Every now and again, somebody who thinks the government can regulate the economy to prosperity goofs up and tells the truth. For today's example, take a honcho with the Economic Policy Institute, some left-leaning think tank that's been pressing the administration to change the overtime rules for salaried workers. Said honcho said the newest changes represent a minimum wage hike for the middle class.
Yes. Exactly.
But, as with other hikes in the minimum wage, how many people will be thrown out of work, or see less work, because of it?
The Obama administration, which really needs to look at Venezuela's government-run economy these days, announced a new rule last week that will give salaried workers the ability to collect overtime pay if they make up to $47,400 a year. That's up from the current threshold of $23,600.
The administration is so proud of the new rule that it's started to give out hard numbers. Workers will take home more than $12 billion over the next 10 years, it said.
Another way to put it: Employers will have to spend another $12 billion over the next 10 years. Does anybody in this administration suppose that those business owners will look for ways to cut costs--employee costs--to make up for it? Or will those business owners just take it all with a smile, knowing that the government has lovingly given their employees a raise and the businesses will just have to make do?
Hint: Already business owners are telling the papers they'll have to cut back. Some salaried workers might be moved to hourly pay. Some might have to take pay cuts--or at least see bonuses lowered. Some owners are talking about cutting base pay for salaried workers to make up for any overtime they'll now get. It's amazing how fast employers concerned with the bottom line (which is most of 'em) find ways around government regs.
How many folks won't be hired, or hired at lower salaries, in the coming years is anybody's guess. Not that real life and consequences matter to this administration. Who accuses it of substance over flash anyway?
Or as one Joe Biden, vice president, said at the new rule's announcement: This new rule will have a rippling effect.
Let's hope not, Mr. Vice President. Let's hope not.
Editorial on 05/23/2016