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.

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.

Also as a principle, regulating said free markets for QoL improvements (e.g. min wage, HI, disability, comp, soc sec, etc.) affect all participants - both efficient and destined-to-die businesses alike. If you can't exist through playing by the rules that everyone has set, why are you still in business?

When you start a business there’s an expectation that you’re probably not taking a paycheck from it for a few years while you try to attract customers to provide steady cash flow.

While doing this, you somehow have to find a way to hire people to help you grow.

If it doesn’t work out, the business owner loses everything most likely and will probably be on the hook for the space they were leasing.

Now if you survive and make it past all that, hopefully everything stabilizes and you’re able to run a successful business that can return more to you than you put in…but it’s hard. Very very hard.

This “should that business even exist” stuff comes from not having any idea how hard it really is and how much is really on the line or the ups and downs along the way (which are even harder when you’re trying to make payroll).

If it was easy, everybody would do it.

>> While doing this, you somehow have to find a way to hire people to help you grow.

Where is that expectation coming from? It's fine if it's a side business you're looking to bootstrap or something, or if you have enough seed funding (which can be in the form of your own savings if you're okay risking that) to be revenue negative for a time, but if you have enough funding or revenue to consider hiring people, the first person you should be hiring is yourself.

>> If it doesn’t work out, the business owner loses everything most likely and will probably be on the hook for the space they were leasing.

This is why you create a -business-. A legal entity separate from yourself. An LLC at the minimum. So that your personal liability is (wait for it) limited. If you're doing a sole proprietorship or something, where you'd be on the hook for everything, WTF are you doing hiring people and signing leases?

Owners get pais last, not first. Sure you make enough income to pay yourself first, then you hire. Time passes, there's a bad month or 3, employees still get paid, owners start accumulating loan accounts.

LLC's and other structures are designed to limit downside, but some creditors will end-run this with personal sureties. This is really common with leases, but also other forms of credit. Inexperienced business owners may not push back against these as hard as they should (you can push back, but most starting out don't know that they can...)[1]

Building a business from scratch is hard work, and most fail within 5 years because failing is really really easy, and success requires someone to do a lot of different tasks well, and almost always some "luck" [2] as well.

[1] most bootstrappers try once, and are thus inexperienced. The folk they are dealing with (landlords and suppliers) are very experienced. This imbalance leads to contracts that are very often one sided.

[2] the best luck is advice from an experienced bootstrapper, ideally for free. They can help you avoid the most common mistakes. Of course you'll ignore some of their advice because "experience doesn't work like that".

Creditors and lenders are not fools. They'll often require the owner of an LLC to personally sign for the note.

I think this is only true for a newfangled SF business.

Traditional business gets a bank loan, has a business plan, and pays salaries from the start (including to the owner).

Make no mistake, the only reason a company closes is because they run out of cash. Old-style businesses have been doing that forever. SV businesses do the same when that "next round" fails.

Which leads me to conject that a VC business is just a bootstrapped business, where VCs are the customer...

This assumes that such "more efficient organizations" can even exist. If they are possible, why aren't they already around? Are those "Businesses that cannot afford to retain talent and remain competitive" that you speak of somehow preventing them from existing?

In most markets where efficiency is not achievable, then businesses are not entitled to exist. This is why things such as tax subsidies and other forms of funding are used to bootstrap new markets (e.g. green energy) that have a net social gain.

Reads like maximalist statement with zero clues about the subject.

However if you reject this ideal which is the western worlds baseline, then you really have to provide some info on what framework you are arguing from…

Yes some companies will optimize for profit - some already do that, amazon makes a killing while warehouse staff are low paid. Uber makes everyone a contractor specifically to avoid benefits and so on.

Other companies pay a living wage, and cost a "cost to company" for each employee. These may choose to pay the benefit as cash.

Where I live the tax benefit of health care applies to companies and individuals alike. Some companies have mandatory health cover, others have optional health cover, others have no health cover. Since there is no tax implication it's not hard for prospective employees to compare one with another.

Ultimately, some companies pay low wages, some pay high wages, that's somewhat tangential to health cover or not.

Speculating on what most employers would "most likely do" is, well, just speculation[1]

[1] large companies like amazon known for screwing employees? Yeah, I'm with you there - but I don't think most employers are like that.

The leadership at my employer talks big about how much they care about their employees, and indeed, the vacation and benefits are very good. Yet even in the face of record profits they gave me a 1.5% raise this year, despite the 8.5% inflation. I'll believe that they'd pass benefits package savings onto me when I see it.

I've never seen that happen, ever, in 25+ years of being in the working world in the US. Not saying it never happens, but I've not seen it, and after asking around, no one I know has seen that info.

In Australia minimum wage laws means that Starbucks locations rarely have more than two people on staff - that's just economic forces causing a rational business response.

Firstly companies don't shutter, they downsize. The most vulnerable employees are the first to go, the higher paid ones are typically the most valuable, remain. Owners go last.

