All Commentary
Wednesday, May 18, 2016

Obama’s Egregious Overtime Rules Attack Prosperity and Worker Rights

The lives of many millions will be negatively affected

The Department of Labor’s new regulation regarding working hours ranks among the most outrageously destructive actions by the Obama administration in its two-term history. It is going to profoundly affect the lives of many millions of people, shattering dreams and smashing the human rights of workers to negotiate, produce, and achieve.

By executive fiat, the Department has now said that time-and-a-half rules on worker pay apply to workers earning up to $47,476 per year (such specificity!) whereas they used to apply only up $23,660. The new rules apply to salaried as well as hourly workers. High-level executives (along with teachers and doctors) are exempt (how people will be classified is determined by a complicated test).

Forced Idleness

An Obama administration spokesman said this is designed to address “both underpay and overwork.” Because a law alone cannot magically produce wealth, it will not address underpay. Employers do not have a secret closet stuffed with cash to which they have been denying workers access. Instead, workers will be cut back and/or reclassified by force of law.

So yes, this edict will address overwork by forcing people to become poorer. This hits the white-collar job market hard and in ways that will upset the lives of millions of people.

Want to work long hours to get ahead? Forget it. Your boss won’t let you for fear of violating the regulations. Your career opportunities are shut down. Or maybe you will get downgraded from salary to wages in order to make long hours possible. In either case, no accomplished American worker has had to account for his or her working hours for generations. It’s a freedom we enjoy as Americans.

The National Retail Federation is right. These rules will affect every aspect of life for millions. It will destabilize family vacations because workers won’t be able to prepare by working extra. It will make salaried positions more elusive. It will thin the ranks of middle-level executives and impose strange record-keeping rules. It might result in millions of people taking a second job in order to pay the bills.

It Didn’t Work in Europe

This new rule introduces European-style labor regulation despite how such rules regarding overtime have dragged down productivity and introduced social stagnation over an entire continent. It is completely inconsistent with an entrepreneurial economy of risk and reward.

Think of the typical startup. Workers work ridiculous hours at below market wages in hopes of building a successful enterprise. Rules on pay and working hours, if enforced, would rule out startup culture. It is precisely because US rules are kept to a minimum, and only apply at relatively low levels, that the culture of startups is as vibrant as it is.

Applying working-hours rules to incomes that approach the median will tie up the American labor force in fits of bureaucracy and recrimination. Most people might remember how frustrating it can be when you finally get your first full-time job with an hourly wage. First you find your hours restricted to stay under the health-care mandate; then you find your hours restricted to avoid time-and-a-half pay.

It has so far been a blessed relief to earn more and avoid such restrictions. Once you pass the earnings threshold, you can work according to your wishes and actually provide as much value as you want. The new rules are based on the strange idea that labor is somehow more valuable after 40 hours than under 40 hours, which is obviously untrue. Moreover, no one really believes that. So the purpose here is to forcibly underemploy people.

Who Benefits?

Is the Obama administration just setting out to be cruel? No, this is an overt sop to the dwindling number of Labor Unions that are looking for ways to block competition in the marketplace. They are supporters of the Democratic Party, so this is a political payout. The economic effects on the labor force will be felt only after Obama has left office.

It should not be forgotten that maximum working hours laws were first tried in the Progressive Era. Their purpose was to make a certain class of workers less valuable in the marketplace. That class of workers was specifically named in the legislation: women. This generation was concerned that women were outcompeting men, and, moreover, married women were seen as needing to save their energies for propagating the race. In essence, maximum work hour rules were part of a range of laws influenced by the pseudoscience of eugenics.

Only later were they imposed during the New Deal as a way of manipulating labor data in a way that appeared favorable to the party in power. They didn’t actually help workers, any more than any legislative restriction on worker rights helps. Fortunately, in our own times, they have become ever less relevant.

Attack on Freedom

Applied in the 21st century, a time in which work life has become ever more customized according to individual preference, these rules will be devastating for productivity. They are inconsistent with the very idea of human freedom. In short, they are intolerable.

What’s more, the imposition of the rules was never voted on by any legislative body; it is a pure administrative edict: the worst of the worst from the worst.

Congress has a chance to weigh in on the regulation before it takes effect, and to do so during the dicey months leading to an election. It could be killed if good sense and courage prevail.