Arthur,
And Sally's story in the WSJ is why, when I started my last business I
decided to employ no-one. Within two years more than 20 people were working
with me -- not for me. They were perfectly free to take jobs from me or
not. If they wanted a holiday they took one -- and for as long as they
wanted -- though they usually gave me notice far ahead so I could plan
schedules. They could work from home if they wanted but, usually, they came
to work for the companionship of their friends. They earned more than
others who were employed. They paid tax, of course, but via their own
accountants -- not via any sort of admin department I'd have to have paid
for an d managed.
The situation in this country (UK) is much the same as described in the WSJ
article. I'm retired now but in my life in the course of various endeavours
I've created something like 100 jobs for others -- unique jobs that didn't
exist previously. If I were younger today and facing the sort of future my
grandchildren now face -- possibly jobless, who knows? -- because of
government ineptitude, collusion and profligacy, I wouldn't dream of
starting a business for all the hassle it entails but would remain as a
freelance.
Keith
.
At 10:21 11/08/2010 -0400, you wrote:
Content-Type: multipart/alternative;
boundary="----=_NextPart_000_001F_01CB393E.F072C4C0"
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One reason why companies are slow to hire more full time employees.
From Steve Kurtz.
From: Steve Kurtz [mailto:[email protected]]
Sent: Wednesday, August 11, 2010 5:54 AM
To: Arthur Cordell
Subject: Why I'm Not Hiring - Wall Street Journal; August 9, 2010
Why I'm Not Hiring - Wall Street Journal; August 9, 2010
By Michael P. Fleischer
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 latermuch 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 yearon
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 comingfor 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 premiumsfor 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 salessomething 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.
Todd Fry
ProBenefits USA, LLC
800.585.5802 toll-free
816.741.9307 desk
816.741.9418 fax
<mailto:[email protected]>[email protected]
www.probenefitsusa.com
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Keith Hudson, Saltford, England
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