If you cut employee benefits, especially health benefits, wages will rise, really?

Many experts out there, mostly economists (is that an oxymoron) believe that if the cost of employee benefits drops, employers will make up at least a portion of that difference in higher wages. This is some of the thinking behind the so-called 40% Cadillac tax on high cost health plans within Obamacare. At the same time employers have been cutting health and other benefits for years with no thought of giving anything back. All we have heard over the last five years is that wages are flat and the middle class is getting nowhere. The recent recession gave more cover for employers to make cuts that were permanent to deal with economic problems that were temporary.

Here’s the deal, when your employer announces that your share of the premium is going from 30% to 40% and your health plan will now be a high deductible plan and your prescription co-pay is going up, ask what portion of the savings generated you can expect added to your paycheck

And then be thankful the Democrats extended unemployment benefits.

The Commerce Department also said total wages and salaries last year amounted to $7.1 trillion, or 42.5 percent of the entire economy. That was down from 42.6 percent in 2012 and was lower than in any year previously measured.

Including the cost of employer-paid benefits, like health insurance and pensions, as well as the employer’s share of Social Security and Medicare contributions, the total cost of compensation was $8.9 trillion, or 52.7 percent of G.D.P., down from 53 percent in 2012 and the lowest level since 1948.

Benefits were a steadily rising cost for employers for many decades, but that trend seems to have ended. In 2013, the figure was 10.2 percent, the lowest since 2000.

One way to look at the current situation is to compare 2013 with 2006, the last full year before the recession began. Adjusted for inflation, corporate profits were 28 percent higher, before taxes, last year. But taxes were down by 21 percent, so after-tax profits were up by 36 percent. At the same time, total employee compensation was up by 5 percent, or less than the 7 percent increase in the working-age population over the same period. NYT 4-5-14.

The fact is your premiums are going up, your cost-sharing is going up and your retirement benefits are going down (all sometimes even after you have retired) and not one penny of those savings will find their way into your pocket. Go punch an economist in the nose.