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Reality vs Government Mandated Overtime, “Living” Wages and other Mandates

Most of the young people today point to the sluggish economy, the lack of jobs and growing poverty and government dependence today as proof that Capitalism and Free Markets don’t work. They have been brainwashed by public education, which has become more indoctrination than education, into believing the United States has actually had a Capitalistic Free Market society all along and it is time to “try something new” that is more “fair”. And of course that would be Socialism which they believe will be “fair” because the government “levels the playing field”.

But people with the ability to use critical thinking, something that stopped being taught in public schools and universities decades ago, understand that you can’t have both government control and a free market. Any incursion of government into a free market renders the market no longer free. And our government has had a heavy hand in the no longer free markets in this country since the 1930’s and Franklin D. Roosevelt’s Progressive “New Deal” which used the Depression as a springboard to control business and the economy.

The National Industrial Recovery Act (NRA) was enacted in 1933 and was the beginning of the heavy hand of government control on the economy. It set a minimum wage and maximum work week and abolished child labor among other things. But back then, the Supreme Court still used the Constitution as a guide and the law was eventually held as unconstitutional. Of course the Liberals went nuts and accused anyone against the law of enslaving women and children.

One of the most interesting facts was the ways that businesses found to get around the laws. One of the major cases that caused the NRA to fall was that of a laundry owner in Brooklyn named Joseph Tipaldo. He was forced to pay minimum wages by law, which he did, but he demanded a kickback from the employees. He paid them minimum wage, but they were required to return the money above what they were previously making. The case went to the Supreme Court and the 5-4 decision upheld Tipaldo’s right to contract with anyone without the government’s interference. Freedom of Contract is a major principle of a free market economy. Without the freedom of a business to contract with anyone as it pleases, there is no free market. So America lost her Free Market economy under FDR and the NRA in 1933, but regained the freedom with SCOTUS decisions in 1935 and 1936. But, alas, the return to free markets were short lived. then, like today, the liberals screamed about fairness and the need to regulate businesses. While this would seem to be “fair” it actually removes the free market from existence. And of course laws like this only expand.

If I were to tell you that one of the worst and most crushing blows to a free market economy in the history of the US came when Conservative Justice Roberts decided to switch sides and deliver a crushing blow to businesses by siding with the 4 liberal justices and allowing the government to dictate what companies must provide to employees you would immediately think I was talking about Chief Justice John Roberts, the Conservative turncoat who upheld Obamacare along with the 4 liberal justices. But that is not what I am referring to here. The Conservative Justice in this case was Justice Owen Roberts and his betrayal came to be known as the “The switch in time that saved nine”. See FDR was also a Progressive like Obama and he had threatened to add several more Supreme Court Justices to the 9 we had. And of course they would be left wingers. Owen Roberts was looking out for his job.

Nevertheless, the Roberts switch to opine with the liberals ushered in the Fair Labor Standards Act of 1938 (FLSA) and since then, America has had neither a Free Market nor a Capitalistic economy. So for the Bernie Sanders fans who believe that the “Free Market” has caused all of our economic woes and is responsible for the malaise that has set in on our economy, you might want to do a bit more research before you call for more government intervention to “fix” the economy by raising wages and demanding overtime pay, health care and a plethora of other government mandated regulations. The truth is, it was Socialism that has damaged the markets, not the free market system – because we have not had a free market in nearly 80 years.

And just as the business owners of the day that found “creative” ways to get around the laws (kickbacks) business owners are now doing the same thing. More and more onerous regulations fall on a company as the number of employees grows to certain thresholds. There are many companies that would like to expand and hire more people, but they have to hold their number of employees down to stay below the points where they would then be subject to far more expensive government mandates. Under a free market, the business would be able to expand and hire as needed.

Kickbacks are out now, but more and more “legal” methods are created to avoid mandated pay and benefits. Several years back I worked for a company and traveled a lot. Most times travel was by air, but there were times when we were installing a new system where we drove from Virginia to as far away as Alaska. We were hired as “exempt” employees, meaning we were really salaried, but they were required by law to pay us time and a half for hours over 40. They had a creative way to avoid a lot of overtime, especially when we were traveling. A drive to Alaska provided no income for the company, but a lot of overtime. So what they did was take your normal weekly pay for a 40 hour week and divide that by the number of hours you worked to arrive at your “new” hourly pay amount. And they paid time and a half on that.

