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Overtime Regulations Disproportionately Harm Young People and Startups

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Tags InterventionismPrivate PropertyValue and Exchange

[Author's Note: This is a letter I presented to the House Committee on Education and the Workforce. Joe Biden announces the implementation of a new overtime regulation rule last week that will disproportionately hurt startups, small businesses, and young people. This will be yet another cog in the vast machinery of regulations keeping young people and young companies from building the future.]

I am a young founding employee at a startup that helps other young people get started in their careers. I see every day the steps that must be taken for young people and young companies to succeed in a constantly changing economy. I experience firsthand and vicariously through the hundreds of customers and vendors I’ve worked with the sacrifices these young people and young companies make in order to set themselves up for success. While I understand the intention of overtime regulation, I urge you to reconsider placing this burden on workers as it will disproportionately harm the young employees and employers alike.

Both startups and young people are the lifeblood of an innovative, progressive economy and the movers of serious social and technological change in this country. Startups are primarily composed of 24–29 year-old adults, young by any traditional measure. It’s fitting that these two groups work together — the need to run lean operations without expanding resources like a transnational corporation or a government bureaucracy is a common theme for both. Placing greater limits on how both young people and startups can make use of extra time is to place a clamp on this lifeblood for a new economy.

The young person and the young company are similar — they lack many of the resources of their more-established competitors, they lack the experience of their more-established competitors, and they lack the ability to sway rules-makers like their more-established competitors. When compared to an older colleague, the young person’s skills pale in comparison. They lack years of experience. They lack the connections to succeed in the marketplace. They lack skills only gained by working for many years in different environments.

They do have one thing, though, and this resource can be exponentially more significant than any skill — they have time.

The young person has the luxury of working long hours and getting up early to go into the office before dawn. They lack the lifestyle inflation of their older colleagues who must serve families, pay down debts on cars and houses, and are biologically less-energetic than their younger colleagues. While the older employee can get by working a mere 9–5, a young employee can choose to work 9–9, getting in, adding more value to their career and to their employer, and setting themselves up for success later in life.

They can choose not to, of course, and many do. And they benefit from it. Putting in long hours early in your career can be seen as investing in success later in the career. A young adult who has few skills and few connections can make up for it in the flexibility of work schedules and the ability to showcase strong work ethic that comes from that flexibility.

Overtime regulations disproportionately harm young people in this sense. These are the individuals to whom that extra hour of work is more valuable and making it harder for employers to allow employees to work these long hours (when they choose to do so) burdens the young person and limits their ability to succeed in the future. It limits the ability of the primary movers of economic change and growth to change and grow. It not only harms them but harms the economy as a whole.

Similar to the young employee, the young company lacks the resources of incumbents. A young company can’t offer a huge salary or great benefits at first, but it can offer equity and the opportunity to be part of something big. Young founders often go months at a time without receiving pay, only earning "sweat equity" for the time they put in. These companies would be stretched to the seams if this extra time — paid for not in cash now but in the potential for future earnings — is limited.

These young people and young companies are the lifeblood of a thriving economy. This regulation will hurt real people getting started in real careers. It's a step in the wrong direction disguised in good intentions. 

Zak Slayback is a founding team member of Praxis and the author of The End of School: Reclaiming Education from the Classroom. He writes regularly at www.zakslayback.com and is one of LinkedIn's most influential writers on education.

Note: The views expressed on Mises.org are not necessarily those of the Mises Institute.
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ILO in Asia and the Pacific www.flickr.com/photos/iloasiapacific/
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