Labor Pains

In The Free Agent’s last job, she alternately amused and shocked her coworkers with statements like, “if it were up to me, there would be no employment laws”.  A large part of her duties, after all, was to keep Hippy Week on the right side of labor laws.  By the end of her eight-year tenure, however, managers were quoting back another of her favorite maxims, “why isn’t there a law saying you have to do your job?”, in recognition that all employment laws are handcuffs on the employer.  Natural allies—I have these tasks I need done, you have time on your hands and a desire for the money I’m offering—are turned into unnatural adversaries.  Always, the law punishes the employer for the sin of offering someone a job.

In one rap session, the editor, struggling to understand why he couldn’t pay salaries instead of hourly wages to certain employees, asked “How did this all get started?”

It all got started in a crisis like today’s, when government attempted to solve widespread unemployment by increasing the cost of employment.  That’s right—Olde Tyme Economists would argue that if you have too much of a commodity floating around, the price will fall until enough buyers are found to clear the excess.  But that’s the old way of thinking, from the days when governments stuck to what they do best, building palaces and killing people.  Now that their expertise is being applied to every problem of life, we have employment laws.  To answer the editor’s question, the issue of classifying employees into salaried or hourly workers started with a massive piece of Great Depression legislation called the Fair Labor Standards Act (FLSA).

Contrary to the Olde Tyme Economists, Franklin Delano Roosevelt advocated these laws “to raise wages, create employment, and thus restore business”.  Creating jobs by increasing the cost of employment may be the first documented case of what The Free Agent calls Magic Wand politics.  When Roosevelt and Secretary of Labor Frances Perkins got the FLSA passed in the dire year of 1938, unemployment had ranged between 15 and 25% for seven straight years.  Its provisions, including minimum wage and overtime, cover most Americans today.

Arguments rage about what the minimum wage should be, and most of The Free Agent’s co-religionists, of course, would dispense with it altogether.  But even for believers, the wage must be at one of three places: above, at, or below the prevailing wage unskilled people are willing to accept.  If it’s below that wage or exactly at it, it is unnecessary.  If it is above what people are willing to work for, as it must have been when the original law was passed, in 1938 The FA might have asked how it could create jobs.  Today she might wonder aloud if raising unskilled wages at double the rate of inflation might not erode the natural advantage the domestic workforce has over the foreign one.

To the Roosevelt/Perkins mind, anyone who worked more than 40 hours a week was robbing his unemployed fellows.  Rather than make it a crime for the worker, however, the law tries to make it less expensive to hire another employee than to give more work to the eager beaver.  Picture a fast food worker who finds that even at today’s minimum wage of $7.25, he needs to work more than 40 hours.  McDonald’s isn’t going to pay him fifty percent more than someone else, so our fellow has to go down the street, change uniforms, and punch in at Burger King.  The FLSA can’t prevent him from continuing to work, they can just make it a hassle for him.

Seventy-two years later, the federal government is still trying to increase employment by increasing the cost of employment, with the Department of Labor budgeted to hire a thousand new employees, none of whom will benefit employers in the least.  Might as well try increasing milk production by cutting back on the cow’s feed.