For example, say an employee made $15 per hour. A normal 40 hour week, she would make $600.00. Now say she worked 60 hours one week. The new hourly rate would be $600 (the normal 40 hour work week pay) divided by 60 hours. So instead of making $15 per hour, you would make $10 per hour for the first 40 hours that week and time and a half for the 20 hours overtime – $15. So you would make $400 for the first 40 hours (instead of $600) and an additional $300 overtime. So your pre-tax pay would be $700 ($400 + $300). Interestingly, if you worked 40 regular hours and 40 overtime, the extra 20 hours would get you $50 more. That’s it.

Why would we allow this? Well, we were technically salaried and when we worked overtime, we ended up with a bit extra. Beer money we called it.

And to top this off, when we were on the road we were required to work 12 hours per day, 7 days a week. But then what would you do if you worked a 40 hour week? Drag an install out to 3 weeks? We wanted to get home and sitting around in a hotel in some city far from home wasn’t going to get the job done. Again, it worked for us. We got to do some fun stuff if we wanted. Glaciers in Alaska. Golf. Bars. Mostly bars. And often, I would come home and pick up 3 or 4 paychecks. And I was single. I hardly spent a dime of my personal money on the road.

So how will the President’s mandatory expansion of overtime pay work out? There will no doubt be some creative ways like I have seen first hand. But rulings like this will force some employers to hire a couple of part time workers instead of a full time employee. So jobs will be lost. Others will hire temporary contractors. No benefits, no overtime. And for those that are used to being able to take a child to the doctor, run errands and do other tasks freely as a salaried worker, these hours will now be deducted. Most will convert salaried workers to hourly which often entails less generous benefit packages and other “perks”.

And the $15 minimum wage will have it’s own fallout. All of the fast food workers who are salivating over $15 per hour, but they don’t realize that the big “rich” corporations are not the ones who actually run the fast food restaurants. Most are owned by entrepreneurs who had to pay a lot of money to buy a franchise and they have to pay the corporations a percentage of their sales. Most franchises are required to buy their supplies from the Corporation and the prices are set for them. They cannot simply raise prices, they cannot buy cheaper quality food and their profits are already thin. Many franchise owners put in more hours than any employee, but they will have to put in even more as they let employees go.

The other option is automation. If you have ever ordered food at a Wawa Convenience Store, the video below shows how they control costs:

Of course there are a couple of humans actually making the sandwiches, but I have seen a couple of people handle a lunchtime rush and they probably do as much volume as any fast food place.

These kiosks are already replacing workers across the US. Investor’s Business Daily notes:

Wendy’ssaid that self-service ordering kiosks will be made available across its 6,000-plus restaurants in the second half of the year as minimum wage hikes and a tight labor market push up wages.

It will be up to franchisees whether to deploy the labor-saving technology, but Wendy’s President Todd Penegor did note that some franchise locations have been raising prices to offset wage hikes.

McDonald’s (MCD) has been testing self-service kiosks. But Wendy’s, which has been vocal about embracing labor-saving technology, is launching the biggest potential expansion.

Wendy’s Penegor said company-operated stores, only about 10% of the total, are seeing wage inflation of 5% to 6%, driven both by the minimum wage and some by the need to offer a competitive wage “to access good labor.”

It’s not surprising that some franchisees might face more of a labor-cost squeeze than company restaurants. All 258 Wendy’s restaurants in California, where the minimum wage rose to $10 an hour this year and will gradually rise to $15, are franchise-operated. Likewise, about 75% of 200-plus restaurants in New York are run by franchisees. New York’s fast-food industry wage rose to $10.50 in New York City and $9.75 in the rest of the state at the start of 2016, also on the way to $15.

Free Market intervention continues to erode employment. When is the last time you called a pizza restaurant to order a pizza delivered? I honestly can’t remember. I used to go to my computer and place the order but now, I simply use my smart phone.

