Why I’m Not Hiring
When you add it all up, it costs $74,000 to put $44,000 in Sally’s pocket and to give her $12,000 in benefits.
With unemployment just under 10% and companies sitting on their cash, you would think that sooner or later job growth would take off. I think it’s going to be later—much later. Here’s why.
Meet Sally (not her real name; details changed to preserve privacy). Sally is a terrific employee, and she happens to be the median person in terms of base pay among the 83 people at my little company in New Jersey, where we provide audio systems for use in educational, commercial and industrial settings. She’s been with us for over 15 years. She’s a high school graduate with some specialized training. She makes $59,000 a year—on paper. In reality, she makes only $44,000 a year because $15,000 is taken from her thanks to various deductions and taxes, all of which form the steep, sad slope between gross and net pay.
Before that money hits her bank, it is reduced by the $2,376 she pays as her share of the medical and dental insurance that my company provides. And then the government takes its due. She pays $126 for state unemployment insurance, $149 for disability insurance and $856 for Medicare. That’s the small stuff. New Jersey takes $1,893 in income taxes. The federal government gets $3,661 for Social Security and another $6,250 for income tax withholding. The roughly $13,000 taken from her by various government entities means that some 22% of her gross pay goes to Washington or Trenton. She’s lucky she doesn’t live in New York City, where the toll would be even higher.
Employing Sally costs plenty too. My company has to write checks for $74,000 so Sally can receive her nominal $59,000 in base pay. Health insurance is a big, added cost: While Sally pays nearly $2,400 for coverage, my company pays the rest—$9,561 for employee/spouse medical and dental. We also provide company-paid life and other insurance premiums amounting to $153. Altogether, company-paid benefits add $9,714 to the cost of employing Sally.
Then the federal and state governments want a little something extra. They take $56 for federal unemployment coverage, $149 for disability insurance, $300 for workers’ comp and $505 for state unemployment insurance. Finally, the feds make me pay $856 for Sally’s Medicare and $3,661 for her Social Security.
When you add it all up, it costs $74,000 to put $44,000 in Sally’s pocket and to give her $12,000 in benefits. Bottom line: Governments impose a 33% surtax on Sally’s job each year.
Because my company has been conscripted by the government and forced to serve as a tax collector, we have lost control of a big chunk of our cost structure. Tax increases, whether cloaked as changes in unemployment or disability insurance, Medicare increases or in any other form can dramatically alter our financial situation. With government spending and deficits growing as fast as they have been, you know that more tax increases are coming—for my company, and even for Sally too.
Companies have also been pressed into serving as providers of health insurance. In a saner world, health insurance would be something that individuals buy for themselves and their families, just as they do with auto insurance. Now, adding to the insanity, there is ObamaCare.
Every year, we negotiate a renewal to our health coverage. This year, our provider demanded a 28% increase in premiums—for a lesser plan. This is in part a tax increase that the federal government has co-opted insurance providers to collect. We had never faced an increase anywhere near this large; in each of the last two years, the increase was under 10%.
To offset tax increases and steepening rises in health-insurance premiums, my company needs sustainably higher profits and sales—something unlikely in this “summer of recovery.” We can’t pass the additional costs onto our customers, because the market is too tight and we’d lose sales. Only governments can raise prices repeatedly and pretend there will be no consequences.
And even if the economic outlook were more encouraging, increasing revenues is always uncertain and expensive. As much as I might want to hire new salespeople, engineers and marketing staff in an effort to grow, I would be increasing my company’s vulnerability to government decisions to raise taxes, to policies that make health insurance more expensive, and to the difficulties of this economic environment.
A life in business is filled with uncertainties, but I can be quite sure that every time I hire someone my obligations to the government go up. From where I sit, the government’s message is unmistakable: Creating a new job carries a punishing price.
Mr. Fleischer is president of Bogen Communications Inc. in Ramsey, N.J.
(SOURCE) http://online.wsj.com/article_email/SB10001424052748704017904575409733776372738-lMyQjAxMTAwMDAwODEwNDgyWj.html
August 27th, 2010 at 10:12 pm
Yeah, but ya gotta remember: this is the “Summer of Recovery.” That means Mr. Fleischer isn’t being patriotic because he’s blaming the government when it’s HIM that isn’t hiring.
