Thursday, August 28, 2008

Health Care

As a bonus to overcome World War Two wage and price controls companies began offering “fringe” benefits including health insurance. We came to expect that as a part of our compensation package. As health care costs increased, companies began increasing the employee payment and raising the co-pays. Now many companies are cutting health care coverage or eliminating it altogether.

Many (most?) employees would buy their own policies BUT when the companies stop offering the coverage, they don’t add the money they used to spend for non-cash compensation to your salary at the end of the week.

For those of you who are not sure what I mean, your have a compensation package which includes your salary, the value of your health insurance, paid vacation, sick leave and paid personal time (like for doctor’s appointments).

The value of the things your company pays for that you don’t have to pay for directly is call non-monetary compensation. But you must calculate it as part of your hour wage when comparing job offers. Think about one company offering a company car for business travel and another offering mileage. One package may be slightly better or worse than the other.

If your company stops paying for something like health care, you just got a pay cut since you’ll now have to take that amount off your weekly check to pay for the same coverage. Your take home pay went down and that is the real definition of a pay cut.

When a company claims that they need to "cut costs" and the cost is part of your compensation, what they are really saying is "we want you to take the loss so our profit won't". My question is always "why should I pay to keep your profit level above some arbitrary number?"

In most cases of cost cutting the issue is not keeping the company open it's 7% profit versus 9% and the company want's you to take the loss to keep that number higher.

Monday, August 18, 2008

Why I'm not rich.

Lets see if I get it. Apple beat all the analyst’s expectations and their stock shares lost $17.47, or 10.5 percent in after-hours trading.

So that’s why I’m not rich, when a company does better than projected, I expect that the value goes up, not down. Yes, earnings are down from last year, but with over a billion dollars in profit this year, Apple looks they they are making money when a lot of businesses aren’t.

Monday, August 11, 2008

More fuzzy thinking

In this article describing the presidential candidates positions on the economy I found the following quote.

"If you don't tax them, they can pay their workers more," said Taylor Griffin, the candidate's (John McCain) senior adviser.

This kind of fuzzy thinking is what got us into this economic mess. In a capitalist society any savings will accrue to the company and they will hire workers at the lowest salary necessary to get the quality of worker they need.

The person making the statement either knows better and is just creating a sound bite or has no clue about how business really works.