Ever been to Red Robin Hamburger Restaurant? You will find a Ziosk! Order and pay right from the table.

And what about mobile apps? Other than the pizza orders already mentioned. Business Insider says:

Lots of different types of retailers have embraced the opportunity to generate additional sales through mobile commerce apps. But fast-food chains — dubbed Quick-Service Restaurants (QSRs) — have only dipped their toes into this space.

In part, this is because their service is fast by nature and requires an in-store visit, so there isn’t an obvious advantage to enabling online or mobile ordering.

Recently, though, Taco Bell launched a mobile order-ahead app that allows customers to purchase food from the app and pick it up without waiting in line. The app has seen significant early success — with higher average order sales boosting total revenues — and now other QSRs are starting to follow suit.

In new research from BI Intelligence, we look at how fast-food chains are leveraging mobile order-ahead to attract more customers, intensify loyalty, ease payment friction, and drive additional incremental revenues.

These kiosks are coming down in price, but are still somewhat pricey. But pretty much everyone has a smart phone and before long, expect to walk into a fast food restaurant, or even sit in the parking lot and order and pay for lunch on your smart phone. then walk in or drive up to pick up your meal. This is a much smaller investment and will eliminate more positions at $15 per hour.

But we can’t eliminate the cooks, can we?

Absolutely. Robots are already available that can make and assemble hamburgers. they are far more consistent and never spit in your food. Advanced models even allow you to order your meat and have it custom ground to create your own burger.

So is all this technology as evil as the corporations that will soon embrace it? Or is this simply the logical result of a free market adapting to the boot of government on it’s neck? I believe it is the latter. And I applaud the innovation and spirit of the inventors, entrepreneurs and pioneers who never stop adapting and moving to go around the heavy hand of government. And this is a perfect illustration of what will happen when the government tries to control the economy.

The Independent (UK) reports a hamburger in Venezuela now costs $170.00:

It (the government of Venezuela) has already asked women to stop blow-drying their hair and given a two-day working week to public sector workers, now the scale of the financial crisis propelling Venezuela towards economic ruin can be seen in how much it costs to eat a humble hamburger.

The official exchange rate is now at a rate of 10 bolivares for $1 as the country continues to be gripped by a currency crisis caused by the fall in the global oil price and the economic mismanagement of President Nicolas Maduro’s government.

That means the hamburgers being sold for 1,700 Venezuelan dollars as reported by the AFP news agency will set customers back $170.

It means even the middle classes are struggling to afford the most basic necessities.

Venezuela is a bit further down the road to Socialism than we are in the US, but not that far ahead. The anti free market movement, the “pillage the corporations” and demonize the “rich” proponents who can be seen at any Bernie Sander’s rally or Fast Food demonstration rally, don’t understand that they are hurling themselves off a cliff. Here in America we are in a race between technology and stupidity. Stupidity won in Venezuela.

Let’s hope a determined free market and an innovative people, here in the US and other developed countries as well, are ahead of the stupidity curve the Bernie supporters are pushing.

And when the only jobs left go to the critical thinkers who can figure out ways to circumvent a government that is suppressing a free economy, the country’s schools and universities will have a harder time justifying turning out the Socialist turnips they have been indoctrinating for a couple of generations. Fortunately, some engineers and computer scientists manage to emerge in spite of the American education system.

As for the rest, you have condemned yourself to a life of dependence on government. But the good news is, Virtual Reality has come a long way. But I just wonder where a nation full of professional gamers living in their parent’s basement will go when their parents are gone.

Me, I’ll be down at Wendy’s ordering from a robot.

About Tom White

Tom is a US Navy Veteran, owns an Insurance Agency and is currently an IT Manager for a Virginia Distributor. He has been published in American Thinker, currently writes for the Richmond Examiner as well as Virginia Right! Blog.Tom lives in Hanover County, Va and is involved in politics at every level and is a Recovering Republican who has finally had enough of the War on Conservatives in progress with the Leadership of the GOP on a National Level.

12 Responses to “Reality vs Government Mandated Overtime, “Living” Wages and other Mandates”

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