Why businesses can’t afford to create jobs these days

Today’s Wall Street Journal has an important op-ed by Michael Fleisher, president of Bogen Communications, entitled “Why I’m Not Hiring.”

It makes for discouraging, but important, reading.

Meet Sally (not her real name; details changed to preserve privacy). Sally is a terrific employee, and she happens to be the median person in terms of base pay among the 83 people at my little company in New Jersey, where we provide audio systems for use in educational, commercial and industrial settings. She’s been with us for over 15 years. She’s a high school graduate with some specialized training. She makes $59,000 a year — on paper. In reality, she makes only $44,000 a year because $15,000 is taken from her thanks to various deductions and taxes….

After running through the various government-added costs of employing workers, Fleischer concludes:

 

When you add it all up, it costs $74,000 to put $44,000 in Sally’s pocket and to give her $12,000 in benefits. Bottom line: Governments impose a 33% surtax on Sally’s job each year.

Because my company has been conscripted by the government and forced to serve as a tax collector, we have lost control of a big chunk of our cost structure. Tax increases, whether cloaked as changes in unemployment or disability insurance, Medicare increases or in any other form can dramatically alter our financial situation….

To offset tax increases and steepening rises in health-insurance premiums, my company needs sustainably higher profits and sales — something unlikely in this “summer of recovery.” We can’t pass the additional costs onto our customers, because the market is too tight and we’d lose sales. Only governments can raise prices repeatedly and pretend there will be no consequences.

You need to read the entire column.

Brian Saint-Paul

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Brian Saint-Paul was the editor and publisher of Crisis Magazine. He has a BA in Philosophy and an MA in Religious Studies from the Catholic University of America, in Washington. D.C. In addition to various positions in journalism and publishing, he has served as the associate director of a health research institute, a missionary, and a private school teacher. He lives with his wife in a historic Baltimore neighborhood, where he obsesses over Late Antiquity.

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