Unemployment benefits are not welfare

[Alcoholic Actuary]

They are the benefits of an insurance program paid for by the employee through withheld wages.

That is all, carry on.

Furthermore, the rates are set based on the claims experience of the state and are actuarially sound (not all government insurance plans are).

aa

 

[laughing dog]

In economics, compensation to employees includes all payments made to or on the behalf of employees. So it includes the cash value of any perks, payments into retirement vehicles, health insurance premiums and FICA payments made in the name of the employee. In theory, employers (as a group) react and make decisions based on the compensation. In theory, so do actual employees and people looking for work. In theory, the extent to which employees (or employers) bear the burden of these non-tax payments depends on the sensitivities (i.e. elasticities) of the demand for labor and the supply of labor to compensation. For example, in theory, if the demand for a specific form of labor is relatively insensitive to compensation while the supply is sensitive, then the employer will end up "eating" most of the non-cash benefits (i.e. wages are not much affected) because of labor market dynamics - even though individual employers may not notice this. On the other hand, if the supply of labor is fairly insensitive to compensation, then wages will be affected by the non-cash benefits. This is a direct application of the partial equilibrium analysis of the economic incidence of a tax (just think of the non-cash benefits as a "tax").

T

 

[ksen]

I wonder how they separated out each employee's workers' comp premiums.

Those have always been charged to me (as an employer) based on total gross wages.

I suppose they could just divvy it up pro-rata based on each employee's wages. But it also depends on job classification....

Well, I used to just take the WC expense ratio and apply it to the applicable wages of each employee.

 

[Alcoholic Actuary]

lol, yeah.

It was transparent that it was just an attempt to make people feel guilty about asking for a raise.

That's exactly what it was. You should remind your capitalistic employer that it really doesn't matter what he pays, it only matters what the fair market price for these employee benefits actually are and that if he chooses not to pay these standard operating expenses of running a business, you could go somewhere that does.

I wonder how they separated out each employee's workers' comp premiums.

Those have always been charged to me (as an employer) based on total gross wages.

I suppose they could just divvy it up pro-rata based on each employee's wages. But it also depends on job classification....

That's basically how health insurance premiums are divvied up too. Employer plans are group rated and then broken out artificially. There may be a difference in rate for the number of people (per family) being covered, but no one goes through the specifics of accurately assigning individual rates to individual families (that I know of).

aa

 

[jonatha]

I wonder how they separated out each employee's workers' comp premiums.

Those have always been charged to me (as an employer) based on total gross wages.

I suppose they could just divvy it up pro-rata based on each employee's wages. But it also depends on job classification....

Well, I used to just take the WC expense ratio and apply it to the applicable wages of each employee.

You'll be overcharging the suits and undercharging the minesweepers....

 

[jonatha]

In economics, compensation to employees includes all payments made to or on the behalf of employees. So it includes the cash value of any perks, payments into retirement vehicles, health insurance premiums and FICA payments made in the name of the employee. In theory, employers (as a group) react and make decisions based on the compensation. In theory, so do actual employees and people looking for work. In theory, the extent to which employees (or employers) bear the burden of these non-tax payments depends on the sensitivities (i.e. elasticities) of the demand for labor and the supply of labor to compensation. For example, in theory, if the demand for a specific form of labor is relatively insensitive to compensation while the supply is sensitive, then the employer will end up "eating" most of the non-cash benefits (i.e. wages are not much affected) because of labor market dynamics - even though individual employers may not notice this. On the other hand, if the supply of labor is fairly insensitive to compensation, then wages will be affected by the non-cash benefits. This is a direct application of the partial equilibrium analysis of the economic incidence of a tax (just think of the non-cash benefits as a "tax").

T

So where does economics draw the line?

Why don't noncash wages include the employee's share of the cost of striping the employee parking lot? Or the pro-rata share of the electricity used to keep the building temperature comfortable?

 

[Alcoholic Actuary]

lol, yeah.