Lord knows Mr. Obama’s doing his part. He’s hiring as many people as he can just to keep the unemployment rate below 10%. And he doesn’t have to pay a penny out-of-pocket, either. He just uses your, and my, money.
He calls it taxes, share the pain and so on.
I call it theft. Jesus said to help the poor. He never told anyone, not once, to steal from others to do that.
August 29th, 2010 at 10:56 am
This article clarifies the actual numbers in an easy to understand way. The Demoncrats would HATE IT because even their own constituency could understand this simple and understandable reality.:)
All of this and the Bill hasn’t even come due yet. Wait a couple of years when these numbers are doubled and we are even more broke….
August 29th, 2010 at 2:44 pm
Mr. Obama and all his minions (including the nazis that run Congress) can’t possibly be as stupid as they’re acting. That leaves only one explanation for all the crap they’re pushing, and that’s to make it so, without a shadow of a doubt, the government is the ONLY source of help for those not in control.
How sad. Not only are they intentionally delusional, they are actively seeking god status, and that ain’t gonna happen.
September 18th, 2010 at 3:42 pm
Republicans always say that government doesn’t work, then when elected set out to prove it.
September 18th, 2010 at 7:11 pm
I gather by your comment, John, that you’re ignorant enough to believe that, under a Democrat-controlled House, a veto-proof Senate (if you consider some of the jackasses who call themselves Republicans), and a Democrat president, the country is humming right along?
And please don’t try the old “It’s Bush’ fault” thing because the jackasses had control of Congress when it dumped, too.
September 23rd, 2010 at 9:26 am
Gary,
Are ya ever coming back? Or have you moved to a different site? We miss ya, fella!
September 24th, 2010 at 7:08 pm
Garrrrrrrry, where arrrrrrrrrrrrrrrrre you??
September 28th, 2010 at 8:05 pm
??? What up ???
October 5th, 2010 at 9:59 pm
Well, at least Clarke made it back.
Come on, Gary. We really do miss you, and if we said anything to offend you we apologize (or at least I do).
February 5th, 2012 at 4:01 am
http://freemarketcircle.blogspot.comGodly, Communist, UNAmerican SPIN from the Occupy/Obama/Fannie-Freddie types who compose the Red Army and radical network that must be defeated to save America if America decides to commit national suicide by re-electing Barack, even by ACORN election stealing tactics and assistance from Hollywood and LIEberal media. Obama”care” is nothing but a weapon of destruction and unconstitutional dictatorial over-reach. The truth is making is way out! This winter of universal deceit will pass. But alas, it is true – eternal vigilance is the price of liberty. We must be as the rain dancer now, as we are really in the suck. America is in a non-kinetic civil war between those who believe in the American way and those who don’t and those who don’t have an advantage. We are dealing with hardline utopians and deceivers. America is in the way of their utopia so they must destroy her from within. I will quote David Horowitz, in a pamphlet worth sharing and distributing far and wide because only awareness will allow the people to escape the deception and program and established interests and great silence and education economic and spiritual crisis and grip hold of LIEberalism. “In my experience conservatives are generally too decent and too civilized to match up adequately with their radical adversaries, at least in the initial stages of battle. They are too prone to give them the benefit of the doubt , to believe there is goodness and good sense in them which will outweigh their determination to change the world [ in their misguided coercive model] They can’t really want to destroy a society that is democratic and liberal, and more equal than others [...] OH yeS THEY CAN. There is no goodness that trumps the dream of a heaven on earth. And because America is a real world society, managed by real and problematic human beings, it will never be equal, or liberal, or democratic enough to satisfy radical fantasies to compensate them for their longing for a perfect world [...] compared to this heaven even America is hell. [...] Conservatives think of war as a metaphor when applied to politics. For radicals, the war is real. That is why when partisans of the left go into battle, they set out to destroy their opponents by stigmatizing them as ‘racists’ ‘sexists’ [etc.] Deception for them is a military tactic in a war that is designed to eliminate the enemy [...] Deception is the radical’s most important weapon [...] The mark of their success is reflected in the fact that conservites collude in the deception and call them liberals as well.” (Barack Obama’s Rules For Revolution: THE aLINSKY MODEL by David Horowitz)
February 5th, 2012 at 4:03 am
I’m on a tablet please bear with me! The first sentence incorrectly auto-corrected and inserted my URL into the word UN-Godly, in my first sentence, above!