[heavyset_go]

> They probably would. I've had a lot of jobs that heavily emphasize how much is paid for benefits, and often it's used as justification for why raises weren't offered that year.

Sounds like an excuse to me, and if they're this bitter about paying for benefits, something tells me they'd be just as bitter towards giving substantial raises across the board for, essentially, no reason.

[brightball]

Comments like this give the impression that there’s an assumption that business owners are all just swimming in money and not one or two bad months away from bankruptcy. Most businesses do not survive more than 5 years for a reason.

[bduerst]

Businesses that cannot afford to retain talent and remain competitive deserve to not survive, in order to make room for more efficient organizations. This is a principle of the free market.

Also as a principle, regulating said free markets for QoL improvements (e.g. min wage, HI, disability, comp, soc sec, etc.) affect all participants - both efficient and destined-to-die businesses alike. If you can't exist through playing by the rules that everyone has set, why are you still in business?

[brightball]

Should they? Every business doesn’t have millions of dollars in cash to burn trying to find product market fit. Most start from nothing or personal savings, perhaps partially from the salary of a spouse.

When you start a business there’s an expectation that you’re probably not taking a paycheck from it for a few years while you try to attract customers to provide steady cash flow.

While doing this, you somehow have to find a way to hire people to help you grow.

If it doesn’t work out, the business owner loses everything most likely and will probably be on the hook for the space they were leasing.

Now if you survive and make it past all that, hopefully everything stabilizes and you’re able to run a successful business that can return more to you than you put in…but it’s hard. Very very hard.

This “should that business even exist” stuff comes from not having any idea how hard it really is and how much is really on the line or the ups and downs along the way (which are even harder when you’re trying to make payroll).

If it was easy, everybody would do it.

[lostcolony]

>> When you start a business there’s an expectation that you’re probably not taking a paycheck from it for a few years while you try to attract customers to provide steady cash flow.

>> While doing this, you somehow have to find a way to hire people to help you grow.

Where is that expectation coming from? It's fine if it's a side business you're looking to bootstrap or something, or if you have enough seed funding (which can be in the form of your own savings if you're okay risking that) to be revenue negative for a time, but if you have enough funding or revenue to consider hiring people, the first person you should be hiring is yourself.

>> If it doesn’t work out, the business owner loses everything most likely and will probably be on the hook for the space they were leasing.

This is why you create a -business-. A legal entity separate from yourself. An LLC at the minimum. So that your personal liability is (wait for it) limited. If you're doing a sole proprietorship or something, where you'd be on the hook for everything, WTF are you doing hiring people and signing leases?

[bruce511]

All your theory is correct, but in practice it works in the opposite way.

Owners get pais last, not first. Sure you make enough income to pay yourself first, then you hire. Time passes, there's a bad month or 3, employees still get paid, owners start accumulating loan accounts.

LLC's and other structures are designed to limit downside, but some creditors will end-run this with personal sureties. This is really common with leases, but also other forms of credit. Inexperienced business owners may not push back against these as hard as they should (you can push back, but most starting out don't know that they can...)[1]

Building a business from scratch is hard work, and most fail within 5 years because failing is really really easy, and success requires someone to do a lot of different tasks well, and almost always some "luck" [2] as well.

[1] most bootstrappers try once, and are thus inexperienced. The folk they are dealing with (landlords and suppliers) are very experienced. This imbalance leads to contracts that are very often one sided.

[2] the best luck is advice from an experienced bootstrapper, ideally for free. They can help you avoid the most common mistakes. Of course you'll ignore some of their advice because "experience doesn't work like that".

[WalterBright]

> So that your personal liability is (wait for it) limited

Creditors and lenders are not fools. They'll often require the owner of an LLC to personally sign for the note.

[Aeolun]

> When you start a business there’s an expectation that you’re probably not taking a paycheck from it for a few years while you try to attract customers to provide steady cash flow.

I think this is only true for a newfangled SF business.

