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As a small business owner I can tell you we are putting of hiring for pretty much the same reasons mentioned in WSJ. Basically you are paying double to hire an

by bkmrkr 16y ago

As a small business owner I can tell you we are putting of hiring for pretty much the same reasons mentioned in WSJ. Basically you are paying double to hire an employee.

napierzaza 16y ago
But what's the argument? That there are taxes or overhead? The truth is that you're not hiring for charity in the first place. So if the true cost (burdened cost) of a new employee doesn't make you more than enough money to cover that, don't hire. Just because the cost of an employee is not the "sticker" price, and is somehow more complicated, doesn't mean that you're being punished to hire people.
- thetrumanshow 16y ago
  Just a couple of notes for context: 1) On the first day/week/month, the employee is probably not going to contribute much, and in general you are taking a risk. The lower the sticker price on that risk, the more people are likely to take it. 2) If your business is making 250K and spending 240K on employing 4 employees @ 60K each and you want to stay net positive, you need to wait until you reach 300K before you hire the next person[1]. So there are these gaps in ramping up a business which can only be overcome with growth. When salaries are lower, these gaps are smaller. Looking at the broader labor market and assuming growth, lower taxes would mean smaller gaps and potentially less unemployment. [1] Note that because of their opportunity costs, its harder to hire professionals for part-time.
Tichy 16y ago
I don't understand that logic. Yes, if I buy an Apple for 1$, it costs double than if an Apple would just cost 0.50$. You are paying for employees what they cost, that is, what the market determines. What are you doubling? (The taxes and whatnot are simply part of the total cost).
- SamAtt 16y ago
  The logic is that taxes and other fees are pushing the cost of hiring people over what he's willing to pay. To use your example imagine you only have $1 to your name and you can get by without the Apple. At which point you don't buy the Apple where as if it was $.50 you might buy the Apple because it wouldn't take all your money. I'm not saying his logic is correct but it's not hard to understand
  - Tichy 16y ago
    It doesn't have to do anything with the taxes, though. Suppose he is willing to pay 40000$. If taxes are 30000$, he can pay 10000$ to a new hire. If nobody wants to work for that money, it is the fault of the new hires. Of course it would be better if taxes were lower, but since they are a real cost, it makes no sense to say "I pay double". Maybe it costs 0.70$ to grow the apple, so it simply isn't possible to sell the apple for 0.50$. Taxes are the costs for growing employees. What good is it to complain that you would buy an apple if only it cost just 0.50$, if it already costs more than 0.70$ to grow the apple?
    - CoryMathews 16y ago
      "Suppose he is willing to pay 40000$. If taxes are 30000$, he can pay 10000$ to a new hire. If nobody wants to work for that money, it is the fault of the new hires." - Wow I hope I never work for you.. I cannot see how you say this is the "fault of the new hires" its not their fault, its the employers and government. Because the employer cannot afford to pay them more, they have 40,000 to pay them. Its the governments fault because they are taking 13200(assume 33% instead of 30k) this only allows the employer to offer a job if someone takes it for 26800. Hes complaining because it does not need to cost this much. If the government is all about helping the country out of this "recession" shouldn't they be helping businesses hire new people? It's hard for them to do this when it becomes more and more expensive to hire.
      - Tichy 16y ago
        Your analysis is too short sighted. Presumably the taxes are required to keep society running. So somebody has to pay them. In fact it doesn't really matter who pays them. Suppose businesses wouldn't have to pay taxes anymore. Instead there would be a new apple tax. So now apples would cost 2$ instead of 1$. Now you can pay your hire 20000$ instead of 10000$. But the hire needs twice the money for food, so he needs to ask for a higher salary in return, so that he can still eat apples. So you still can't afford the hire. That there is probably a lot of waste of taxes is another subject entirely. Of course it would be preferable to require as little taxes as possible. But taxes are not just some arbitrary costs governments can inflict or take away with the flick of a finger.
nkassis 16y ago
I think the author was trying to point out that this is nothing new and he feels the op-ed author was only raising this issue for political reasons. I have to admit that the wsj could have mention some of the op-ed author's background. As for the point about small business not hiring due to extra costs. I'm sure it's true but this isn't something that was put in place in the last 2 years. This was true in all the recessions and booms we've had sine world war 2 and FDR if not before.
secretasiandan 16y ago
Do you believe that the costs are too high on an absolute level or just too high to hire given current business conditions? If too high on a absolute level, I'm curious to know what you believe to be a reasonable tax rate is. What services and level of service would this provide? Is it inefficiency or uncessary services that makes taxes too high? Or something else? Re health care benefits : that's not something you HAVE to give your employees. Why do you choose to offer them?
- stoptypingnow 16y ago
  Extending this point a little, in a competitive environment I believe it matters what your competitors are paying for their labor and services. Since overhead (taxes and insurance) is relatively uniform, taxes should matter very little to his ability to compete.

