16 November 2011


higher wages for overtime, lower cutoff point = unambiguous increase of profits for firms from tendency to want to work less, leading to permitting high amounts of overtime due to marginal benefits to supervisory structure and low utility of money for the firm. high variance/skewing of total income encourages production of goods with low utility per cost and further income inequality.

lower wages for higher amounts of work = increase of profits for firm depends on job responsibilities and elimination of inefficient work practices. any tendency to want to work less does not naturally result in higher profits for all firms, leading to resolution of conflict only when firm competitiveness is high enough for profitability prior to work reduction. contrast between worker outcomes based on firm profitability leads to congruence between the firm's goals and benefit to workers and society, compared to overtime system where variation in firm profitability with low overtime cutoff would lead to adverse outcomes for same.

a profitable firm should cause benefit to workers and society. with overtime system, both are harmed instead of benefiting.

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