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Economic Fallacies

RECEIVED Fri., Dec. 9, 2016

Dear Editor,
    Larkin Skinner's letter about the article "Point Austin: Hours to Burn" ["Missing the 'Point'," Feedback, Dec. 9], while well-intentioned, contains at least two economic fallacies that lead him to mistakenly conclude that mandating time-and-a-half pay for a vastly expanded pool of workers will increase overall employment and reduce suffering.
    Fallacy #1: Job creation is a zero-sum game, and so there is a fixed number of hours of work available, or as Larkin put it, "If I, as an employer, have two employees working 60 hours per week, I could just as easily hire a third employee" (presumably reducing everyone's hours to 40 per week).
    Actually, the amount of potential work is nearly limitless – the population in the U.S. has roughly doubled since about 1960, yet everyone is not scraping by with half the food, half the housing space, etc. Quite the opposite – how many PCs and iPods did the average person own back then?
    Fallacy #2: Employers and employees do not change their behavior when an employment law is passed, or as Larkin put it, "If all employers obey the law, the costs are passed equally to consumers no matter who makes the good."
    In the real world, if you meddle with voluntary interactions between employers and employees, hours of work that used to make economic sense can vanish. Instead of two employees working 60 hours per week, you might, for example, wind up with two employees working 40 hours a week, and fewer goods or services being produced, even though the intent of the law was to produce three 40 hour per week jobs. Or the employer might decide to move the business from a business-hostile state like California to a more business-friendly state like Texas.
    There's plenty of things you can legitimately dislike about Governor Abbott, but Abbott opposing Obama's attempt to impose economically harmful time-and-a-half rules on our thriving job market is not one of them.
Jim Henshaw
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