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> if companies did not offer health care as a perk, they would be able to offer higher salaries instead. Prices, including labor prices, are not determined by

• zaroth 5y ago
  Budgets are set by costs. When you run a business, you care about the “fully burdened” cost of each employee, and you hire as many as you can within your budget. One of the line items in that is my half of the payroll tax. Another line item is health insurance. Another may be an offset for office space and equipment. Whether my fully burdened cost budget has a line item for health insurance being paid to a 3rd party or to the employee is totally irrelevant. Tax law currently happens to make it much more efficient for me to pay that money to a 3rd party, so that’s where it goes. The reason I have that line item is due to a combination of market forces and regulation. By no means do I get to choose just not to pay it, if I expect employees to keep working for me, or the government not to shut me down.
  • aYsY4dDQ2NrcNzA 5y ago
    > When you run a business [...] you hire as many as you can within your budget. It sounds like you’re saying that employers are always trying to hire as many people as possible. Which would be nonsense, of course.
    • zaroth 5y ago
      That’s not what I wrote. In fact, not even what you quoted me as writing. A bizarrely uncharitable non-takedown, and completely besides the point as well?
      • aYsY4dDQ2NrcNzA 5y ago
        I’m sorry for the misunderstanding, but I believe I have quoted you accurately.
  • chrisseaton 5y ago
    > and you hire as many as you can within your budget If you believe this then what's your explanation for why Google hires a smaller number of expensive engineers, rather than a larger number of cheaper engineers? They could hire 10x if they went for only lower-tier college new-grads!
    • zaroth 5y ago
      Sorry if I missed the word “qualified” - I felt it was presumed by the word “hired”. Obviously a business would not be particularly successful hiring janitors to write code simply because they could pay them less.
    • lbotos 5y ago
      Google is budgeting for more expensive engineers, so they end up hiring less.
• jwilber 5y ago
  Yes. As someone with a chronic health condition living in America, I agree completely. Leaders of this country really do not care about the healthcare of its citizens (just look how long people with diabetes have been screwed, how long people have been able to lose literally everything over medical debt, etc.), I can’t imagine leaving things to the individual would be helpful in any manner whatsoever.
• mywittyname 5y ago
  They probably would. I've had a lot of jobs that heavily emphasize how much is paid for benefits, and often it's used as justification for why raises weren't offered that year. These places would probably be happy to give everyone a raise and do away with the frustration with medical benefits, especially plans whose cost go up like 20% a year. There are a lot of jobs which do not offer benefits, or benefits are offered with no part paid by the employer. These places would not offer raises, but these people would end up with better choices of private plans. Benefits are a huge burden for companies, especially smaller ones. Coordinating benefits is a seasonal full-time job that someone has to do. I've known of a few smaller family businesses that gave everyone a raise, and told them to get their own health care coverage on healthcare.gov.
  • heavyset_go 5y ago
    > They probably would. I've had a lot of jobs that heavily emphasize how much is paid for benefits, and often it's used as justification for why raises weren't offered that year. Sounds like an excuse to me, and if they're this bitter about paying for benefits, something tells me they'd be just as bitter towards giving substantial raises across the board for, essentially, no reason.
    • mywittyname 5y ago
      It's not out of bitterness. People don't necessarily realize that benefits are as expensive as they are, or that they had been increasing in cost so dramatically. It's more like, "sorry we aren't giving raises this year, but we are covering an added $400/mo in insurance costs for everyone."
      • lowercased 5y ago
        A few years ago I sat in with a client on an 'employee meeting' where they discussed raises/insurance. No one had ANY clue what health insurance premiums were. The owner asked people what they thought it was per month. "$75? $99?" They went around the room. I said "$600". The whole room looked at me like I was nuts. The owner said "$560". Audible gasps around the room. People had literally no idea how much this stuff costs (this was... 5 years ago, IIRC).
• kukx 5y ago
  The companies compete for workers, especially highly skilled ones. One company rising wages would push others to react in a similar way assuming they compete for the same talent.
  • munk-a 5y ago
    Somewhat and I think highly skilled workers actually "suffer" from the worst relative compensation. Most legitimate 10x-ish developers don't make 10x what their coworkers are making, they end up producing significantly more value for the company then they're costing with the excess value going to profits and subsidizing other employees. I personally think a model like this is pretty fair, if somebody is making 50k a year then pulling in 1M annual is pretty silly - but it makes sense to account for that difference with taxation rather than the arbitrary choices of private employers.
