,” Ryan said. “Someone running a production line or covering a hospital floor. The ones most likely to get their hours cut are pretty much everyone else.”
Democratic Representatives Greg Casar of Texas and Pramila Jayapal of Washington, who introduced companion legislation in the House earlier this year, said the proposal is intended to put money in your pocket while updating labor rules that have remained largely unchanged for decades.
“The American people are facing an affordability crisis, as skyrocketing inflation outpaces workers’ wages,” Jayapal said in June. “I’m proud to co-lead the Double the Wage for Overtime Act with Rep. Casar to both deter corporations from forcing workers into long, unsustainable hours and to ensure that hardworking Americans get the pay they deserve. This is a critical step in the effort to raise wages and protect workers.”
Stronger overtime protections are generally linked to improved work-life balance and lower rates of burnout. Business groups, however, have concerns that a higher overtime pay rate would raise operating expenses, particularly for small employers in industries like retail and food service.
The legislation is backed by many of the nation's largest unions, including the AFL-CIO, United Auto Workers, United Steelworkers, Service Employees International Union, National Nurses United and American Federation of State, County and Municipal Employees.
Many non-labor organizations and advocacy groups have endorsed the proposal as well, including the Economic Policy Institute, National Urban League, Center for Law and Social Policy (CLASP) and Patriotic Millionaires.
However, so far, the bill is still lacking Republican backing, making its prospects in Congress uncertain. Companion House legislation introduced in June was sponsored entirely by Democrats, and the Senate bill faces an uphill path in a divided political environment.
“It's a messaging bill right now, not ...
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