Re: yesterday's "Why I'm not hiring" WSJ op-ed and why it was poop

http://motherjones.com/kevin-drum/2010/08/wall-street-journal-editorial-page-outdoes-itself

by jj_aa • 16 years ago

52 53 16 years ago

motherjones.com

poet• 16 years ago

Editorialized submission headline for a highly editorialized piece. Regardless of the issues at hand, no thanks.

look_lookatme• 16 years ago

Agreed.

ytNumbers• 16 years ago

Definitely the worst article to ever hit the #1 spot on HN. It looks like yesterday's WSJ editorial must have hit a raw nerve with a lot of HNers, and this makes them feel better. I'm okay with quality HN articles about politics. It's just a shame that the top spot on HN is being reduced to this sort of cheap partisan bickering. I hope HN does not become yet another MotherJones/MSNBC or WSJ/FoxNews.

nkassis2• 16 years ago

that's what put me off Digg. But I fully understand that HN will have a bias towards more libertarian views. I really don't think a site dedicated to entrepreneurs and hackers will go the MotherJones/MSNBC way and Fox News hardly has any article with substance online.

hjkl2• 16 years ago

The original WSJ article struck me as disingenuous, but this article seems to just go the ad hominem route.

napierzaza3• 16 years ago

It's true, he didn't spend nearly enough time explaining why the argument was false. But then again, the 2-3 sentences he spent on that was enough. The rest is, I suppose, filler.

But at the same time it makes sense. Blaming the government for your inability to afford employees is just a blame game. You can afford and employee or not. If you're a moderate veteran in business you know the burdened costs so you factor that in.

The article has good detail about how he's blaming the government for his own failing business. He's just trying to egg on the government for more breaks or he won't hire and supposedly the recession will continue.

Maybe he'd like to turn off the HVAC system in the offices to save some money too.

Taxes exist, get over it.

SamAtt2• 16 years ago

I've always lived by the rule "if you think someone's wrong based on who they are and not what they said than your argument is too weak to present to others".

suppressingfire• 16 years ago

What if they're wrong based on what they said AND who they are?

ZachPruckowski3• 16 years ago

While ad hominem is usually bad, I don't see the problem with using it in response to anecdotal evidence. If your argument is "I, personally, can't run my business while paying employees an average wage!", then "your business was spiraling downwards while before the downturn and well before healthcare reform and wage bumps" seems to be a decent response.

Similarly, knowing someone's background is pretty crucial for an op-ed. If the piece is being sold as "I'm a typical businessman, and Obama's policies are keeping me from hiring people", then it's important to know if the businessman in question is typical, or if he's politically connected.

Edit: Typo'd "solid" for "sold".

hjkl2• 16 years ago

It does seem unfair to have to respond to an inflammatory anecdotal op-ed with a reasoned non-anecdotal argument, but I think that's the burden of a good faith response.

In that respect, I think Michael Fleisher's background is a good indicator that his piece has a bias, but pointing it out doesn't necessarily negate what he wrote.

wccrawford• 16 years ago

"All his complaining about taxes and benefits is just a smokescreen for his own incompetence."

Actually, I'd call that 'more proof that he's incompetent', personally. I read that yesterday and shook my head at disbelief that a CEO could say such a thing seriously.

krschultz• 16 years ago

hn member toxicflavor basically made this point yesterday in about 10 words.

http://news.ycombinator.com/item?id=1587873

bkmrkr• 16 years ago

As a small business owner I can tell you we are putting of hiring for pretty much the same reasons mentioned in WSJ. Basically you are paying double to hire an employee.

napierzaza3• 16 years ago

But what's the argument? That there are taxes or overhead? The truth is that you're not hiring for charity in the first place. So if the true cost (burdened cost) of a new employee doesn't make you more than enough money to cover that, don't hire.

Just because the cost of an employee is not the "sticker" price, and is somehow more complicated, doesn't mean that you're being punished to hire people.

thetrumanshow2• 16 years ago

Just a couple of notes for context:

1) On the first day/week/month, the employee is probably not going to contribute much, and in general you are taking a risk. The lower the sticker price on that risk, the more people are likely to take it.

