Minor Thoughts from me to you

Compensation under profit maximization

Compensation under profit maximization →

Austin Frakt, at The Incidental Economist, leads his readers through an exercise demonstrating that total employee compensation is a mix of salary and healthcare benefits. He demonstrates that if healthcare costs went away, employers would have to offer a higher salary.

Of course, the reverse is also true: if health insurance gets more expensive, employers will offer a lower salary (or just postpone raises indefinitely). Salary stagnation, then, is an artifact of increasing health insurance costs, not a sign of a poor economy.