CAFE HAYEK- Here’s a letter to the Washington, DC- based WTOP Radio:
In your report this morning on Pres. Obama’s proposal to force employers to expand the number of employees who are eligible for overtime pay, you featured a clip of a law professor proclaiming that such intervention is made necessary by employees’ alleged lack of bargaining power.
This law professor is a poor economist.
If workers in fact have no bargaining power, then firms will respond to the president’s mandate by demanding from workers fully offsetting concessions such as lower base pay, fewer fringe benefits, or more difficult job duties. Without bargaining power, workers cannot refuse these offsetting demands. Therefore, the mandate, by causing the mix of employment terms to change without any increase in overall compensation, will at best leave workers no better off than before. more