Traditional business gets a bank loan, has a business plan, and pays salaries from the start (including to the owner).

[bruce511]

I would have said exactly the opposite. Newfangled SV businesses have all that investor cash to pay salaries, whereas bootstrapped need revenue, the sooner the better.

Make no mistake, the only reason a company closes is because they run out of cash. Old-style businesses have been doing that forever. SV businesses do the same when that "next round" fails.

Which leads me to conject that a VC business is just a bootstrapped business, where VCs are the customer...

[brightball]

What are those loans secured against?

[d3ad1ysp0rk]

Bingo. As someone who started a brick and mortar business that is tied to our home, the financial failure would have very real impacts on us, regardless of having an LLC.

[Sevii]

The owners assets.

[gruez]

> Businesses that cannot afford to retain talent and remain competitive deserve to not survive, in order to make room for more efficient organizations. This is a principle of the free market.

This assumes that such "more efficient organizations" can even exist. If they are possible, why aren't they already around? Are those "Businesses that cannot afford to retain talent and remain competitive" that you speak of somehow preventing them from existing?

[bduerst]

Markets are zero sum. Competition ensures that an inefficient business will lose out to efficient competitors.

In most markets where efficiency is not achievable, then businesses are not entitled to exist. This is why things such as tax subsidies and other forms of funding are used to bootstrap new markets (e.g. green energy) that have a net social gain.

[FpUser]

>"Businesses that cannot afford to retain talent and remain competitive deserve to not survive, in order to make room for more efficient organizations. "

Reads like maximalist statement with zero clues about the subject.

[apalmer]

This is basic concept of the free market. it is valid to reject this concept. The free market is basically a religion in the US.

However if you reject this ideal which is the western worlds baseline, then you really have to provide some info on what framework you are arguing from…

[FpUser]

Because "free market" does not exist. In "free market" you will end up with few majors owning everything else and controlling people's lives. We have various regulations that among the other protect small companies to a point and are trying to keep the huge ones in check. Things are slowly deteriorating lately in favor of big corps as they have government in their pockets but hopefully it is not yet irreversible. There is much more to discuss about "free market" and that naive "survival of the fittest" look at it but I am in no mood and am not qualified to write essays about the subject.

[bduerst]

Which is why if you read the second part about my comment above, free markets are regulated. It's a no true scotsman to appeal to the purity of free market semantics when nobody else is using language limited to the literal definition.

[MomoXenosaga]

And why does that matter? Should we all work for free then in order to help out our employers?

[compiler-guy]

It matters in the present context because we are talking about how employers would respond if employees didn’t expect health insurance as part of their job. If employers stopped paying health insurance, then it is extremely likely that they would not pass the savings on to employees, but to use it to maintain the business.

[bruce511]

Clearly there are all manner of outcomes if employers stopped paying for health insurance. Generalising is fruitless.

Yes some companies will optimize for profit - some already do that, amazon makes a killing while warehouse staff are low paid. Uber makes everyone a contractor specifically to avoid benefits and so on.

Other companies pay a living wage, and cost a "cost to company" for each employee. These may choose to pay the benefit as cash.

Where I live the tax benefit of health care applies to companies and individuals alike. Some companies have mandatory health cover, others have optional health cover, others have no health cover. Since there is no tax implication it's not hard for prospective employees to compare one with another.

Ultimately, some companies pay low wages, some pay high wages, that's somewhat tangential to health cover or not.

Speculating on what most employers would "most likely do" is, well, just speculation[1]

[1] large companies like amazon known for screwing employees? Yeah, I'm with you there - but I don't think most employers are like that.

[mrtranscendence]

> Yeah, I'm with you there - but I don't think most employers are like that.

The leadership at my employer talks big about how much they care about their employees, and indeed, the vacation and benefits are very good. Yet even in the face of record profits they gave me a 1.5% raise this year, despite the 8.5% inflation. I'll believe that they'd pass benefits package savings onto me when I see it.