by bkmrkr 16y ago

As a small business owner I can tell you we are putting of hiring for pretty much the same reasons mentioned in WSJ. Basically you are paying double to hire an employee.

napierzaza 16y ago

But what's the argument? That there are taxes or overhead? The truth is that you're not hiring for charity in the first place. So if the true cost (burdened cost) of a new employee doesn't make you more than enough money to cover that, don't hire. Just because the cost of an employee is not the "sticker" price, and is somehow more complicated, doesn't mean that you're being punished to hire people.

thetrumanshow 16y ago
Just a couple of notes for context: 1) On the first day/week/month, the employee is probably not going to contribute much, and in general you are taking a risk. The lower the sticker price on that risk, the more people are likely to take it. 2) If your business is making 250K and spending 240K on employing 4 employees @ 60K each and you want to stay net positive, you need to wait until you reach 300K before you hire the next person[1]. So there are these gaps in ramping up a business which can only be overcome with growth. When salaries are lower, these gaps are smaller. Looking at the broader labor market and assuming growth, lower taxes would mean smaller gaps and potentially less unemployment. [1] Note that because of their opportunity costs, its harder to hire professionals for part-time.

Tichy 16y ago

I don't understand that logic. Yes, if I buy an Apple for 1$, it costs double than if an Apple would just cost 0.50$. You are paying for employees what they cost, that is, what the market determines. What are you doubling? (The taxes and whatnot are simply part of the total cost).

SamAtt 16y ago
The logic is that taxes and other fees are pushing the cost of hiring people over what he's willing to pay. To use your example imagine you only have $1 to your name and you can get by without the Apple. At which point you don't buy the Apple where as if it was $.50 you might buy the Apple because it wouldn't take all your money. I'm not saying his logic is correct but it's not hard to understand
- Tichy 16y ago
  It doesn't have to do anything with the taxes, though. Suppose he is willing to pay 40000$. If taxes are 30000$, he can pay 10000$ to a new hire. If nobody wants to work for that money, it is the fault of the new hires. Of course it would be better if taxes were lower, but since they are a real cost, it makes no sense to say "I pay double". Maybe it costs 0.70$ to grow the apple, so it simply isn't possible to sell the apple for 0.50$. Taxes are the costs for growing employees. What good is it to complain that you would buy an apple if only it cost just 0.50$, if it already costs more than 0.70$ to grow the apple?
  - CoryMathews 16y ago
    "Suppose he is willing to pay 40000$. If taxes are 30000$, he can pay 10000$ to a new hire. If nobody wants to work for that money, it is the fault of the new hires." - Wow I hope I never work for you.. I cannot see how you say this is the "fault of the new hires" its not their fault, its the employers and government. Because the employer cannot afford to pay them more, they have 40,000 to pay them. Its the governments fault because they are taking 13200(assume 33% instead of 30k) this only allows the employer to offer a job if someone takes it for 26800. Hes complaining because it does not need to cost this much. If the government is all about helping the country out of this "recession" shouldn't they be helping businesses hire new people? It's hard for them to do this when it becomes more and more expensive to hire.
    - Tichy 16y ago
      Your analysis is too short sighted. Presumably the taxes are required to keep society running. So somebody has to pay them. In fact it doesn't really matter who pays them. Suppose businesses wouldn't have to pay taxes anymore. Instead there would be a new apple tax. So now apples would cost 2$ instead of 1$. Now you can pay your hire 20000$ instead of 10000$. But the hire needs twice the money for food, so he needs to ask for a higher salary in return, so that he can still eat apples. So you still can't afford the hire. That there is probably a lot of waste of taxes is another subject entirely. Of course it would be preferable to require as little taxes as possible. But taxes are not just some arbitrary costs governments can inflict or take away with the flick of a finger.

nkassis 16y ago

I think the author was trying to point out that this is nothing new and he feels the op-ed author was only raising this issue for political reasons. I have to admit that the wsj could have mention some of the op-ed author's background. As for the point about small business not hiring due to extra costs. I'm sure it's true but this isn't something that was put in place in the last 2 years. This was true in all the recessions and booms we've had sine world war 2 and FDR if not before.

secretasiandan 16y ago

Do you believe that the costs are too high on an absolute level or just too high to hire given current business conditions? If too high on a absolute level, I'm curious to know what you believe to be a reasonable tax rate is. What services and level of service would this provide? Is it inefficiency or uncessary services that makes taxes too high? Or something else? Re health care benefits : that's not something you HAVE to give your employees. Why do you choose to offer them?

stoptypingnow 16y ago
Extending this point a little, in a competitive environment I believe it matters what your competitors are paying for their labor and services. Since overhead (taxes and insurance) is relatively uniform, taxes should matter very little to his ability to compete.