Patrice has already taken note this morning of those docile robots who will soon be taking your orders at Wendy's, an unintended (but perfectly predictable) result of unrealistic minimum wage hikes.
Now, Andy Pudzer, CEO of CKE Restaurants, the chain that owns Carl's Jr., comments on the what will likely be the "harsh reality" ushered in by the Obama administration's new overtime regulations (we lay out regulations here).
Pudzer writes in Forbes:
The Labor Department claims the rule will benefit roughly five million employees and raise overall wages by around $1.3 billion. But this is a static calculation that simply counts up the number of affected employees and mistakenly assumes that employers will accept the increased labor costs associated with such a regulation and make no moves to avoid or offset them.
. . .
Perhaps the biggest consequence of the rule is that it will cause some employers to reclassify salaried employees as hourly, and set schedules so they can more easily track hours worked and avoid excessive claims for overtime. For example, taking a manager’s current salary and allocating it across 45 hours (with 5 hours of overtime pay) will result in no increased labor expense or increased salaries. However, it would mandate five hours of overtime, rather than allowing managers to take advantage of the flexible schedules they currently enjoy.
Most employers incentivize their managers to run the businesses they manage like they own them with salaries and incentive compensation including performance-based bonuses rather than overtime pay. Owners set their own hours and work the hours necessary using their best business judgment rather than a schedule set by a superior. For many beginning managers, this new rule will reduce or eliminate that flexibility and the bonus potential associated with good performance.
Turning highly sought-after entry level management careers into hourly jobs where employees punch a clock and are compensated for time spent rather than time well spent is hardly an improvement on the path from the working class to the middle class.
These new regulations don't take into account the reality of running a business. Sometimes there are peak opportunities and sometimes business is slow. Because they come from bureaucrats who merely hand down rules based on their ideas but in an experience vacuum, these regs don't acknowledge those realities.
They also don't recognize the trade-offs people make to get ahead and become successful:
Most salaried employees recognize that in exchange for the opportunity, prestige and financial benefits that come with a salaried position and a performance-based bonus, they’re expected to have an increased sense of ownership and stay until the job gets done, to run the business like they own it.
Once this new rule is published in the Federal Register, employers will have 60 days to comply with its directives. For most businesses it will be just another added regulatory cost they must look to offset. For their employees, it will be another barrier to the middle class rather than a springboard. One can only wonder when the advocates of progressive economics will realize that, despite their best efforts, you cannot regulate your way to economic prosperity.
The Obama administration has never understood what it takes to become and remain middle class–a job. You do well, you move up or move to a new job. The Obama bureaucrats treat jobs like public utilities.