Monday, April 15, 2013

The Law of Unintended Consequences. (Or "How Obama Stuck it to the Middle Class")

All laws and rules are governed by a greater law, The Law of Unintended Consequences. No matter how carefully a rule or regulation is crafted by someone, it will have a net effect on things that may have nothing to do with the rule or regulation. What may be seen as a good thing, turns against it and may even create a net loss of what the rule or regulation was intended to rule or regulate over.

In 1938, we adopted legislation called 'The Fair Labor Standards Act'. The intention of this bill was to create a standard of labor for employers to adhere to. One of the standards set forth by this act was that workers were to be paid 1.5hrs for every hour worked over 40. This was a good thing for all workers, on its face, but the law of unintended consequences prompted businesses to strictly enforce a 40hr work week even if it means to run shorthanded. A manager that allowed a person to work over 40 hours risked cuts to his department, effectively a commodity (labor) that cost X per hour would then cost X and a half an hour. This variable is easily controlled by limiting the number of hours an employee could work. The birth of the 40 hour work week was an unintended consequence. Who suffered? The people that made little, but were willing to put in extra time because their families counted on it. Now they had to try and get another job to make up the difference. Instead of working one job for 60 hours they were FORCED to go to another employer and work for REGULAR pay, not time and a half. If I'm not mistaken, that would effectively help the big money fat cats, not the little guy. Of course this took place in a time when there were no jobs anyway so it just handed out a pay cut to everyone that was willing to work more than 40 hours. I myself work two jobs. I'd work a third if I could find one that worked into my schedule.

This brings me to the ACA, the Affordable Care Act or Obamacare as it's been called. We are experiencing the first effects of this legislation and it does not look promising. One of the provisions in the ACA is that any employee working more than 30 hours in a work week be given a healthcare benefits package that conforms with the myriad of other provisions in the ACA. While this sounds wonderful, it is however subject to the Law Of Unintended Consequences. The Darden Group (Olive Garden, Red Lobster, Long Horn), Regal Cinemas, Dominos Pizza and many others have reduced worker hours to opt out of this requirement. In essence, this wonderful new benefit cost hundreds of thousands of workers more than 25% of their pay. Like the 1938 Fair Labor Standards Act that forced employers to adopt a 40 hour work week, the ACA is forcing them to adopt a 29 hour work week. How many of you out there could survive on 29 hours at your current rate of pay? Obama has stuck it to the middle class...again. All these wonderful benefits that they keep handing out is just making people more poor.

Another provision that looks like it may act contrary to it's intended purpose is the fine/tax imposed if an individual or a business does not carry/offer coverage that complies with the ACA. My tax professional told me that both individuals and business have inquired whether or not it would be cheaper to not obtain/offer insurance and just take the penalty. More and more people are going to go this way. What the framers of this provision envisioned was a way to drive more people into the insurance pools. More healthy people that don't use as many services balance out the sick ones. Or so they think. I work in healthcare. The people that get something for nothing are the ones that abuse the system. They come to the emergency room for anything and everything. I have even heard from some providers that are going to either provide 'Cadillac' care to people who can afford it or enter into a partnership with a large healthcare conglomerate so they don't have to worry about regulation. Some are even taking their toys and leaving the game altogether.


Not to mention that they have a new line on my tax paper work that outlines my 'fringe' benefit package. How long before those bastards try to tax that money that I never lay eyes on? As it stands right now, I take less than half of my gross income home. 

This all goes back to simple economics. Simple enough for a child to understand but for some reason it eludes the liberal left. An economy is driven by supply and demand for commodities. Costs for those commodities are driven by supply and demand as well. Labor is a commodity. The government through their incompetent wisdom has regulated this commodity (labor) to the point where it is no longer cost effective to hire a living body. We already have and will continue to see labor jobs go to machines. Hours of service will continue to be cut for people willing to work but regulated against. Of course we will still have to hire people to fix the machines...for awhile anyway, but eventually it would behoove a business to replace bodies with a machine. Machines don't get sick, they work 24 hours a day, no breaks, no holidays, no OVERTIME OR HEALTHCARE and no worries about some politician 'looking out for the little guy'. What machines can't do or build they'll just outsource to another country.

That's my two cents, spend 'em or put 'em in the dish for the next person.