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When labor protections backfire

Catherine Rampell on

That might seem like a good thing. Why wouldn't you want to improve the living standards of as many people as possible?

The answer: You won't actually be helping them if making their labor much more expensive, much too quickly, results in their getting fired.

Similarly, a year ago, the Obama administration issued a new overtime rule.

This rule massively expanded the universe of white-collar employees entitled to time-and-a-half pay for working beyond 40?hours per week. Before, white-collar workers earning salaries up to $23,660 were generally entitled to overtime. The new rule more than doubled the threshold, to $47,476.

The new threshold was to be implemented in one fell swoop, starting last December. There was fierce debate within the Obama administration about the wisdom of such an abrupt increase, but those who mentioned this to me declined to ever do so on the record. Meanwhile, left-leaning groups cheered the millions whose pay was about to go up.

Then, a court blocked the rule in November, and several weeks ago the Trump administration began the process of revising it. During his confirmation hearings, Labor Secretary Alexander Acosta cautiously suggested that a cutoff of about $33,000 might be appropriate, though he wanted to spend more time looking at the effects on workers and firms.

As strange as it feels to say something nice about policies being pursued by the Trump administration, this might be a better approach.

On this and other labor issues, says Michael Strain, director of economic policy studies at the conservative American Enterprise Institute, "We need to be debating whether a cost-benefit test is passed, something on which reasonable people can disagree." Instead, Strain says, a lot of thoughtful, well-meaning people on the left seem to be looking for a free lunch -- that is, for policies with all winners, no losers and no costs. (Kinda like the right's attitude toward tax cuts, I might add.)

Here I confess that I've been guilty of this. I'm often drawn to studies and stories about pro-labor policies that "pay for themselves." And while there often is a pro-business or macroeconomic case to be made for policies that help workers, I pledge to be more mindful about potential unintended costs as well.

Readers, I hope you'll hold me to this. And anyone else peddling free lunches, too.

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Catherine Rampell's email address is crampell@washpost.com. Follow her on Twitter, @crampell.

(c) 2017, Washington Post Writers Group

 

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