  • heavyset_go 5y ago
    And yet wages for highly skilled workers haven't kept up with productivity increases, cost of living increases and inflation in many parts of the country, including areas like SF or NYC where you find some of the highest paid workers.
    • bb88 5y ago
      Productivity increases create less demand for labor, so you would expect the demand for labor to drop. If two workers now can do the job of four people five years ago, it doesn't mean the two workers get paid double.
  • photochemsyn 5y ago
    Not so sure about that. Anti-poaching agreements are supposed to be illegal but I imagine this kind of thing continues today in secret: https://www.cnet.com/tech/tech-industry/apple-google-others-settle-anti-poaching-lawsuit-for-415-million/ https://www.cnet.com/tech/tech-industry/apple-google-others-...
• bduerst 5y ago
  Health insurance is a budgeted overhead variable cost assigned to employee expenses. It's true that should HI disappear, not all of the HI cost will be transferred to employee salaries, but it's definitely a non-zero amount.
  • munk-a 5y ago
    And, I think, over time we'd see more and more of that HI cost be transferred to employee salaries. Supply and demand is often taught in classes as "If this bar shifts here the economically efficient price point shifts over to here" - the portion that ends up frequently omitted is that that shift takes time. It's why some taxes are leveraged on employers and some on employees - in the end the net result is the same, but we can end up enjoying decades of beneficial inefficiencies while the market works to respond to the shift.
    • bduerst 5y ago
      Yes, if HI becomes universal healthcare in the U.S., like most developed nations, then funding will be through a variety of means, inevitably involving income tax. That said, depending on the splits, it's much more probable that the cost to "employee salaries" will be less than their typical OOP expenses anyways.
• tiahura 5y ago
  Prices, including labor prices, are not determined by costs. That’s very much not the case for 99.9% of goods and services. Prices for labor, i.e. wages, are set by the demand for labor, and workers’ opportunity costs.
• usefulcat 5y ago
  Imagine a scenario where overnight, all US companies stop offering health insurance. In this scenario, all those employees who used to have health care would now have to pay for it themselves (or do without it). So they're all going to be expecting an immediate raise to compensate for this increased expense, and if not they'll almost certainly be looking for a new job that pays a lot more (after all, it's not like they need their old job for the insurance any more..) If you're a company, unless you were already planning to do some mass layoffs, you're going to give most of them that raise because the alternative is having a bunch of people quit. And if you don't increase your offers for new hires, you probably won't be hiring anyone either.
  • KerrAvon 5y ago
    The catalyst for that scenario is likely some form of effective universal healthcare, which you will pay for indirectly via taxes.
    • axlee 5y ago
      It will have to be paid for, as is everything, but it will cost much less both in aggregate and at a personal level. Source: any other country.
      • lostcolony 5y ago
        It also, to the grandparent's point, would not really necessitate anyone spending anything differently. The amount employers pay to private healthcare plans instead becomes a corporate tax; the amount individuals pay to private healthcare plans instead becomes an individual tax. But just by dint of it all going to the same pool, which now covers everyone, gives such massive pricing power that all those "$64 for an aspirin" BS charges will be cut to be in line with, yeah, any other country.
    • maccolgan 5y ago
      Universal healthcare funded via taxes is the exact opposite of insurance. Insurance premiums are decided upon your medical profile and risk. Taxes are based upon income, which has nothing to do with health.
• deleted 5y ago
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• maxerickson 5y ago
  That's fine, the idea isn't to get rid of employer provided healthcare to make salaries go up, the idea is to get rid of employer provided healthcare because of the problems that come with it.
  • heavyset_go 5y ago
    Take a look at the individual market and what is offered on it. If you want a comparable plan to an employer's group policy, you will be paying close to a grand a month in premiums for just yourself alone, and you will have yearly deductibles to the tune of thousands (sometimes tens of thousands for a family) dollars. Without increases in compensation, workers will suddenly have thousands of dollars in new yearly expenses just to maintain coverage, and many will be forced to go without coverage at all. This wouldn't be a problem, though, if employer-provided healthcare was replaced with a universal healthcare system that most first world nations have had for ages.
    • maxerickson 5y ago
      So do you think replacing the insurance market is more or less likely when people think the 25% of their premiums that they pay are what their insurance costs? I have pretty good insurance, when I started, a few weeks before the end of a year, some of the folks I was working with were bitching about how it didn't cover anything and was expensive (the employee premiums were tiny at the time and are still low).