Secondly, in my experience, all employees would rather forgoe a raise and keep everyone employed that insist on a raise. We saw this first-hand in 2020. Lockdown brought extreme uncertainty but employees agreed to 50% [1] pay instead of massive job cuts.

Yes it helps that we pay staff well. Yes it helps that they get a bonus in the good years. Yes it helps that we have their interests at heart. Yes it helps that they are skilled and we don't want to lose them.

Yes, over the years some people have become redundant, but there are swings between good times and bad times, and no we don't shutter just because there's a bad time. That's explicitly _not_ how it is supposed to work.

[1] we had a min threshold for 50%, those under got 100%. Also thanks to govt assistance, and our ability to back-pay later, they all ended up "whole".

[2] ps - I agree on the need for a minimum wage. In almost all cases it is too low by a lot. And I agree that if you can't pay minimum wage, then you can't afford an employee.

I've seen workers pidgeon-holed into low stagnant wages too often to accept it as a status quo when the companies employing them are posting profits - in the modern world we too quickly accept the fact that owners are supposed to take out lion's share salaries and profits need to continuously increase. A business can have a healthy existence just making the economic wheels spin and ensuring that employees are well compensated.

We usually set minimum increases based on inflation. Often we do higher. Occasionally we have wage freezes but they are not common. We adapt to conditions and circumstances.

Obviously we are one data point, but I have seen other small companies do the same. Big companies bad behaviour does make the news, good behaviour does not, so while bad actors certainly exist, I don't know if that is the norm, and I don't know if it is more prevalent in the US.

If the company is paying it it’s just a business expense they can deduct from their income.

If only someone had some sort of working template on how this could be done in a cost effective way. I'm sure everyone, regardless of where they fall on the political spectrum, would rally round such an obvious net good in that case.

(I know that bit of sarcasm is a bit of a tangent, it just feels like this whole subthread is missing the obvious)

I think we just skipped over the part that we already know is never going to happen, however much that might be the ideal solution.

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.

Of course. And the employee negotiates for as much as he can extract from the company. That's how markets work.

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.

And yet price stickiness is a thing that exists!

https://www.investopedia.com/terms/p/price_stickiness.asp

This is the problem with a lot of "econ 101" stuff, it makes these big sweeping assumptions like "markets are price-efficient and operate at market-clearance prices" and after spending econ 101 building it all up, econ 102 and 200 and etc etc will spend semesters telling you why it's all crap.

Markets are not price-efficient, real-world prices are very sticky, and that includes the price of labor (actually labor tends to be far stickier than most other products). For example, vanishingly few real-world employers are going to offer automatic raises to cover cost-of-inflation, which is the same mechanism that you would be relying on to increase wages after removing health-care benefits.

A lot of people in retail/food are still making the same $11 or $12 they were hired on at, despite much higher salaries often being paid to new hires (guess the efficient market hypothesis says their on-the-job experience has... negative value?).

Tech is its own little thing, competition for tech labor is much much tighter, of course, but that much is obvious. In the real world, you can already see that labor prices are very very sticky and owners will almost never choose to pass these savings along.

This is false: they would pay a lost less in additional income taxes. Americans overpay for the same services as every other developed country. They are being fleeced.

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.

Also, you forgot the popular option:

* give (bigger) bonuses to their execs

They also had pension plans, but these days, those are rare outside of government jobs. I wouldn't be surprised if companies clawed them back as the threat from unions dwindled.

https://www.latimes.com/archives/la-xpm-2005-may-11-fi-unite....

A 401k is probably better since the company is paying funds directly to your account, IOW they can't underfund it.

That said, Raytheon ended up fucking over their 401k plan. Raytheon matched in company stock and required that 401k owners held the company stock for 3 years once it was put into the plan. It worked great until 2005 when Raytheon's stock dropped to 1/3 of the price on news of gross of mismanagement. Employees couldn't get out of the stock, and were forced to swallow the loss.

So even on a 401k details matter.

They tend to reward long tenures at companies. Even with government sort-of guarantees they have risk of insolvency. And ultimately it's just not your money.

I also really think that congress should forgo the Roth IRA contribution limits for most people. They're arbitrary and limiting.

Also the penalty for large employers is much smaller than the cost of health insurance (50% to 18% depending on individual vs group coverage), assuming that if companies didn't provide health insurance they'd pocket the difference means companies should still pay the fine.

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.

[1] https://en.wikipedia.org/wiki/High-Tech_Employee_Antitrust_L...

Amazingly, fantastically useful.

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.

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.

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.

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).

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.

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.

https://www.cnet.com/tech/tech-industry/apple-google-others-...

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.

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.

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.

It sounds like you’re saying that employers are always trying to hire as many people as possible.

Which would be nonsense, of course.

A bizarrely uncharitable non-takedown, and completely besides the point as well?

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!

Obviously a business would not be particularly successful hiring janitors to write code simply because they could pay them less.