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Fixing the Problem They Created

What the what?

As the New York Times reported yesterday, President Obama intends to barge unilaterally into a hotly contested area of employment law by ordering the Department of Labor to develop regulations “to require overtime pay for several million additional fast-food managers, loan officers, computer technicians and others whom many businesses currently classify as ‘executive or professional’ employees.” As with the expansion by decree of minimum wage law, it will be interpreted in some quarters as an undiluted boon to the employees it covers – their employers will either raise their pay or limit the hours they are expected to work, or both, and how could they be anything but happy about that? But as the piece quotes Cato’s Dan Mitchell as warning, ”There’s no such thing as a free lunch… If they push through something to make a certain class of workers more expensive, something will happen to adjust.”

Several thing to unpack here. First, as Olson points out, labor law is already a nightmare. The example he cites is that many business refuse to give cell phones to employees lest that be interpreted as an admission to working them after hours. If this regulation goes into place, employers will have to guess whether an employee is eligible or exempt from overtime, with thousands or millions of dollars in the balance. The change may hit small business hard and hit low-wage employees harder. Many businesses may get rid of “transition” jobs where people who work on an hourly basis can be tested out in salaried management positions.

Second, the ostensible reason for this is that employers are working employees harder these days, putting many on salary to avoid paying overtime and trying to squeeze every ounce of productivity out of them. But there’s a reason for that and it’s not because employers are evil. It is because hiring new employees has become very expensive. And the reason it has become expensive is because of Democratic pushes for mandated insurance, Democratic pushes for more extensive employer insurance, Democratic pushes for higher minimum wage, Democratic pushes for more more more more more. Even if this falls into place and millions of employee exemptions are rescinded, it may not result in wave of hires. Because overtime for a good employee is often worth more than the start-up costs of a new and untested one.

(Actually, I think the likely result of all of this stuff is going to be to push employers toward fewer employees and more contractors.)

This isn’t a constitutional issue, actually. The FLSA does give the executive the authority to decide the criteria for exemption from overtime. And maybe there’s a case to be made that the system is being abused (assuming you think it’s the government’s business to dictate labor conditions like this). But I’ll raise the same objection I did to the minimum wage: why would you hit businesses with this when unemployment is our nation’s biggest problem?

Quite simply because we have an Administration that doesn’t understand the Law of Unintended Consequences.

9 comments

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  1. AlexInCT says:

    What could go wrong with this, huh?

    They mean well, so, that’s all that counts…..

    My bet is more people are going to line up, trading their votes to the democratic party for peanuts and maybe the occasional reach around.

    These people do not understand that they can’t regulate reality to meet whatever fantasy they want the world to be.

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  2. hist_ed says:

    “This isn’t a constitutional issue, actually.”

    What clause in the Constitution gives the federal government the power to set wages?

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  3. Hal_10000 says:

    Ostensibly, the FLSA is justified by the commerce clause. Would love to see a constitutional challenge, but it would likely go nowhere.

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  4. Seattle Outcast says:

    The Commerce Clause has been so buttfucked this last hundred years that it has no meaning any longer. The court needs to come back around and say “you fuckers finally over did it, we’re going back to what it actually means, and not a fucking blank check to do whatever the fuck you want”

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  5. AlexInCT says:

    The Commerce Clause has been so buttfucked this last hundred years that it has no meaning any longer.

    Exactly. This has been the excuse used by an ever more tyrannical, abusive, and power hungry government to justify what they never where allowed to do under the constitution. At this point my reaction is to immediately assume they mean to abuse power whenever this shit is invoked to justify their behavior. Even the legitimate shit. And I doubt I am alone here.

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  6. Xetrov says:

    Obama has clearly had a war on employment for years.

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  7. AlexInCT says:

    Obama has clearly had a war on employment for years.

    That is basically how I have felt every time he has pretended to finally focus on employment. Indubitably what comes out causes more job losses and damages the economy as well as the ability of countless millions to find work. These people are scumbags and nothing else.

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  8. Hal_10000 says:

    The Commerce Clause has been so buttfucked this last hundred years that it has no meaning any longer. The court needs to come back around and say “you fuckers finally over did it, we’re going back to what it actually means, and not a fucking blank check to do whatever the fuck you want”

    Oh, I absolutely agree, which is why I would like to see FSLA challenged. I was explaining the reasoning not agreeing with it. The commerce clause has become the duck blind for all sorts of federal bullshit. It finally got so bad in Garcia, where the SG told the Court he saw *no* limit to the commerce clause, that the Court finally acted (that was on the drug-free school zones act, where the feds were arguing that drugs in schools affect learning and that affects interstate commerce, so voila!. Under that logic, my shits are government business because I’m crapping out food I bought in another state.)

    But I am dubious that a challenge will go anywhere because the Court has been reluctant to make such huge changes in the Constitutional landscape. Maybe if you got Napolitano on the Court or something.

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  9. hist_ed says:

    I actually have a wee bit of hope because of the recess appointments case. Even Kagen was skeptical of the administration’s position. A solid 9-0 ass kicking on that might mean that they are a teensey bit more likely to look at other cases in which habitual actions over the past few decades are clearly violating the language of the Constitution. I hope like hell that Ginsberg stays healthy for another couple of year and doesn’t decide to bow out before Obama is gone.

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