Making Things Worse: The Obama Way
Bill Quick

Obama’s Demand for Wage Rules for Salaried Workers Will Have Far More Impact Than Proposed Minimum Wage Changes | Coyote Blog

5-10 million is potentially 3x or more the people affected by a minimum wage change.  But in some sense, this still underestimates the impact.  Here is one example.  Last year the average starting salary of college graduates is about $45,000.  The median is likely lower.  This means that over half of all college graduates going into the work force will be taking hourly jobs that used to be salaried.   Teachers will be hourly.  Budget analysts will be hourly.  Etc.

So all these folks are saying – Yeah!  I get overtime!   Wrong.  They will be eligible for overtime.  But companies will quickly restructure their work processes to make sure no one works overtime.  And since their new hires are working just a straight 40 hours (with mandatory unpaid lunch break time in CA), they will likely pay less.   If I am paying $40,000 a year for someone who will work extra hours for me, I am not going to pay that amount to someone just punching a time clock.  And the whole psychological relationship is changed – a salaried person is someone on the management team.  A person punching a timeclock may not be treated the same way.

Further, when someone gets switched from salary to hourly, they lose a minimum pay guarantee.  When I get a $3,500 a month offer, I know that no matter how slow things are, until I am fired I get $3500 a month.  There is a floor on my earnings.  As an hourly worker, my hours can be adjusted up or down constantly.  There is no floor at all.

Oh, and by the way, remember Obamacare?  The PPACA penalizes companies who do not provide a health plan that meets certain (expensive) criteria.  But that penalty is not applied for workers who are “part-time” or work less than 30 hours a week.  Salaried workers are automatically full time.  But once you convert all those people to hourly and make sure they are working no more than 40 hours a week, is it really so large a step to getting them under 30 hours a week?

Wait, what?  You aren’t trying to say that a government policy might have, unexpectedly, unintended consequences exactly opposite of those it purports to be trying to achieve?

But that’s just crazy talk!

Bill Quick

About Bill Quick

I am a small-l libertarian. My primary concern is to increase individual liberty as much as possible in the face of statist efforts to restrict it from both the right and the left. If I had to sum up my beliefs as concisely as possible, I would say, "Stay out of my wallet and my bedroom," "your liberty stops at my nose," and "don't tread on me." I will believe that things are taking a turn for the better in America when married gays are able to, and do, maintain large arsenals of automatic weapons, and tax collectors are, and do, not.

Comments

Making Things Worse: The Obama Way — 3 Comments

  1. In my last two long-term contract positions (“long-term contract” in my end of the engineering trade is generally defined these days as “4 to 6 months’ duration, or perhaps longer”), the one I completed in April of last year and the one I finished just over two weeks ago, I was permitted to work as much overtime as I wished – it was simply understood by both parties that I would receive no pay for such overtime hours as I chose to work.

    I suspect that a significant segment of the newly-”converted” hourly-paid (formerly-salaried) folks will find themselves with a similar arrangement in the very near term…

    Economic Reality, she is a real bitch-kitty sometimes. 8-)