The Wall Street Journal editorial page is like the proverbial fish in a barrel. If I ever lack material to criticize, I can just hop over to A16 or whatever and pick from several semi-clever, mostly misleading columns extolling the unlimited virtues of Mr. Market and Corporate America and the bottomless evils of The Gubmint and Big Labor.
Today (yesterday, actually), we have Michael P. Fleischer, president of a small business called Bogen Communications International, who blames the government for snatching a third of his median employee’s income. Or, as he puts it, he’s not hiring because it costs $74,000 to put $44,000 in “Sally’s” pocket.
An outrage! But where is that $30,000 going? When you look at it, it’s not really so outrageous.
About $11,400 of it goes to private health care costs, which Fleischer tries to blame on the heavy hand of government and “ObamaCare” through a bit of jujitsu that is the WSJ columnist’s stock in trade:
Companies have also been pressed into serving as providers of health insurance. In a saner world, health insurance would be something that individuals buy for themselves and their families, just as they do with auto insurance.
I don’t want to give away my secrets here, but all I’ve got to say is: the passive voice is often a huge tell.
It actually contains a good size kernel of truth (another WSJ trick). Corporate-provided health insurance goes back to World War II when companies finagled their way around government-imposed wage controls to pay their workers more. Catch that? “Pay.” Health insurance costs are part of “Sally’s” actual pay. If she and her employer didn’t withhold them, she would have to pay them out of her check from Fleischer. Mr. Market would say that her pay would be somewhere right around $11,400 more. (Funny enough, we don’t get Fleischer complaining about being “pressed into serving” as provider of retirement compensation, which he is if he contributes to his workers’ tax-favored 401k accounts. That surely distorts markets, too, by funneling workers’ cash into a few corporate hands. Hi, Fidelity!).
So just right there, that supposed $44,000 jumps to $55,400. Maybe individual-controlled insurance would push down health-care costs—who knows (though we do know that, say, single-payer and state-run systems cost half as much as ours and get similar or better outcomes). But even that wouldn’t necessarily push down what Fleischer, as the employer, would pay to Sally. And how would Fleischer propose to get to such a utopia? I reckon it would take government interference of some kind.
There’s more, naturally.
Sally gets $3,661 withheld for Social Security taxes. Fleischer would have you think that this is money paid into the government maw that Sally will never get back.
That’s not the case, of course. Contributions to retirement plans or pensions are compensation under anybody’s standard. She’ll get that $3,661 back, plus her employer’s $3,661 contribution, when she retires—and more. You can be far more certain of that than you can about your 401k.
So add another $7,322, and now we’re up to $62,722. And:
She pays $126 for state unemployment insurance, $149 for disability insurance and $856 for Medicare.
And Fleischer adds “$56 for federal unemployment coverage, $149 for disability insurance, $300 for workers’ comp and $505 for state unemployment insurance.”
Should we mandate that people buy insurance for the likelier than not possibility that they’ll lose their jobs at some point in their career? Or that they’ll have a not-unlikely debilitating injury? Or that they’ll need to pay now for old-age health coverage since now is when they’re earning money? These seem like classic tragedy of the commons problems. You don’t mandate coverage, and most people won’t buy it. Then everybody pays (unequally), anyway. These things have clear benefits to the payer and to the community.
Add the $2,997 a year in insurance payments and we’re up to $65,719. Out of $74,000. So, Sally pays taxes—real taxes—of $6,250 to the federales and $1,893 to the Jerz (one of the highest-tax states).
Does that strike you as crazy? And let’s point out that those taxes aren’t paid by Fleischer, so they have little to do with why he’d hire someone or not.
In other words, Fleischer isn’t hiring because he doesn’t want to or can’t pay workers the money the market (with some externalities accounted for) bears.
But the coup de grace here comes from Kevin Drum, who points out that Fleischer is the brother of Bush spin doctor Ari Fleischer.
Michael, thanks to his White House connections, was one of the squadron of free market evangelizers who parachuted into Baghdad to privatize Iraqi industry after the war.
You’ve got to be kidding me.
Worse, Fleischer’s company is not exactly making money hand over fist, as a Drum correspondent notes. It lost a whopping $11.6 million on sales of $44 million last year. Since 2000, its revenues have fallen by a third (not including inflation) and its cash on hand is down 83 percent.
Mr. Fleischer should spend less time complaining about taxes and more time thinking about how he can correct 10 years of mismanagement.
Indeed. This is not the kind of company that’s going to lead a hiring boom.
Now that’s the WSJ editorial page in action.
Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR’s business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.
