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"The law is aimed at businesses with five or more employees that don’t offer pensions or 401(k) savings programs. The law requires companies to contribute 3 per

by jalanco 14y ago

"The law is aimed at businesses with five or more employees that don’t offer pensions or 401(k) savings programs. The law requires companies to contribute 3 percent of a worker’s salary to a retirement account. Workers will be enrolled in the program unless they choose to opt out."

hga 14y ago
Depending on the details, a strong motive to hire no more than 4 direct employees. This could bring about some major structural changes.
- 001sky 14y ago
  3 percent of a worker’s salary Thats 1/3 of sales tax rate. Its literally not material, economically. Logistically, this will need to be outsourced, which ironically mighthit fees at a cost ~3% of payroll (ie, like a ~= to a credit card fee). So this law is a boon for special interest = those companies.
  - hga 14y ago
    Agreed with you on the outsourcing, but I think you underestimate the "death by a thousand paper cuts" problem. Sure, any one of these things is not necessarily material or at least very big, but there's no limiting principle to California's style of government, they just keep piling up and up. And it'll be material for companies that are right now at the margin, where this pulls them under the break even point, or the point at which the salary the eeeeevil business owner can pay himself is just not worth it.
    - 001sky 14y ago
      I don't disagree on the PITA factor. But its not a death-knell. Provided that it is outsourced at payroll or via a bank relationship, etc. In that sense, this is just another legistated subsidy to these industries. But the only awkward case is n=4, where they need +1 to do the paperwork =]. But analytically, A 3 to 6% increase in labour cost only kills a very weak business plan. Consider the edge-case example: Even with 100% labour expense and a 6 month runway of cash, you are running out of cash 1/2x6%=3% sooner? Thats ~3 business days (240/2x3%). Again, its massive brain damage. Until it gets outsourced. But in theory it should be no more difficult than a pre-tax Medical savings account, or a pre-tax Transportation voucher system, etc (which almost everyone already has). But even BigCo's outsource this crap to PayChex or what not.
      - hga 14y ago
        The point I'm failing to communicate is that all these little bites add up. Each particular one may not be very large, but when you add enough of them you preclude a number of business plans, especially if you move your focus from our sorts of businesses where the Bay area defines the very best place to do them (although all of California enjoys the unique benefit of non-competes being unenforceable, providing the country's most liquid market for human talent). If the California/Bay area competitive advantages aren't so overwhelming, you have to ask yourself how much sense it makes to try to create and build it in California vs. states that are sane. If the company type is inherently local (e.g. a dry cleaner with all those environmental issues), can I afford to try to continue running it in California, or should I move and do whatever elsewhere, or just retire? In the long run, its hard to see the Bay area etc. remain viable for high tech if too many other types of companies are forced out of the state.

by jalanco 14y ago

hga 14y ago

Depending on the details, a strong motive to hire no more than 4 direct employees. This could bring about some major structural changes.

001sky 14y ago
3 percent of a worker’s salary Thats 1/3 of sales tax rate. Its literally not material, economically. Logistically, this will need to be outsourced, which ironically mighthit fees at a cost ~3% of payroll (ie, like a ~= to a credit card fee). So this law is a boon for special interest = those companies.
- hga 14y ago
  Agreed with you on the outsourcing, but I think you underestimate the "death by a thousand paper cuts" problem. Sure, any one of these things is not necessarily material or at least very big, but there's no limiting principle to California's style of government, they just keep piling up and up. And it'll be material for companies that are right now at the margin, where this pulls them under the break even point, or the point at which the salary the eeeeevil business owner can pay himself is just not worth it.
  - 001sky 14y ago
    I don't disagree on the PITA factor. But its not a death-knell. Provided that it is outsourced at payroll or via a bank relationship, etc. In that sense, this is just another legistated subsidy to these industries. But the only awkward case is n=4, where they need +1 to do the paperwork =]. But analytically, A 3 to 6% increase in labour cost only kills a very weak business plan. Consider the edge-case example: Even with 100% labour expense and a 6 month runway of cash, you are running out of cash 1/2x6%=3% sooner? Thats ~3 business days (240/2x3%). Again, its massive brain damage. Until it gets outsourced. But in theory it should be no more difficult than a pre-tax Medical savings account, or a pre-tax Transportation voucher system, etc (which almost everyone already has). But even BigCo's outsource this crap to PayChex or what not.
    - hga 14y ago
      The point I'm failing to communicate is that all these little bites add up. Each particular one may not be very large, but when you add enough of them you preclude a number of business plans, especially if you move your focus from our sorts of businesses where the Bay area defines the very best place to do them (although all of California enjoys the unique benefit of non-competes being unenforceable, providing the country's most liquid market for human talent). If the California/Bay area competitive advantages aren't so overwhelming, you have to ask yourself how much sense it makes to try to create and build it in California vs. states that are sane. If the company type is inherently local (e.g. a dry cleaner with all those environmental issues), can I afford to try to continue running it in California, or should I move and do whatever elsewhere, or just retire? In the long run, its hard to see the Bay area etc. remain viable for high tech if too many other types of companies are forced out of the state.