Increasing employment

I recently read an internal report that discussed the cost of health care for companies. Effectively, the average cost is over $13,000 a year for family coverage and after employee contributions approaches $10,000 a year to the employer. Now consider this in relation to people's salaries. If you want to hire an employee for a $25,000 a year job, and provide health coverage, you are looking at a 40% health care tax. Of course, if the employee is making $100,000 a year, the health care cost is only 10%.

Now if you have the opportunity, why not either outsource the work of that $25,000 a year person or move the job to a country that has national health care? It is likely that you will actually pay less in salary also but the biggest savings is likely to be the avoidance of that health care bill. There are additional problems and costs associated with moving the work but in any cost/benefit analysis, the cost of employee provided health care in this country is likely to be among the most significant elements.

So consider the current proposals we are seeing about how to increase employment in this country. Many of them are geared to providing short term tax breaks. They could be effective if the tax break was big enough, but think about the impact of taking the cost of health care out of the hire equation. Yes, the bill would still have to be paid for, and how we tax individuals and corporations to do so would be an issue to be discussed, but the cost benefit analysis on whether to hire an employee would have a $10,000 reduction on the cost side.