It was transparent that it was just an attempt to make people feel guilty about asking for a raise.

I wonder how they separated out each employee's workers' comp premiums.

Those have always been charged to me (as an employer) based on total gross wages.

I suppose they could just divvy it up pro-rata based on each employee's wages. But it also depends on job classification....

Well, I used to just take the WC expense ratio and apply it to the applicable wages of each employee.

You'll be overcharging the suits and undercharging the minesweepers....

Or if you have employees in all states, you'll be undercharging the Californians and over-charging the Pennsylvanians...

aa

 

[ksen]

That's exactly what it was. You should remind your capitalistic employer that it really doesn't matter what he pays, it only matters what the fair market price for these employee benefits actually are and that if he chooses not to pay these standard operating expenses of running a business, you could go somewhere that does.

I now work for a place that doesn't do that . . . and we only work a 4 day work week!

Oddly enough the work still gets done!

- - - Updated - - -

Well, I used to just take the WC expense ratio and apply it to the applicable wages of each employee.

You'll be overcharging the suits and undercharging the minesweepers....

I'm a suit and I didn't really care.

 

[Playball40]

I've never seen this. It is a labor expense to the employer, but is not counted as 'compensation' (wage package) to the employee.

I've seen it. It's never considered compensation as far as the W-2 goes but employers I've worked for in the past have routinely had me make a statement every year for employees showing how much they really make which included: Salary/Wages, employer matching for payroll taxes, unemployment taxes, employer matched retirement contributions, employer portion of healthcare insurance, and worker's comp insurance premiums.

Honestly, it seemed like a dick move.

It's not really a statement of "how much they really make" though. I guess they are trying to say if you were an independent contractor you would have to pay those things yourself...but what a stupid way of looking at it. I've had statements showing the employer portion of healthcare, matched retirement, paid life insurance....but never employer payroll tax expenses. That's just stupid and not accurate.

 

[Playball40]

In economics, compensation to employees includes all payments made to or on the behalf of employees. So it includes the cash value of any perks, payments into retirement vehicles, health insurance premiums and FICA payments made in the name of the employee. In theory, employers (as a group) react and make decisions based on the compensation. In theory, so do actual employees and people looking for work. In theory, the extent to which employees (or employers) bear the burden of these non-tax payments depends on the sensitivities (i.e. elasticities) of the demand for labor and the supply of labor to compensation. For example, in theory, if the demand for a specific form of labor is relatively insensitive to compensation while the supply is sensitive, then the employer will end up "eating" most of the non-cash benefits (i.e. wages are not much affected) because of labor market dynamics - even though individual employers may not notice this. On the other hand, if the supply of labor is fairly insensitive to compensation, then wages will be affected by the non-cash benefits. This is a direct application of the partial equilibrium analysis of the economic incidence of a tax (just think of the non-cash benefits as a "tax").

T

So where does economics draw the line?

Why don't noncash wages include the employee's share of the cost of striping the employee parking lot? Or the pro-rata share of the electricity used to keep the building temperature comfortable?

The tenant pays that already.

 

[jonatha]

So where does economics draw the line?

Why don't noncash wages include the employee's share of the cost of striping the employee parking lot? Or the pro-rata share of the electricity used to keep the building temperature comfortable?

The tenant pays that already.

If he had fewer employees, he could get by with a smaller parking lot and not pay that anymore.....

 

[laughing dog]

In economics, compensation to employees includes all payments made to or on the behalf of employees. So it includes the cash value of any perks, payments into retirement vehicles, health insurance premiums and FICA payments made in the name of the employee. In theory, employers (as a group) react and make decisions based on the compensation. In theory, so do actual employees and people looking for work. In theory, the extent to which employees (or employers) bear the burden of these non-tax payments depends on the sensitivities (i.e. elasticities) of the demand for labor and the supply of labor to compensation. For example, in theory, if the demand for a specific form of labor is relatively insensitive to compensation while the supply is sensitive, then the employer will end up "eating" most of the non-cash benefits (i.e. wages are not much affected) because of labor market dynamics - even though individual employers may not notice this. On the other hand, if the supply of labor is fairly insensitive to compensation, then wages will be affected by the non-cash benefits. This is a direct application of the partial equilibrium analysis of the economic incidence of a tax (just think of the non-cash benefits as a "tax").

