8 January 2009

President-Elect Obama c/o Transition Team

Dear President-Elect Obama:

Over the past twenty years our family has experienced increasing economic difficulty, as have others in the lower middle income bracket. The cost of living keeps going up while income does not increase enough to keep even. This situation in part is caused by taxing policies concerning land, labor and capital. One of these related to labor is the minimum wage which many cite as being not high enough (Liberals) or too high (Conservative) or should not be one (Libertarian). I personally think the over time law is a greater cause of low wages by not supporting full employment, whereas the minimum wage law only addresses wages.

In my opinion, there needs to be a change in the overtime law. The 1930 labor laws are outdated and in need of revision. They are a problem in that they were written to a particular and traumatic time, and in my opinion biased toward corporate privilege.

My reason for thinking this is based on a study reported on by the Association of Part Time Professionals in the early 1980's. The study showed that the work week had steadily declined from 72 hours per week at the beginning of the Industrial Revolution until it went flat at 40 hours per week from the 1930's through the 1970's. Had the trend continued we would now be in the lower 20's hours per week. However, we are still around 40 hours per week. The ceiling of 40 hours as the start of overtime has had the unintended consequence of also being the floor to the length of the work week. Note that anyone who works less than 40 hours per week is said to work "part time," 40 hours being "whole time" instead of just working "X" hours per week. As economic efficiency has allowed more production per worker in a 40 hour per week there is a decrease in the number of workers needed. Given that there are two ways to absorb the efficiency, less workers per hour or less hours per worker, we need to look at which one is least damaging to a worker economically. I believe less hours per worker will lead to full employment and therefor a lower need for government provision of social safety nets.

I think that a "free market" effect could be achieved by changing the positive feedback loop of overtime law to a negative feedback loop to stabilize the economy by changing the law to have counter balancing set points based on unemployment and inflation. I would suggest that the overtime would apply to all employees, that is converting salary into wage. If one can not get the job done in the allotted time then the worker has exceeded their ability or the job is too big and another worker is needed. Management will have to decide which case it is and not simply opt to get more work for free.

My Proposal:

Each year the unemployment rate and inflation rate could be used to adjust the next year's overtime point, by decreasing or increasing the hours at which overtime pay begins, see the chart below.

% Unemployment	% Inflation
0-0.9 >>> -1 hour	0-0.9 >>> +1 hour
1-2.9 >>> -2 hours	1-2.9 >>> +2 hours
3-5.9 >>> -3 hours	3-5.9 >>> +3 hours
6-9.9 >>> -4 hours	6-9.9 >>> +4 hours
10+ >>> -5 hours	10+ >>> +5 hours

For example, in a given year the over time law is at 40 hours; inflation, say is 1%, raises the overtime to 42 hours; and the unemployment, say was 6%, decreases the overtime to 38 hours for the coming year. Should the conditions remain the same the following year, overtime will start at 36 hours.

Thus the overtime hour will decrease until the point that higher wages from jobs chasing workers causes enough inflation to start increasing the work week. (What the actual unemployment, due to job changing, is, can set the rate lower than the 0.9 if experience shows it to be so.)

Sincerely,

Jack R. Jones