2) If your business is making 250K and spending 240K on employing 4 employees @ 60K each and you want to stay net positive, you need to wait until you reach 300K before you hire the next person[1]. So there are these gaps in ramping up a business which can only be overcome with growth. When salaries are lower, these gaps are smaller. Looking at the broader labor market and assuming growth, lower taxes would mean smaller gaps and potentially less unemployment.

[1] Note that because of their opportunity costs, its harder to hire professionals for part-time.

Tichy6• 16 years ago

I don't understand that logic. Yes, if I buy an Apple for 1$, it costs double than if an Apple would just cost 0.50$.

You are paying for employees what they cost, that is, what the market determines. What are you doubling? (The taxes and whatnot are simply part of the total cost).

SamAtt2• 16 years ago

The logic is that taxes and other fees are pushing the cost of hiring people over what he's willing to pay. To use your example imagine you only have $1 to your name and you can get by without the Apple. At which point you don't buy the Apple where as if it was $.50 you might buy the Apple because it wouldn't take all your money.

I'm not saying his logic is correct but it's not hard to understand

CoryMathews6• 16 years ago

yes but if I only have 20$ I can get twice as many if they are $.50 instead of $1. Thus he could hire more people if the overhead per hire was lower.

nkassis2• 16 years ago

I think the author was trying to point out that this is nothing new and he feels the op-ed author was only raising this issue for political reasons. I have to admit that the wsj could have mention some of the op-ed author's background.

As for the point about small business not hiring due to extra costs. I'm sure it's true but this isn't something that was put in place in the last 2 years. This was true in all the recessions and booms we've had sine world war 2 and FDR if not before.

secretasiandan2• 16 years ago

Do you believe that the costs are too high on an absolute level or just too high to hire given current business conditions? If too high on a absolute level, I'm curious to know what you believe to be a reasonable tax rate is.

What services and level of service would this provide? Is it inefficiency or uncessary services that makes taxes too high? Or something else?

Re health care benefits : that's not something you HAVE to give your employees. Why do you choose to offer them?

stoptypingnow• 16 years ago

Extending this point a little, in a competitive environment I believe it matters what your competitors are paying for their labor and services. Since overhead (taxes and insurance) is relatively uniform, taxes should matter very little to his ability to compete.

napierzaza3• 16 years ago

He'd much rather hire people who are non-union and paid in cash. Totally off the books. How much more American can you be?

DanielBMarkham3• 16 years ago

I hate the fact that somebody can explain how arithmetic works, and folks will trash them for political reasons. I hated watching the comments on HN when the first article was posted, and I hate watching the reaction today.

zoomzoom• 16 years ago

Honestly, everyone reading the WSJ knows how math works. The point of the article was not to explain math - it was to blame "government" - and Barack Obama - for the lack of private hiring. A political statement gets (and deserves) a political response.

CoryMathews6• 16 years ago

When its government taxes that are causing it to be so expensive why would you blame someone else?

Also he is only blaming Obama for the health care price raise not the previous amount.

jbooth4• 16 years ago

Additionally, the article's author gave no indication that he knew how arithmetic works.

Round number from memory, paying someone 59k, gov't takes 20k, and healthcare costs 12k, so everything is 100% government's fault. And Obama's fault. Even though he cut the taxes for that employee.

EDIT: Hi downmodders. 100% factual post here. Obama cut your taxes. Sorry.

DanielBMarkham3• 16 years ago

Let's assume that you are right -- he is making a blatant political point.

It's also true that these things add together. And I believe the reasons he states to be a true indicator of why he's not hiring.

When somebody explains to you why they are not hiring -- and gives you the numbers to back it up, arguing about his politics or opinions of your pet causes is total idiocy. Who cares? Just assume that all those things on his balance sheet are wonderful goodness from above. Assume he's a bigoted moron. Whatever works for you.

Numbers still add together to make totals. And people make decisions (and form opinions) based on those numbers. Arguing about his politics doesn't change any of that. You can't argue yourself into a profit margin.

Next year there will be a new pet cause and a new item on the balance sheet. Maybe these are all great things, maybe the inmates are running the asylum. Probably a great discussion for somewhere else. None of that political stuff is relevant here, no matter how strongly you feel about it. This is the cost of doing business, and this is why he is not hiring. It would have been an entirely different piece without the numbers, but the numbers are true indicators of the nature of his business decision. Ignoring them or having a snit about them is just so much noise.

