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Business Observer Friday, May 27, 2016 2 years ago

Everyone loses with overtime rules

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Agonizing over the new overtime regulations ...
by: Matt Walsh Editor

Agonizing over the new overtime regulations ...

Take this bet: $1,000 that you cannot find one employer in the U.S. — and there are 28 million of them — who is dancing in the street and praising Obama's new overtime regulations for how they will improve the employer's business. Not one.

It's one more Obama sneer of disdain at American capitalism and employers.

It was 2008, and Al Carlson, then-CEO of Sarasota-based Sun Hydraulics, was explaining Sun's experience with Enterprise Florida. At the time, Sun wanted to build another manufacturing plant near its existing site. It had never sought government assistance in its 35 years of existence. But as Carlson explained, his team thought: “Why not? Let's see what happens.”

Carlson learned quickly he didn't like the program. The incentives were all based on the hiring of more employees. “I don't want more employees,” Carlson told me. “That's not the purpose of our business.”

Carlson, whose DNA is engineering, said one of his business' objectives was to figure out how to be more productive, how to do more with fewer resources, to do more with fewer people.

So here is how that story relates to Obama's new overtime regulations, which if left in place by Congress over the next 50 days, will require employers to pay overtime to any salaried employee earning up to $47,000. And then indexed thereafter.

Like Sun, every business strives to do more with the fewest, most productive people possible.

Yet, the Department of Labor believes one of the results of its overtime changes will be an incentive for businesses to hire more people. The Labor Department brainiacs believe that rather than pay time-and-a-half overtime to those salaried employees who previously worked more than 40 hours a week without overtime, employers will hire more people to do the salaried employees' extra work and avoid paying overtime.

But a likely scenario would net no more jobs. Some employers will cut the salaried employee's base pay so that his or her new overtime pay ends up at the same level the salaried employee earns now. That, or cut employees' benefits.

This is what Obama and his B-crats appear not to see: Every government-forced increase in wages is not automatically offset with an increase in sales to cover the higher wage costs. Nor likewise will a business' profits rise in tandem with the higher wage costs.

To the contrary, the higher overtime demands — and the new costs to administer the regulations — will make businesses less productive and less profitable. Another regulatory drag on an already anemic economy.

Here's another loss to productivity and the American spirit to get ahead.

Surely, many of you remember how, early in your careers you recognized that to get ahead, to earn more and create more opportunities for yourself, you were willing to work harder than many of your peers. You put in extra hours with no additional pay on the bet this extra effort would be rewarded later. You were willing to do the extra work at the salary on which you and your employer agreed. That was your private deal with your employer.

Indeed, that's the way many Americans have realized the American dream: work harder and longer and be more productive than others.

But what happens when an employee falls under the overtime regulations?

Everyone loses.

The relationship changes. Employees are forced to punch in and out, a demeaning act; as if he's one of the herd. The incentive to do extra is snuffed. The ambitious employee is held back. He is less productive than he would otherwise be.

And so is the business — held back, less productive.

But this is the Obama administration vision — everyone equal. The communal, socialistic model, dictated by Washington at the point of a gun.

One of the great tragedies in America is federal intervention into private employment. Ever since the 1930s of Roosevelt's New Deal, an insidious government increasingly has forced its way, like an ugly troll taking tolls at the bridge, between what should be a private compact between two people — employer and employee.

That arrangement should be no different than any peaceful, private exchange between a buyer and seller of goods and services.

Obama and his Labor Department progressives would argue the need for government to intervene to protect the worker. But they ignore the powerful, simple fact that in the agreement between employer and employee no one is forced. If an employer exploits or the employee is unproductive, the two are free to terminate their agreement.

Likewise, the statist interventionists refuse to accept that the extraordinary American standard of living did not come about because of union contracts, wage-and-hour laws or the reams of regulations from Congress and the Department of Labor.

Americans' world-leading wages and working conditions are the result of entrepreneurial innovation and competition — the freedom of employer and employee to determine how best to collaborate to serve their customers.

At what price an employer and employee agree to trade is none of the government's business.


Will Republicans kill it?

Two Republican-sponsored bills that would nullify the new overtime regulations are creeping through the U.S. Senate and House — S.2707 and H.R. 4773.
Lawmakers have about 50 days remaining to kill the rules.

While numerous House and Senate members have proclaimed opposition to the regulations, are they really committed? The bills were introduced in March.

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