The cost of this perspective is that we rarely stop to consider what trade-offs we're making by only considering the success of the company. The United States is unusual among free-market democracies in that we prize low tax burdens and low regulatory mandates above social services. In many countries in Europe, for example, health care is provided by the state and is not an employer's responsibility. Europe mandates that all workers receive 20 days of paid vacation a year, in addition to the paid national holidays, which range from eight to 14. By contrast, the US mandates no days off, even on national holidays; the average across all jobs is ten days.

We'll dig into these more, but the point is: these are choices. Different countries make different decisions about how to allocate their resources, but in each case, societies have balanced them differently. It is a common argument in the US to hear that these benefits cripple business. That's flatly not true. In measures of open markets and economic freedom, the US is mediocre or bad. In terms of economic competitiveness, it excels, but so do many European countries.

So for the rest of this post, I ask you to shift your perspective and look at this solely through the workers' eyes. These are the men and women that make the beer at the center of breweries' businesses. They deserve at least the few minutes it takes to consider their perspective without immediately "yes, but"-ing them with the brewery's financial concerns. We spend basically the rest of the year using that lens, so let's see how it affects the workers.



A Living Wage

How do we assess what people need to live? The most common measure is the poverty line, but it's a measure nearly every economist considers well beneath what a person needs to be self-sufficient in the US. A better measure is the "living wage," a metric created at MIT that more accurately reflects that bare minimum:

The living wage model is an alternative measure of basic needs. It is a market-based approach that draws upon geographically specific expenditure data related to a family’s likely minimum food, childcare, health insurance, housing, transportation, and other basic necessities (e.g. clothing, personal care items, etc.) costs. The living wage model does not allow for what many consider the basic necessities enjoyed by many Americans. It does not budget funds for pre-prepared meals or those eaten in restaurants. It does not include money for entertainment nor does it does not allocate leisure time for unpaid vacations or holidays. Lastly, it does not provide a financial means for planning for the future through savings and investment or for the purchase of capital assets (e.g. provisions for retirement or home purchases).

MIT has a wonderful tool that allows you to look at the hourly wage for any county or city (though city data are based on MSAs, so county-level data is probably more precise.) So for example, the living wage for a sample of locations for a single person family (with the state minimum wage in parentheses):

Zieback, SD: $9.59 ($8.85)

Winneshiek, IA: $10.16 ($7.25)

Shelby (Memphis), TN: $10.78 ($7.25)

Cook (Chicago), IL $13.30 ($8.85)

Multnomah (Portland), OR: $13.74 ($11.25)

Suffolk (Boston), MA: $14.65 ($11.00)

Kings (Brooklyn), NY: $16.14 ($10.40)

San Francisco, CA: $19.63 ($11.00)

I encourage you to go click around--not only does it give you the baseline number, but how they came to that figure in terms of the different categories of cost and what the living wage would be for different family configurations. Just to emphasize how low that living wage is--even though as you can see in every case it's above the minimum wage--consider how housing alone factors in.

In Portland, the living wage calculator figures it will cost a single person $11,352 a year in rent; that's 48% of the after-tax income of a person making a living wage. But you're not going to find too many $946 apartments here. In fact, the median one-bedroom apartment cost is $1,133 a month--or 58% of the annual after-tax income for a worker making $13.74. If you'd like to see what an apartment costs in your town, this is a great tool.



Benefits

A paycheck is the minimum a worker can expect--and often all they get. That everything over and above pay is considered a benefit--a bonus, really--is one of those choices we make as a society--and other societies make very different choices. Let's consider the other categories of compensation beyond the paycheck and look at how other countries treat these.

Sick Leave

It's remarkable that a third of the American work force gets no mandatory sick leave, but it's true (and only 46% of service workers receive it). Employers aren't required to offer paid time off when a worker gets sick. In Europe, countries have different approaches. The UK has one of the least generous, where they offer a mere £88 a week--but up to 28 weeks. France offers half a year at 50% of the worker's salary. In the Netherlands, workers may take up to two years of sick leave and receive 70% of their salary. By comparison, in the US, just 62% of production workers receive sick leave at all.

Health Care

Here the US really is an outlier. Health care systems vary, and depending on how you define it, more or fewer countries have universal health care. By even restrictive definitions, most democracies have them. The US does not. Instead, we have this ancient system where businesses are expected to cover their workers. The Affordable Care Act (Obamacare) improved access to healthcare, but doesn't act as a public health care plan like European countries have. One of the most important ways it differs is that it's not portable. In Europe, workers don't have to consider whether they'll lose health care if they switch jobs as they do in the US.

Depending on which plan they adopt, providing full coverage to employees adds $2.58 an hour to total compensation on average. (It of course depends on the plan the company offers.) The cost for employees buying health insurance on the open market is a good deal more expensive, however. Group plans are cheaper, so the same plan will cost an employer less than an individual. More importantly, if a worker has to pick it up herself, it will come out of after-tax income. When I ran the numbers on what a silver plan in Oregon would cost a single male earning $30,000, it came out to $230 a month. Again--that's in after tax income. Silver plans are, of course, quite a bit less coverage than national plans in Canada or the UK.

Vacation

Once again, the US doesn't mandate that workers get any paid time off. The US seems to be unusual in offering "PTO"--paid time off--which employees can use at their own option for either vacation or sick leave. This somewhat muddies the water in terms of time off, since vacation and sick leave are in entirely separate categories of benefit. Nevertheless, the US is far less generous than Europe, where workers can expect to get four weeks of paid vacation, in addition to 8-14 days of national holidays. American workers, by comparison, average ten days in paid vacation and receive on average six paid national holidays. Surveys have shown that American workers are less likely to take this time off as well, fearing penalties for being absent, and also spend more of their off-hours checking email and doing work.

Child Care and Maternity/Paternity Leave

In the US, parents are allowed to take up to 12 weeks off with the birth of a new child, but none of that is paid. Maternity leave varies in Europe, but mothers are paid during time off and the interval is generally longer (14+ weeks) than the federal FLMA program provides for in the US. Fathers may receive time off in Europe and in some cases it is paid time, but the benefits are substantially less than for mothers.

The EU has set goals about paid child care, but member states have done better or worse jobs achieving it. At the high end, countries in Scandinavia and Britain pay for child care, while other countries try to offset costs. The US lags particularly far on this measure (tellingly, the Bureau of Labor Statistics doesn't even track it). The cost of child care varies wildly by state--from $4,800 a year in Mississippi to over $22,000 in DC.

Retirement

In recent decades, US companies have shifted their focus from a model of offering workers a "defined benefit" package to "defined contribution." That means they agree to put some money in an account like a 401K, but offer no promises about what workers receive when they retire. This is one of the many ways risk was shifted from employer to worker. Fortunately, the US does offer federal benefits to retired workers in the form of Social Security and Medicare. For three out of five retirees, Social Security accounts for half or more of their income, and Social Security is based on lifetime earnings, so low-paid workers can expect to be low-paid retirees.

