Question

Suppose a new law mandates employers to pay 50% overtime pay premium for all work beyond 35 hours per week. If an employer initially paid $30 per hour and had a 50 -hour work week, what hourly base wage will the employer offer so that the total pay per work week will stay the same

a. $27.27.
b. $25.36
c. $26.09
d. $24.56.

Answer 1

To maintain the weekly pay at $1,500 when exceeding 35 work hours attracts a 50% overtime premium, the new hourly base wage must be set at $26.09.The correct answer is option c.$26.09

Step-by-step explanation:

To calculate the new hourly base wage that an employer would offer after a new law mandates a 50% overtime pay premium for all work beyond 35 hours per week, we need to set up an equation that reflects the total weekly pay under the new conditions should remain the same as the old conditions.

Initially, for a 50-hour work week, the total pay at $30 per hour would be $1,500. Beyond 35 hours, the new law requires 15 hours of overtime pay at 1.5 times the hourly base wage.

The equation to calculate the new base wage w is: 35w + 15w × 1.5 = $1,500. When we solve for w, the equation simplifies to 57.5w = $1,500, resulting in a new base wage of $26.09 per hour.