Michael P. Fleischer at the Wall Street Journal posted an interesting article detailing just how expensive it can be for companies to hire and employ people. When broken down, it really is surprising how much of what a company incurs for an employee goes to taxes and benefits – costs that result from and are heavily influenced by the actions of government. When government considers increasing the minimum wage, taxes, regulations, or mandates that impact businesses, it needs to be prepared for the resulting possibility of higher unemployment. In a highly competitive environment, particularly in a severe recession like the one we’re experiencing, companies often don’t have the resources to cover higher expenses for the employees they have, let alone hire new ones. If we want to encourage companies to hire, we need to reduce the burdens that government has placed on hiring.
Check out Fleischer’s article and see how a real company has to write $74,000 in checks for salary, benefits, and payroll taxes just to put $44,000 per year into an employee’s pocket. If you can’t get access to the entire article, Mike Shedlock at Global Economic Analysis has posted excerpts of it with his own commentary here.
-CH
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