T

So where does economics draw the line?

Why don't noncash wages include the employee's share of the cost of striping the employee parking lot? Or the pro-rata share of the electricity used to keep the building temperature comfortable?

I suppose if one could identify those items with any sort of accuracy, it would.

 

[Bomb#20]

They are the benefits of an insurance program paid for by the employee through withheld wages.

That is all, carry on.

Furthermore, the rates are set based on the claims experience of the state and are actuarially sound (not all government insurance plans are).

aa

Hey, a post that actually addresses the topic of the thread! Kudos!

So when you say the rates are actuarially sound, do you mean for the payout structure specified in the unemployment insurance law, or do you mean for the actual payout structure, taking into account the repeated temporary extensions Congress passes?

 

[Playball40]

The tenant pays that already.

If he had fewer employees, he could get by with a smaller parking lot and not pay that anymore.....

LOL, not if he doesn't reduce his rentable square feet. Interesting tidbit. If you are an employee of the landlord, all your pay, benefits, taxes etc...are paid/reimbursed by the tenants of the building.

 

[jonatha]

If he had fewer employees, he could get by with a smaller parking lot and not pay that anymore.....

LOL, not if he doesn't reduce his rentable square feet. Interesting tidbit. If you are an employee of the landlord, all your pay, benefits, taxes etc...are paid/reimbursed by the tenants of the building.

Are you referring to triple-net leases, or to the economics of the business in general?

(We could always tell the employer that he isn't paying the unemployment taxes, his customers are....)

 

[Alcoholic Actuary]

Furthermore, the rates are set based on the claims experience of the state and are actuarially sound (not all government insurance plans are).

aa

Hey, a post that actually addresses the topic of the thread! Kudos!

So when you say the rates are actuarially sound, do you mean for the payout structure specified in the unemployment insurance law, or do you mean for the actual payout structure, taking into account the repeated temporary extensions Congress passes?

It is based on the true paid claims experience - regardless of the actual legal language. This is true down to the company level experience. Companies that have higher turnover pay more in unemployment premiums than companies with lower turnover.

Now its also important to know that 90% of the premiums collected are returned to the states for benefit payments. 10% of the premiums go to the federal government reserves for 'emergencies'. When congress extends benefits, the increased payments can be paid out of federal reserves without an increase in premium in subsequent years.

aa

 

[jonatha]

Hey, a post that actually addresses the topic of the thread! Kudos!

So when you say the rates are actuarially sound, do you mean for the payout structure specified in the unemployment insurance law, or do you mean for the actual payout structure, taking into account the repeated temporary extensions Congress passes?

It is based on the true paid claims experience - regardless of the actual legal language. This is true down to the company level experience. Companies that have higher turnover pay more in unemployment premiums than companies with lower turnover.

Now its also important to know that 90% of the premiums collected are returned to the states for benefit payments. 10% of the premiums go to the federal government reserves for 'emergencies'. When congress extends benefits, the increased payments can be paid out of federal reserves without an increase in premium in subsequent years.

aa

Except the reserves are depleted (and then some), so in some states (including Kentucky) we'll be paying a surcharge (to both the Federal and State governments) for years to come....

 

[Loren Pechtel]

Actually, the premiums are paid by the employer.

Depends on the state.

 

[jonatha]

Actually, the premiums are paid by the employer.

Depends on the state.

Do elaborate...

 

[Loren Pechtel]

Depends on the state.

Do elaborate...

In some states the employer pays it. In some the employee pays it.