Another day, another labor market intervention!
Recently, the Biden administration announced new rules regarding overtime pay and salaried employees. Generally, salaried employees are paid a fixed amount rather than an hourly wage, so they are not paid traditional overtime. But lawmakers say low-wage salaried workers Also I will receive overtime pay. This in itself is not new. What’s new is that the Biden administration is raising the salary cap for this rule.by Ministry of Laborfrom July 1stcent, Salary earners earning less than $43,888 a year will now receive overtime pay, which will increase to $58,656 by 2025.
Several concerns may arise. This rule will make hiring less experienced workers more expensive than before. The person you intended to hire for an entry-level position making $40,000 a year may suddenly become less attractive, and you may prioritize hiring someone with a more established work history and better skill set. Become. Anecdotally, I often hear people complain about how hard it is to find even entry-level jobs, and passing laws that make it more expensive to hire people for entry-level jobs would make such a difference. It’s not helpful to people. But perhaps this will be offset by hiring fewer entry-level employees and reducing their benefits and perks instead. There are multiple margins that can be adjusted.
However, what struck me from the Ministry of Labor’s announcement was the following sentence:
“This rule restores the promise to workers that if they work more than 40 hours in a week, they should be paid more for those hours,” said Acting Secretary Julie Hsu. Stated.
I found this very difficult to understand. I have worked in positions that paid below the current minimum cap. There were definitely times when I was working over 40 hours a week. Yet I never asked for or expected overtime pay. Because you had already agreed to a set salary during the job negotiation process. If someone said to me, “Oh, no!” He was working over 40 hours a week, and he wasn’t getting paid for the extra overtime. The promise has been broken! ” I would just stare at them and wonder what the hell they were talking about.I was Promised wages were paid – I never have An agreement between me and my employer that I will be paid additional wages if my working week exceeds 40 hours. So what kind of promise was broken? Who made that promise?
Secretary Su is talking about reinstating promises that no one actually involved made. If I had started getting paid less than my negotiated salary; that That would have been a breach of promise. And that is a role that the government can play effectively. If my employer promises me a specific salary in my employment contract and fails to keep it, the government may take appropriate steps to recover the broken promise. But this new rule is nothing like that. This does not mean that the government will enforce existing promises (or contracts) between two consenting parties. This is an act in which the government steps into a promise that has been kept as agreed and forcibly breaks the promise after the fact. Director Su’s actions are better characterized by the words of Darth Vader. the empire strikes back: “I am changing the contract. I pray that there will be no further changes.”
