Thursday, May 19, 2016

Movin' On Up: The 'shrinking middle class' fallacy

Twenty years ago, as most of my friends prepared for graduation and the next steps in their lives, I was a college drop-out - flunk-out really. I was making barely over minimum wage and working two jobs, sometimes three, to pay bills. There were a good many reasons that I found myself in the predicament that I was in at the time, rather than fitting myself for a cap and gown, but none of them were external. In the intervening time period, a lot of things have changed. Which is why when I hear Bernie Sanders talk about the disappearing middle class, I just have to shake my head.

Bernie is looking at a number in isolation and saying ‘there are less people in this group than there were 30 years ago’. And his followers eat it up, because they want someone to blame for the malaise that affects them: college debt, poor job prospects, flat-lining wages. All of these things are because of the 1% on Wall Street, Bernie will tell you. They hold all that wealth! But wait just a second… If those people aren’t middle class anymore, exactly where did they go?

Wednesday, May 18, 2016

How the New Overtime Rules Will Hurt Everyone

Today, the Obama administration took the long-expected step of amending the overtime regulations as they apply to all labor.  In a quaint video uploaded to Facebook, they outline just how this will work: that by doubling the threshold over which individuals are exempt from overtime, they will magically relieve all of those over-worked and underpaid Americans of their burdens, using Sam and Mattie as avatars of Americans facing such challenges.  But the video also goes to great lengths to ignore practical reality and the fundamentals of economics, which tell us simply that in the face of increased costs, employers will simply employ fewer people.

The video seems to think that now, because it will be more expensive to pay Sam or Mattie overtime, the number being fixed nationwide regardless of regional cost of labor variations, employers will just either a) raise their pay so they aren’t overtime eligible, or b) shift the extra workload to other employees to keep their workload down.  Let me tell you what will really happen, because you see: I’ve done both Mattie and Sam’s jobs before.