Skip to comments.Worker Costs Rise. Don't Expect Salaries To (Employees are getting more expensive today)
Posted on 10/30/2011 8:59:17 AM PDT by SeekAndFind
Employees may not realize it, but they are getting more expensive.
It isn't that their paychecks have suddenly started bulging. It's that other employment costslike health and retirement benefitscontinue to rise. Benefit costs in the private sector were up 4% year-on-year in the second quarter, more than double the 1.7% increase in wages and salaries. On Friday, the Labor Department's employment-cost index for the third quarter is likely to show this trend continuing.
The trouble is, this means employers are paying more for workers without actually paying their workers more. Higher benefit costs eat into profits without directly raising a company's output in the way hiring more workers would. In fact, this can actually discourage hiring. And the more that companies have to spend on benefits, the less take-home pay goes to workers. This undermines the virtuous cycle of consumer spending and job growth needed to help lower the 9.1% unemployment rate.
This is already a management concern: The third-quarter Duke/CFO Magazine outlook survey shows companies expect health-care costs to jump 7.8% over the next year, while wage and salary costs are seen up just 2.3%. Just last week came word Wal-Mart Stores is raising health premiums for workers and cutting coverage for new part-time employees working fewer than 24 hours a week altogether because of rising costs.
Pension-related costs may also jump as companies grapple with higher deficits due to earlier falls in equity markets and the still super-low interest-rate environment. With any luck, stock-market rallies like the sharp one seen this month will help relieve some of that pressure.
Keeping health costs down, however, will prove more formidable. This, at a time of high unemployment, is likely to keep the squeeze on wages and salaries.
(Excerpt) Read more at online.wsj.com ...
most employees are unaware of this side of the equation.
So the new government regulations get the workers a reduced hourly wage, no benefits, and doubled commute expenses as they now have to work two jobs at two employers to make less than they did before.
The government can fix anything.
Having been an employer, You are correct, most people are just plain ignorant of what it costs to actually have an employee. Pretty simple to figure out though:
If you have an employee, and you pay that employee $50,000 per year, your cost as an employer is nearly DOUBLE their Salary. Labor Law Compliance costs alone account for 10% of their Salary in out of pocket COSTS to an employer. and it will only get worse
It’s a good thing I’ve just given myself a raise.
Companies are moving facilities overseas where the work force is cheaper - that says something about American companies....but it also says something about American workers.
Just think: it’s cheaper for companies to pick up shop and move somewhere else than it is for them to stay here and hire Americans.
If the COST of healthcare is one of the major costs for companies, how can American workers be the ones to blame for this?
Obama PROMISED us that ObamaCare would save every employer $2000 per year and that they would pass this on to us as increased salary. What happened?
Almost ALL employees haven’t got a clue how much things other than their immediate compensation cost... and they don’t care.
Like gasoline at the pump, the total cost should be tallied in their checks. Employees are required but they do cost a lot.
Employer’s side of FICA / Medicare
Retirement / 401 match
It all adds up
It was obvious wasn’t it?
Cover everybody up to 26 yrs old.
Mandate a bunch of additional coverages,
how could that possibly raise costs?
So let’s also think about what makes those overseas workers so much cheaper. No benefits; no vacations; much lower living standards.Workplace safety standards much laxer. Much poorer infrastructure because the tax revenue doesn’t exist.
American companies can hire workers cheaper if the workers would only agree to all those steps. Do you find American workers at fault because they resist that ?Do you think that they should do that? Should we convert America into Thailand, Malaysia, Mexico, or China?
I know for a fact even the lib production companies here in L.A. hire via 1099 ONLY. It’s been picking up steam for a year now. The studios are now so entrenched NOT to hire the poor saps coming from every film school as one school admissions guy told me is “extremely bad’.
Yup. We'll call it "Global Competition" and "Free Trade" - the idiots will buy into it and even sometimes vociferously defend it as "Free Enterprise".
Am I correct in 1099 being an independent contractor, not an employee?
That can backfire on an employer if the employee doesn't work for multiple other employers. The government observes only a single employer and forces the employer to make that employee a W2 employee with all the overhead of income tax withholding, social security (employee/employer) and medicare. Having that slapped on you when you don't have reserves to fund it can be financially devastating.
If only we could eliminate all employees and focus on consumers instead