Monday, April 26, 2004

Overtime Pay

The Mises Institute shows us the folly in the current debate about overtime pay. Why are overtime regulations bad? The article explains:

"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."

and also:

"...the regulations will harm those firms that found it necessary to attract high wage earners by offering overtime pay. People who used to work overtime repeatedly—to their personal betterment—will be forced to stop. Employers who were once generous about allowing workers to work extra hours will no longer be able to. The full cost of such interventionism must include the workers who are now denied opportunities, as well as hard cash, for their work. Never mind the effect that the proposals may have in terms of short-term political impact."