CoryMathews6• 16 years ago

While I agree his business is doing lousy and thats a huge reason why he cannot hire more, his point still rock solid.

The government takes way to much for each employee hired. 33%! The author would realize this is a HUGE problem for employers, but I forget he is only a political blogger.

Thus when you hire 3 and a tax rate of 33% + 33% + 33%, you are really paying for 4 people and getting 3. That makes it hard to hire more employees.

Then comes the health care, which drives this 33% even higher. As the wsj author states

"Every year, we negotiate a renewal to our health coverage. This year, our provider demanded a 28% increase in premiums—for a lesser plan. This is in part a tax increase that the federal government has co-opted insurance providers to collect. We had never faced an increase anywhere near this large; in each of the last two years, the increase was under 10%."

28% is a HUGE increase..

Don't turn this into a political "I must defend/attack obama/bush" article. He stated everything with facts to defend why. 33% per employee and rising quickly in just a years time is a huge reason not to hire someone new.

thetrumanshow2• 16 years ago

Wait for it.. someone is going to again point out that taxes in the US are slightly lower than some other developed countries, and therefore they will imply that since everyone's taxes are high, we should assume that high taxes are perfectly sane.

run4yourlives2• 16 years ago

Sanity isn't the issue. The issue is that in no way do US taxes make you uncompetitive, and therefore, as portion of the total cost of employee retention the point is moot.

It's irrelevant if my apples are 50 cents or a dollar. What's relevant is what everyone else is selling apples for.

Tichy6• 16 years ago

Who else should pay the taxes in your opinion?

CoryMathews6• 16 years ago

Its not who should pay them its why so many are needed. Are the programs they are paying for actually needed?

ZachPruckowski3• 16 years ago

The totality of compensation (benefits, taxes, salary) scales primarily with living standard, not with economic or political structure.

If we moved those taxes off income into sales, then you'd have to pay your workers 25-33% more for them to be able to buy the same stuff. If we moved healthcare and other benefits onto the employee, you'd be paying that money as extra salary, or else they're getting effectively less compensation. If we went with a libertarian model, you'd just be paying higher wages so that your employees could buy their current stuff and also hire their own police and fire companies (and you'd need to pay for your business's protection).

That's not to say you couldn't trim some fat with other methods, but the only real ways to eliminate paying that 33% involve cutting your employees' standards of living. I'm not saying it's your job to care about that, but let's call a spade a spade here. That money isn't dead weight loss, it's money that straight up improves the quality of life of your employees, and is therefore compensation.

russell• 16 years ago

Well, well, well. A man who sucks at the government tit complains about taxes that pay his bills. He's probably also getting stimulus money, but that's just an unfounded jibe.

icarus_drowning2• 16 years ago

Garbage in, garbage out? The original piece wasn't particularly impressive (rather than blame taxes for business problems, why not suggest targeted tax cuts offset by targeted tax increases?), but this somehow manages to be worse.

The ostensible reason the op-ed was crap was that Micheal Fleisher is related to someone who served in the Bush Administration. Now, while I agree that not divulging that information was a mistake on the Journal's part, I hardly think that shores up MJ's argument. It is necessarily fallacious-- his point is wrong because he was wrong in the past, because he was associated with people we don't like, and because his business is in trouble. It is certainly possible that these things might be true, but they have little bearing on the (equally bad) arguments in his op-ed, which are: taxes are slowing job growth-- see, just look at my business!

MJ notes that the original article wasn't worth much comment. Why they decided to then ignore their own conclusion and comment on it anyway is a mystery to me.

The least they could have done was try to raise, rather than lower, the already miserable tone of the debate.

jobu• 16 years ago

I think Kevin Drum meant the article wasn't worth much comment, but the fact that the WSJ chose to put it on the op-ed page was worth a few comments.

Why did the WSJ publish it? Perhaps it was a poor choice, perhaps it was a slow news day, or perhaps it was a double-cross to destroy Michael Fleischer's credibility with his own words.

icarus_drowning2• 16 years ago

But its the tone of that response that's the problem. Even if the fact that the WSJ chose to publish it is worthy of comment, its certainly worthy of more thoughtful comment. MJ looks as bad as the WSJ by responding to a clumsy op-ed with such a petty, ad-hom piece.

Re: yesterday's "Why I'm not hiring" WSJ op-ed and why it was poop

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