The economy suffers greatly when such regulations are forcibly added to voluntary labor contracts. Firms that hire low-wage workers who traditionally work more than 40 hours a week will be forced to reduce their labor demand, leaving many workers either out of work (and eligible for various forms of unemployment welfare) or forced to work in other areas of the labor force. Say hello again to moonlighting. MORE
Source link: http://blog.mises.org/1905/working-overtime-to-ruin-lives/
Working Overtime to Ruin Lives
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Dear Dr Westley,
While I agree there is far too much interventionism going on in this and in other countries throughout the world by this and other countries, I would have to say paying people $15/hour overtime instead of the regular $10/hour for the extra hours they work wouldn’t make this countries big businesses poor or even less profitable. One only needs to look at how much salary and bonuses or other benefits upper management and executives cut themselves from the efforts of those whose labor create the company’s wealth, which is then used to create more big business used to pay more labor poor wages. I know, I’ve been on the receiving end of this game. Been paid the least and produced the most, in sales that translated to on average 55% of a given areas revenue. Needless to say, I did not stay with any of these companies pulling these shinanigans. So they lost what I profited them but I also lost. In this world today, it makes me look like an unstable employee. The same game is played if you happen to be a small business self-employed individual, as I have been. If people don’t want to pay you for your services rendered, they don’t and they further do harm by speaking falsely of you. Go to an attorney you say. Many of them are just as corrupt and either refuse to represent you, or charge such an outlandish fee that you can’t afford quality representation and thereby loose again.
So my question to you and other Austrian thinkers is, where is the protection from the fallen nature of man suppose to come in for those of us who chose to operate with integrity and excellence in our daily lives personally and professionally when we not only deliver quality but have a right to be paid honorably for it?
“but have a right to be paid honorably for it?”
Ah, there’s the rub isn’t it.
You don’t have a “right” to be paid anything more then what the buyer of labor volentarially agrees to buy it at.
I do agree that government corporate subsidies and high tarrifs, protectionistic regulations and licensure certainly makes big business wealthier so that people feel the government “needs” to protect the “little people.” But this is also a problem with big government.
We only percieve a need for the fed to protect us, because the Fed created most of the problems that cause big business to have the economic power it does.
As Lew continually says, this is simply another case of interference begetting more interference. Or, I like the French libertarian Bastiate. “The government’s creating the poison and the cure in the same bottle.”
Tracy
Oh man – first the anti-oursourcing people asking why getting things cheaper benefits anyone, and now we have someone who thinks that making minimum wage higher won’t do any harm economically – indeed it’ll make things better!
Some people really need to read Hazlitt’s Economics in One Lesson.
Making wages higher isn’t the road to prosperity – if it was, why not stop at making wages at 15$ an hour? Why not make wages a million an hour? Surely these greedy companies can stand to fork over all that money; it’s just a matter of forcing them to do it – it’s our ‘right’ as employees.
Aside from the moral quagmire that minimum wagers get involved in, making wages higher distorts the market economy and it’s incentives. By making wages ever higher an hour, companies effectively ‘freeze out’ those which they are not sure or are sure will not be productive enough to be paid the hourly wage. It makes it more difficult to attain jobs, creates unemployment, hurts the poor, and further chips away at America’s economic infrastructure.
The reason for this? Well, those greedy companies which owe you money operate on profits.
An interesting comment on protecting people from the fallen nature of man; by creating a free labor market – which we are a far cry from – we help the poor, eliminate unemployment, and increase the overall wealth of America.
An interesting excerpt from an email I received yesterday:
I work for a general contractor and find nothing more annoying than overtime. I appreciate the fact that certain occupations don’t lend themselves to salaried positions, but overtime seems to me one of the most perverse incentives imaginable–rewarding someone for taking longer to do his job. Indeed, in our business, there is a time and place for overtime, but as a rule, it’s simply unproductive and costly. In fairness, overtime doesn’t bother me so much in principle when it results from a voluntary agreement between employer and employee. However, most of the people in my industry are union employees, so the market is hardly free of coercion.
On another note, while I haven’t been following the Labor Department’s latest proposals, I do find it an interesting time to come out with such a plan with all the talk about outsourcing, losing jobs overseas, etc. The plan you describe will only worsen the problem as it would make the cost of producing in America even more costly than it is already. To me, it is unfathomable that such a simple concept can escape the political classes, viz. that their latest programs/regulations that raise American labor costs are only going to encourage moving jobs out of the country. In fact, it would be almost comical if it wasn’t so tragic to watch labor’s benefactors in office enact so many policies with such counterproductive results, i.e. programs designed to help labor but which have the opposite effect.
Tracy,
Don’t have a right to be paid for services rendered you say. Your wrong. Next time you agree to perform a service for someone, and they don’t pay you, I’d like to see you just up and walk away with out any feelings of, “Wow, this guys trying to rip me off!” Common sense and basic respect dictate the right I am speaking of and is why we have laws in this land. Perhaps you think it is perfectly acceptable to lie, steal, or kill?
Further more, I wasn’t speaking of overtime pay ie the $15 rate vs the $10 base pay as government imposed. If an employer wants and employee to work extra hours … sacrificing his personal life or responsibilities producing more for that company, why shouldn’t the employee have a share just as management and executives do … some, sizably so.
Don’t give thieves in this country any more ground than they already have … and there are lots of them … and they’re not just union thugs.
And to Alex,
Ibid, I was not speaking of government imposed wages, at all. Aside from that, there are realistic reasons to raise minimum wage … and also to do it without government imposition.
To both you and Tracy, you are writing as the typical reactionary politico, rather than someone who has lived some significant length of history on this earth.
I am far more a small and limited government advocate than you might realize … far more!
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