Indeed, it’s too bad this is not more widely known.
The NYT has a nice overview [1], the relevant passages below. Wikipedia’s coverage [2] is excellent as well.
“In 1942, with so many eligible workers diverted to military service, the nation was facing a severe labor shortage. Economists feared that businesses would keep raising salaries to compete for workers, and that inflation would spiral out of control as the country came out of the Depression. To prevent this, President Roosevelt signed Executive Order 9250, establishing the Office of Economic Stabilization.
This froze wages. Businesses were not allowed to raise pay to attract workers.
Businesses were smart, though, and instead they began to use benefits to compete. Specifically, to offer more, and more generous, health care insurance.
Then, in 1943, the Internal Revenue Service decided that employer-based health insurance should be exempt from taxation. This made it cheaper to get health insurance through a job than by other means.”
Inertia's definitely important but 75 years is a long time, long enough to discount it as a valid excuse. But if we're allowed to dig into history a contra example is another ~70 year old system, the UK's NHS. That system managed to pull itself up by its bootstraps in spite of the loss of empire, material shortages, and left over war ruins, and a superficially more discouraging class system than our's that turns out to have more upward mobility than our system. Weird.
The NYT has a nice overview [1], the relevant passages below. Wikipedia’s coverage [2] is excellent as well.
“In 1942, with so many eligible workers diverted to military service, the nation was facing a severe labor shortage. Economists feared that businesses would keep raising salaries to compete for workers, and that inflation would spiral out of control as the country came out of the Depression. To prevent this, President Roosevelt signed Executive Order 9250, establishing the Office of Economic Stabilization.
This froze wages. Businesses were not allowed to raise pay to attract workers.
Businesses were smart, though, and instead they began to use benefits to compete. Specifically, to offer more, and more generous, health care insurance.
Then, in 1943, the Internal Revenue Service decided that employer-based health insurance should be exempt from taxation. This made it cheaper to get health insurance through a job than by other means.”
[1]https://www.nytimes.com/2017/09/05/upshot/the-real-reason-th...
[2] https://en.m.wikipedia.org/wiki/Health_insurance_in_the_Unit...