• deelowe 5y ago
  I think they would, at least in the short term. Most companies already include benefits their offer package.
• bb88 5y ago
  Labor price is salary + benefit packages. Reducing the cost of benefits from the equation would mean the company has extra resources. The company could: * immediately raise people's salaries * or hire in more people (which increases demand) * they could take the extra profit and distribute that to shareholders * or drop the price of their products and services and pass the savings on to the customer * or they could make capital investments. In most cases, I would expect salary prices to increase for labor (even if not immediately) or make people's current salaries more effective in purchasing power.
  • AceJohnny2 5y ago
    Most of what you've described is "trickle-down economics", and, well... Also, you forgot the popular option: * give (bigger) bonuses to their execs
    • bb88 5y ago
      I'm not disagreeing, but this is the way corporations work in 2022.
    • JamesBarney 5y ago
      If corporations could stop offering health insurance in order to increase profits, why don't they do it?
      • heavyset_go 5y ago
        They're legally required to offer health insurance plans for full-time employees.
        • butlerm 5y ago
          Most employers did it for decades before they were legally required to. The tax benefit to having your employer purchase your healthcare has been substantial since about World War II and such plans have been commonplace ever since, outside of unusually small employers or employees who are marginally paid.
• mbostleman 5y ago
  Companies would "pocket" the difference? What pocket would that be exactly? Companies are in competition. While company A, might "pocket" the savings, company B will use it to their advantage in potentially any number of ways - paying employees more, reducing prices to customers, investing in new equipment. You refer to the 8 million companies in the US as if they're one entity that conspires in lockstep. That's not how it works.
  • heavyset_go 5y ago
    This would suggest that things like this[1] could never happen because of competition, but they have. [1] https://en.wikipedia.org/wiki/High-Tech_Employee_Antitrust_Litigation https://en.wikipedia.org/wiki/High-Tech_Employee_Antitrust_L...
    • mbostleman 5y ago
      Collusion is the antithesis of competition. And it's illegal, hence the litigation. I am referring to the behavior of a free market, not an illegally fixed one.
      • JaimeThompson 5y ago
        Does a free market exist anywhere on Earth?
      • Daishiman 5y ago
        There is no such thing as a free market. A free market is a spherical cow in a vacuum. Corporations are generally far more informed of the nature of labor markets than labor itself a don't risk an equivalent of getting a life-threatening condition while having no health care. Corporations also collude, whether directly or indirectly, in many fronts.
        • fennecfoxen 5y ago
          And yet the theories of the free market, like many physical models, retain significant predictive power!
• nitwit005 5y ago
  You're worrying overmuch about "the market". The US health care system is pretend free market. The government is paying for much of US health costs, and regulating various aspects of it. What really matters is how the government policies would change when it's moved from employers to people. The government is likely to pay the costs for low income people, which will also mean their wages are likely not to rise.
• JamesBarney 5y ago
  This argument relies on a really weird assumption that companies aren't already compensating employees as little as they can get away with. That companies could compensate employees less by not offering benefits but choose not to out of the goodness of their heart. If employers are already compensating employees as little as they can get away with then if they stopped compensating via insurance, they'd be required to compensate via salary.
  • deleted 5y ago
    [deleted]
  • WalterBright 5y ago
    > This argument relies on a really weird assumption that companies aren't already compensating employees as little as they can get away with. Of course. And the employee negotiates for as much as he can extract from the company. That's how markets work.
• closeparen 5y ago
  Companies are paying the increase in productivity to the professional-managerial employees who are actually more productive because of technology, scale, etc. and not to the masses whose productivity is the same as ever. Even when we talk about redistributing this increase, we mostly talk about redistributing it from the professional-managerial employees, who populate the higher personal income tax brackets, not from the companies themselves (corporate tax) or their owners (wealth tax). If you are right that companies and their owners are pocketing it, then we are looking for it in the wrong places. But it seems like it really is largely going to the PMC.
• WalterBright 5y ago
  > There is no indication at all that companies would compensate employees more if they didn't have to pay for their health insurance. Employers use a figure called "total compensation" for what it costs them to employ someone. This includes salary and the cost of all the benefits, including all the so-called "employer paid" taxes and benefits. The WSJ ran an article long ago that showed employee productivity matched total compensation, not salary compensation. Employers certainly do care about the cost. They don't care what percentage of those costs go to employee takehome pay. But offering pre-tax health insurance means the employer can offer less total compensation. Any economic article that talks about salary instead of total compensation is either ignorant of accounting reality or is trying to mislead.