Executive: Why I'm Not Hiring New Workers

Blame the government

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Occasionally, The Wall Street Journal features a small or medium sized business owner who'd like to discuss corporate finances on the op-ed page. And nearly every time one of these articles are featured, they tend to rile up wonky, chart-wielding liberal bloggers. The latest such article, written by Michael P. Fleischer, president of Bogen communications, was intended as a case study for why companies aren't hiring even though they appear to be "sitting on their cash."

With attention to detail Fleischer describes how the government discourages hiring by conscripting his business as a provider of health care and saddling it with burdensome taxes. He soberly concludes:

As much as I might want to hire new salespeople, engineers and marketing staff in an effort to grow, I would be increasing my company's vulnerability to government decisions to raise taxes, to policies that make health insurance more expensive, and to the difficulties of this economic environment...From where I sit, the government's message is unmistakable: Creating a new job carries a punishing price.

Naturally, pundits weighed in with their own analysis:

  • Fleischer Should Just Give It Up and Live Off the Dole quips Alex Pareene at Salon. Mr. Fleischer's math doesn't support his argument: "more than $12,000 of [the difference Fleischer mentions] 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."

  • I'm Sympathetic to His Argument writes James Joyner at Outside the Beltway, but with this caveat: "[Fleischer lumps together] the cost of government and the cost of providing health insurance, which are only tangentially related. If each new employee adds extensive marginal overhead costs — much less push the firm over a threshold where they become subject to additional government mandates — then it’s very difficult to get the marginal gain in productivity necessary to justify to hire."

  • No Grand Revelation Made, this view is only the "cold-hard reality" of the matter, blogs Michael W. at Quando. "When the government continually raises the costs of doing business in the first place (or threatens to do so), the only ones who really survive are either the politically connected or the very wealthy (yes, they are often the same thing). That doesn’t have anything to do with building a better mousetrap, as it were, or growing the economy. And it certainly doesn’t do anything to raise everyone’s standard of living."

  • How Did This Company Hire People in the First Place? "I believe that government existed, and maintained policies that had a similar effect on paychecks, throughout all the years Bogen Communications has existed," writes Steve M. on No More Mister Nice Blog. "...Yet somehow the company managed to hire Sally and quite a few other people in that time." The blogger also notes that Bogen communications also appears to have government contracts with local schools. He fumes: "Shouldn't he write a follow-up op-ed explaining to us why his company actually collaborates with the government in order to enable its evil institutions to exist and function?"

  • Fleischer Needs to Wise Up and start thinking about finding a way to call each new job a "green hire", sarcastically retorts Paul Chesser at The American Spectator. "Then everything he's complaining about will be subsidized -- maybe for a whole year! Otherwise the unemployed 'Sallys' of the world are out of luck."

Update: The Atlantic's Derek Thompson adds additional pros and cons: "Here's where Fleischer is absolutely right: it is ludicrously expensive to add workers. Here's where he's not right: the acting government isn't really adding to that cost. Two-thirds of that $30,000 surcharge isn't the Obama administration: $12,000 comes from health insurance (for which we pay no taxes), $3,700 comes from Social Security taxes he would not have to pay under the new HIRE Act..."

This article is from the archive of our partner The Wire.