How Obama Just Exacerbated Income Inequality With His Overtime Meshuga’as

In a fit of absolute genius the likes you wouldn’t see from a highly evolved muskrat, Obama today is forcing buyers of labor to pay more for that labor at any rate over 40 hours per week. He thinks this will mean that more workers will make more money. As in the total number of dollars spent on labor will rise because of this law.

What he doesn’t understand is that less workers will be making more money and the remainder will lose, because laws cannot magically increase the amount of money people are willing to spend on labor. Less people will make more money in order to equal out the total dollar amount spent. The others will either be cut to part time or fired.

What happens is we go from a situation of relative equality, where say:

100 people make $100 overtime, for a total overtime dollar amount of $10,000

To a situation of less equality where:

90 people make $111.11 overtime for a total dollar amount, again, of $10,000, and the other 10 people have zero.

Therefore, overtime legislation creates income inequality. 

Obama doesn’t think. Therefore he isn’t.


3 thoughts on “How Obama Just Exacerbated Income Inequality With His Overtime Meshuga’as

  1. But… what if the company needs x hours worth of overtime? Are you saying that they can just cut the amount of labor required? If they need x hours, then they will pay the amount needed and make it up elsewhere. (And if they *don’t* need x hours of overtime, then why is this company employing excess labor?)

    • Companies don’t need X hours of labor. They need to make X money. If labor becomes more expensive to the point where they are now losing money due to that labor, they will get rid of labor and rebalance their output in order to return to the maximum revenue point.

    • Let’s put it this way. In general, when something gets more expensive, the demand falls. In general, when a price is pushed by law above market rates, an unsold surplus results. I can’t tell you how each individual firm will adapt. Maybe they’ll cut something else to keep the overtime, but that cut will unemploy someone else who is’t even involved in the overtime equation directly.

      The strategy to try to conceptualize how one firm will react to a given law and then expand from there to everyone is a fallacy. There are so many interconnected pieces that to put one company in your mind and imagine how it might adapt without unemploying anyone doesn’t work. Any cut it will make due to being forced to reallocate capital to overtime labor will be a hit to someone else’s pockets, maybe from a customer of theirs from a completely different firm who doesn’t even have overtime employees at all. Everything effects everything, and self-contained examples do not exist in reality. On the aggregate, some will gain at the expense of others, therefore generating unnecessary inequality by force.

      We know by logic that if the price goes up and its above market rate, unemployment of factors will result, which is what a surplus of labor is. This is what will happen, by deductive necessity.

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