[mywittyname]

It's not out of bitterness. People don't necessarily realize that benefits are as expensive as they are, or that they had been increasing in cost so dramatically. It's more like, "sorry we aren't giving raises this year, but we are covering an added $400/mo in insurance costs for everyone."

[lowercased]

A few years ago I sat in with a client on an 'employee meeting' where they discussed raises/insurance. No one had ANY clue what health insurance premiums were. The owner asked people what they thought it was per month. "$75? $99?" They went around the room. I said "$600". The whole room looked at me like I was nuts. The owner said "$560". Audible gasps around the room. People had literally no idea how much this stuff costs (this was... 5 years ago, IIRC).

[tshaddox]

I’m not really sure what that proves though. Each employee almost certainly saw the amount the employer was contributing when they selected their insurance plan. If they forgot that amount and later guessed a much lower amount, what does that demonstrate?

[lowercased]

> Each employee almost certainly saw the amount the employer was contributing when they selected their insurance plan

I've never seen that happen, ever, in 25+ years of being in the working world in the US. Not saying it never happens, but I've not seen it, and after asking around, no one I know has seen that info.

[mrtranscendence]

For what it's worth, my employer does make a bit of a production about how much they pay for our insurance. They make us all look at a document that gives a figure that includes our salary and benefits, plus a breakdown. I guess the point is to make us more appreciative in the face of rising costs? That said, I don't remember the amounts being clear at the time I chose a plan, though maybe they were.

[munk-a]

I mean - that sucks and all... but cost of living is constantly going up. If a company can't afford to continue operating with the costs of wages that company should shutter its doors - that's brutal but it's also how markets are supposed to respond.

In Australia minimum wage laws means that Starbucks locations rarely have more than two people on staff - that's just economic forces causing a rational business response.

[bruce511]

Yours is a common belief, and I don't think you should be down voted for it, but you are wrong.

Firstly companies don't shutter, they downsize. The most vulnerable employees are the first to go, the higher paid ones are typically the most valuable, remain. Owners go last.

Secondly, in my experience, all employees would rather forgoe a raise and keep everyone employed that insist on a raise. We saw this first-hand in 2020. Lockdown brought extreme uncertainty but employees agreed to 50% [1] pay instead of massive job cuts.

Yes it helps that we pay staff well. Yes it helps that they get a bonus in the good years. Yes it helps that we have their interests at heart. Yes it helps that they are skilled and we don't want to lose them.

Yes, over the years some people have become redundant, but there are swings between good times and bad times, and no we don't shutter just because there's a bad time. That's explicitly _not_ how it is supposed to work.

[1] we had a min threshold for 50%, those under got 100%. Also thanks to govt assistance, and our ability to back-pay later, they all ended up "whole".

[2] ps - I agree on the need for a minimum wage. In almost all cases it is too low by a lot. And I agree that if you can't pay minimum wage, then you can't afford an employee.

[munk-a]

The thing I specifically wanted to highlight (which I think most readers missed) was that not receiving a raise is equivalent to receiving a pay cut unless we're riding at 0% inflation. Every year costs go up for employees and keeping them pegged at the same salary prevents them from being able to cover those costs as efficiently.

I've seen workers pidgeon-holed into low stagnant wages too often to accept it as a status quo when the companies employing them are posting profits - in the modern world we too quickly accept the fact that owners are supposed to take out lion's share salaries and profits need to continuously increase. A business can have a healthy existence just making the economic wheels spin and ensuring that employees are well compensated.

[bruce511]

You are not wrong in all points.

We usually set minimum increases based on inflation. Often we do higher. Occasionally we have wage freezes but they are not common. We adapt to conditions and circumstances.

Obviously we are one data point, but I have seen other small companies do the same. Big companies bad behaviour does make the news, good behaviour does not, so while bad actors certainly exist, I don't know if that is the norm, and I don't know if it is more prevalent in the US.

[WalterBright]

Benefit costs normally add 40-50% to the salary costs of an employee.