Excellent column in today’s WSJ by Michael P. Fleischer entitled “Why I’m Not Hiring.” He’s the owner of a small business in New Jersey and he takes the time to break down what the actual employee “burden” is for him for an average mid-pay scale person working within his company. As well, he shows that what a person’s gross pay is will never come close to being what she might actually take home. I’m not making any judgments on the efficacy of taxes or entitlements, just presenting a small business owner’s perspective on things:
My god I’d love to have his workers comp costs. Get into something “Dangerous” like running machines and that 300$ quickly doubles and triples.
I think he also missed a crap load of “Nickle and dime” stuff that is “Government imposed” that most don’t even consider. One off the top of my head is the 4’ X 8’ area filled with posters that inform the employees of “Their rights”. May seem like a small thing, posters are probably less than 80$ and another 100$ or so to put them up, take them down and keep them current. If you have 20 employees that’s on 9$ per person per year or so. However once you take that 9$ and multiple it by the many things that aren’t mentioned in the article you can easily add some significant government imposed cost.
God help you if you’re a day late on paying any of those taxes too. You think credit card companies and the mafia is bad, try dealing with the IRS if you’re late with a payroll tax payment.
~Matt
Is this the same Micheal Fleischer who was “Director of Private Sector Development for the Coalition Provisional Authority in Iraq” and who’s brother is Ari Fleischer, former White House press secretary?
Boy he sure did a great job of managing the spending for all those private sector contracts in Iraq.
Talk about a prime case of cronyism in goverment.
I really don’t think this guy has a leg to stand on when it comes to critiquing irresponsible government spending.
Did you read the article? It had nothing to do with responsible govt spending, but is about the burdens placed on business. If he is misrepresenting those things, then you could point that out for us.
And the interesting counter-arguement to Michael’s story:
But head on over to the Journal Opinion section for the real story (by which I mean the divorced-from-reality story in which high federal taxes on America’s wealthiest are the source of all of America’s woes, and cutting those taxes is the solution to all of our problems). One American business titan can’t hire new workers because Uncle Sam makes it too expensive!
Michael Fleischer, the president of a New Jersey audio systems company, has a “terrific employee” named “Sally”. But poor “Sally,” like Fleischer, is a victim of government greed. The feds (and Trenton) take a lot of money out of her paycheck, and, even more tragically, they make Fleischer pay them to employ her.
Now, payroll taxes are regressive, and could serve to discourage employment, which is bad. But Mr. Fleischer’s math doesn’t really support his argument. He says he’s not hiring because it costs too much money – money that doesn’t go to employees – to hire employees. He blames the government for high taxes, and for maybe thinking about raising taxes in the future. Because of the government, he has to pay $74,000 for Sally to go home with $44,000! Highway robbery!
But more than $12,000 of that difference is benefits, not taxes. The price of health care is skyrocketing. And “Sally” pays $2,400 of that. As for the rest of that money that Fleisher pays but Sally doesn’t get? Well, much of that is in taxes that “Sally” pays. Here’s what the jackbooted government thugs actually make Fleischer himself pay to employ “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.
I can see why you would refuse to hire anyone, when you face like $5,000 in actual taxes. Fleischer should probably just give it all up and live off the dole, like all the lazy unemployed, frankly. That would teach Uncle Sam a lesson!
I thought none of these people pay income taxes? We need to assume nearly all of the $13,000 is refunded to her in April right? Other than healthcare which is a benefit he chooses to provide it is around $4500 for comp, medicare etc or about 6%.
Everything that he listed there is a government entitlement program, so it has **everything **to do with government spending. The government doesn’t tax people for no reason, they do it so they can spend it. Albeit irresponsibly.
But you are right on one mistake I made, that should say “irresponsible” government spending. I’ll go fix that.
I’m not in total disagreement with the message, I just find it flat out hillarious who is giving it.
Is this the same Micheal Fleischer who was “Director of Private Sector Development for the Coalition Provisional Authority in Iraq” and who’s brother is Ari Fleischer, former White House press secretary?
Boy he sure did a great job of managing the spending for all those private sector contracts in Iraq.
Talk about a prime case of cronyism in goverment.
I really don’t think this guy has a leg to stand on when it comes to critiquing responsible government spending.
I predicted to another poster here, offline, that somebody would invariably find something to criticize about the person doing the writing instead of addressing the issues he brings up, perhaps as a way to diminish the message. Both sides in this debate often engage in such *tu quoque *arguments. Welcome to the club.
It costs $74000 to provide an employee with a gross compensation package that is worth $68,714.
I think how much is deducted from Sally’s paycheck is largely irrelevant to the quiestion of why small businesses are not hiring. (It may be more relevant to why someone like Sally might not seek a particular job at a particular wage.) But even there, the article makes some assumptions with the amount of federal income tax withheld and it’s not clear what assumptions are made - number of withholding allowances, married jointly vs. single, etc. The total amount to be withheld appears to be pretty high for a $59,000/year salary. I suspect he’s manipulating that number to make a better case.
That being said, I think it’s still fair to compare the $74,000 amount to the $59,000 gross salary that is being offered. While benefits are part of the compensation package, many people don’t take that into consideration when asking why business may not be hiring. And it’s not as if a small business that already provides health benefits under a group plan for its other employees can simply decide to not provide to new employees going forward in order to reduce the cost of hiring a new employee.
I think the article could have been more persuasive if he had factored in other direct and indirect costs associated with a new employee, such as workers compensation, space, support, recruitment and advertising costs, training, new equipment, etc. I suspect it costs a lot more than $74,000 to pay a new employee $59,000 at his company.
Thx, I disagree with you on some points, but mostly wondered if you had read the article and just missed his point…looks like you got it, and your point on his former role in govt spending is taken as well.