Yet another reason behind the "jobless recovery", or "Why US capital won't hire workers". It's the brilliant job-creating American medical industry, but one wonders what the net effect on employment is.
Government data, industry surveys and interviews with employers big and small indicate that many businesses remain reluctant to hire full-time employees because health insurance, which now costs the nation's employers an average of about $3,000 a year for each worker, has become one of the fastest-growing costs for companies. Health premiums are sapping corporate balance sheets even more than the rising cost of energy.The BLS's Employment Cost Index data tell an interesting story. Since 2001:I, total employee compensation is up 13.2% in seasonally-adjusted nominal terms. However, wages and salaries are up just 10.0%; benefits are up a much larger 21.1%.
In the second quarter, the cost of health benefits rose at a 12-month rate of 8.1 percent - more than three times the inflation rate and the rate of increases in wages and salaries.
"Health care is a major reason why employment growth has been so sluggish," said Sung Won Sohn, the chief economist at Wells Fargo.
In real terms, the numbers are: total compensation, +5.3%; wages and salary, +2.3%; benefits, +12.6%. For production workers -- those 80% of us outside the tip of the employment pyramid -- the real numbers (NSA) are even more vivid: total compensation, +5.1%, wages and salary, +1.8%. The ECI won't give benefits figures for production workers, but you can see that virtually all the rise in real compensation to them under Dubya has come in the form of rising benefits, clearly much of that eaten up by medical cost inflation. We know it isn't rising employer contributions to pension plans!
Makes me want to buy up a whole bunch of Levitra on covered prescription just to get my money's worth . . .