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Article: Why I am not hiring

Discussion in 'Economics and Financials' started by padre31, Aug 10, 2010.

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  1. padre31

    padre31 Premium Member Luxury Box

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    http://online.wsj.com/article_email...09733776372738-lMyQjAxMTAwMDAwODEwNDgyWj.html

    Spot on, and that cost structure is only likely to increase as more taxation is implemented in on 1/011, as the Business owner sagely stated:

     
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  2. my 2 cents

    my 2 cents Well-Known Member

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    Pretty basic...for the life of me I cannot understand why people do not understand this...

    On top of this as a business owner you are going to get hit with a higher tax rate as the tax cuts expire as most LLC's are taxed at individually rates, you are losing R&D tax credits, the IRS and current administration is now fighting like hell to implement retroactive SS tax on non member passive LLC non member investors that file individually, you face a penalty if you have 50 employees and do not provide healthcare which many do not (so stay below 50!!), credit lines are generally declining due to the steep money curve in bonds and banks are poarking money there, credit insurance is EXTREMELY tight due to big companies hording cash because they know they will need it to pay future higher employee costs and taxes, and a whole laundry list of other non incentives facing employers.....can someone please tell me what exact long term policy would make me WANT to actually add employees?
     
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  3. padre31

    padre31 Premium Member Luxury Box

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    From what I can gather, the thinking is "business owners want to make more money, so they will still hire people who produce income for them even if the tax rates go upwards".

    No matter that the spread between hiring a employee who produces a profit and the cost of keeping them employed only grows larger as more tax costs are added.

    In the past, for example, a business could hire an employee if their position produced say..25k..for the business, however the cost of hiring is say 18k, as taxes move upwards that 7k revenue production shrinks but the risk of expansion does not cease to exist.

    As the risk reward curve flattens out, it makes it less likely that the employee will be hired, or the job created at all.
     
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  4. my 2 cents

    my 2 cents Well-Known Member

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    I agree...I think people actually do think this way, and it is pretty elementary thinking IMHO......in order to only break even (not make a profit ..... just to break even) you can hire an employee at $100 and it will cost you $135 (at a profit of absoluetly zero and say 5% EBITAD) that means that employee you just hired must increase your revenue $2,700 in order for you to just break even on them............before your own intrest taxes and depreciation).

    Now if you raise the tax rate just 3% that employee has to increase your revenue an additional $109 (in addition to the $2,700).........just to break even..............you know how to best increase your profit $135..................

    fire an employee, save $135 and pocket it...you made more money and did not increase your market share $1 or increase your GP 1%.........pay someone .005% more to do the work of two...and if they do not then find someone who will ....... there is about 9.8% of the population that are looking........

    That is a lousy way to look at it but margins are not increasing nor are revenues and cost cutting is what has held the market and these big companies up....now you are looking at individuals that are LLC's being taxed more due to tax cuts expiring and now it is trickle down and the smaller businesses are about to start the same process if they have not already...but they damn sure are not going to add to the payroll............in order to be taxed more individually.....i cannot see how this is not obvious to everyone but it is not.....all IMHO of course.
     
  5. vt_dolfan

    vt_dolfan Season Ticket Holder Club Member

    Its not obvious because .... well because I havent seen it laid out as plainley as the author did in this article. The real cost of hiring an employee is usually lost on everyone other than those that actually do the hiring, business owners.

    Calling it a Sur Tax doesnt seem very far off, and its a word most people understand.

    With this big a cost for business owners, its not only not a suprise that business are not re hiring as swiftly as we would like.....its also not a suprise that wages are not keeping up with the cost of living.....

    But the Gov is getting it from both sides, because while it costs this man $75,000 to hire a $44,000 dollar a year employee, they are also taxing her wages as well. And for all this taxation....what exactly do we have to show for it?
     
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  6. my 2 cents

    my 2 cents Well-Known Member

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  7. jdang307

    jdang307 Season Ticket Holder Club Member

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