Kyle Wingfield

Political commentary and opinion from The Atlanta Journal-Constitution's conservative blogger

Overtime pay rule: Another attempt to override the weak economy

The Trump phenomenon , with its rejection of so much center-right orthodoxy, has made a number of people wonder if traditional Republican economic policies are irrelevant to many Americans. Meanwhile, Democrats continue to demonstrate their policies are simply economically illiterate.

The Obama administration -- which has been active on the policy-decree front lately -- issued another directive this week. It more than doubles raises the threshold at which salaried workers must be paid overtime: The new ceiling is $47,500 in annual pay, up from $23,660.

This is another entry in the proud liberal history of believing government can simply order higher wages without negative, offsetting consequences in the real world. Like the talk about a $15 national minimum wage, the overtime-pay policy is ostensibly premised on the notion that employers are withholding great sums of money from workers for no good reason.

Reality is different. Wages aren't rising for a variety of reasons, but simple greed isn't high among them. The post-recession economy has created job growth that's been steady but too slow to boost pay on its own. Despite the steady growth, there's still a great deal of slack in the labor market. A recent report by the Federal Reserve suggests that, seven years after the recession ended, more Americans than previously thought are still working fewer hours than they'd like . And it's not just part-time workers, the study's authors write: "Indeed, our analysis suggests that part-time workers ... may only account for one fifth of the total additional hours that workers wanted to work but were unable to." This "involuntary underemployment" is persistent, with the Fed's data showing half of the households experiencing it in any given year will also be stuck with it in the following year.

It's very likely that labor-market slack is dragging down wages more than businesses' failure to pay overtime to some workers (the administration estimates the new policy would affect about 4.2 million workers). And even those workers who now qualify for overtime pay won't necessarily see it. They may instead be asked to work fewer hours, or businesses may decide to rely on more part-time workers to avoid paying time-and-a-half for the full-time employees. The slack in the labor market gives employers options, and the overall mediocrity of the recovery -- not to mention the likelihood of a recession sooner than later, given historical norms -- will make them more likely to take the less costly, less risky options.

As the Pittsburgh Tribune-Review editorial board succinctly put it , "Thus, hours will be reduced. Some employees will be fired. Full-time jobs will be replaced with part-time jobs. And this is what 'progressives' call 'progress.'" Emphasis original.

It's fashionable to say Republicans don't have the right economic policies for the current age, and there is some truth to that. But the poor alternatives offered by the Democrats are not, in fact, better than nothing.

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About the Author

Kyle Wingfield joined the AJC in 2009. He is a native of Dalton and a graduate of the University of Georgia.