Overtime Pay

It’s articles like this that really do get on my nerves. I hope this article didn’t intend to be a serious piece of non-biased journalism (at least it points out the fact that the source is a “liberal think tank”). The article basically says that a new government policy is going to cost 8 million people their overtime pay.

A few notable quotes:

…it would cost 2.5 million salaried employees and 5.5 million hourly employees their right to overtime pay.

The proposal could also cause workers to work longer hours, since the Labor Department doesn’t put any limit on the number of hours per week an employee must work

Now, if someone could point out where in the constitution it says people have a “right” to overtime pay I’d love to read more about that. Also, if someone can point out where under these new regulations it says employers CAN’T continue to pay overtime, that would be interesting to see too. Oh yes, and personally, and I hope for each person, I don’t want or need the government telling me how many or few hours I can work per week.

What is really happening here -I hope- is that we’re seeing less intrusion into our lives from the government. Not to drag the minimum wage argument in, but it’s virtually always the case that when the government keeps it’s nose out of what an employee and employer agree on for wages, the number of jobs available increases. When the government (who is supposed to work for us) stops telling the private sector they have to pay $X, the market can agree on what the correct price is (typically lower) and can afford to offer more jobs based on supply (of employees) and demand (for the products/services). The wages settle to equilibrium and employees will continue to gravitate towards jobs where the demand is higher.

The article itself is picking up on a possible outcome of a given policy and calling it a negative thing simply because some people may get paid less. Well let me phrase it another way: government is undoing the wrongs that it has done. It is stepping back and letting the private sector determine what is right and fair.

4 thoughts on “Overtime Pay

  1. In the past year, I’ve seen and heard and had to make use of the “let the market take care of itself” argument more than ever. I think back to where the minimum wage and labor laws and policies developed, and it seems that most of these were FDR’s and the government’s response to the Great Depression, no? And the Industrial Revolution, with children and adults working all hours in the mills. I guess my question to you is, because I certainly don’t have the answer, is it ever ok for the government to step in, especially in case of where the market fails? Furthermore, while economy is based on the habits of citizens, does the economy or the market encompass all of the things necessary for individuals to make appropriate choices – certainly taking a job is going to affect your income, in addition to your family, or your health. Is it fair to assume that these are all things that are one-dimensional enough to assess their value in monetary terms? Because to me, that’s all the “market” or “economy” is – money.

  2. There are certainly shortcomings to a 100% free market and I think most would argue (myself included) that there are times government should step in.

    Monopolies are one example, although there really aren’t many of them and today we are *way* to quick to call a company one (ex. Microsoft). Utilities/infrastructure-based services are another example. If you need a telephone pole on my property or wires all over my town to provide your service, I would expect that the government has some hand in that. Neighborhood effects are another example – if what you’re doing effects me in a negative (or positive) way and there’s no reasonable way to pay me back (or charge me) then the government should intervene. Example: polluting my neighborhood. There are a few other times when I would expect government intervention into the market, but not nearly as many as we have today.

    The central goal of the government in the economy, in my opinion, is to allow private individuals to enter agreements freely. We provide a framework for that (contract laws, courts system, etc) and let people interact as they please. Children will *always* be an exception. Children cannot make decisions, so I have no problem making laws to restrict their behavior, alter their wages, or provide a more stringent framework.

    Adults however, should have the freedom to make decisions for themselves. The jobs that pay the most should be the jobs that are in shortest supply – the jobs our society needs to have filled the most and are willing to pay for. A lot of jobs (Lawyers/Doctors) have pay that is *artificially* high because government restrictions on who can and cannot practice law and medicine keep supply low. The other side of the spectrum are the cotton farmers who are being subsidized heavily just to stay in business. The net result there is not only is that money out of the taxpayers pocket, but it also cripples markets in other countries where they can no longer compete.

    So, by and large I take the stance that the government should just butt out.

  3. T, your position awhile ago (1905-1937), was endorsed by the Supreme Court. In Lochner v. New York, http://caselaw.lp.findlaw.com/cgi-bin/getcase.pl?navby=case&court=US&vol=198&invol=45, the Court held that the US Constitution includes, “[t]he general right to make a contract in relation to his business is part of the liberty of the individual protected by the 14th Amendment of the Federal Constitution.”

    This decision led to the court-packing crisis of FDR’s administration, http://www.hpol.org/fdr/chat/. Many people believe that this proposal of FDR’s–to add up to six more justices to the Supreme Court, who would obviously favor the overruling of Lochner and implicitly allow his social policies to go forward (which had been continuously struck down by the Supreme Court)–lead to the “switch in time that saved nine,” http://www.msu.edu/~pipc/courtpacking.pdf, meaning that Justice Robert’s decided to start holding economic legislation to be constitutional.

    Today, all economic legislation (maximum hours/minimum wage, etc.) need only be rational in order for the Supreme Court to find them constitutional. Almost nothing gets struck down on this form of deferential review. The Supreme Court ruled in West Coast Hotel v. Parrish, http://caselaw.lp.findlaw.com/scripts/getcase.pl?navby=case&court=us&vol=300&invol=379, that “the constitution does not speak of freedom of contract.” In West Coast Hotel, the Court upheld minimum wage hours in Washington, and with that, Lochner was dead.

    I don’t think that there’s any chance of the current Supreme Court striking down economic legislation, so the debate thus moves to Congress.

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