Earlier this Spring we examined how one aspect of our tax code (our current debates are like two people fighting over the last egg salad sandwich on the titanic) is anti-family and anti-women. For all of the rhetoric we hear out there about “equal pay for equal work” the idea that you can ever achieve this and also have a progressive income tax in place is a joke and a myth. The fact that my wife is married to me, a wage earner, means that for her job that pays her somewhere in the range of $50,000 per year, she gets to keep about $5,000 less of her earnings than unmarried people who are working right alongside her doing the same things and for the same wages.
But let’s not speak of this unspeakableness.
Consider a second aspect of being married that disadvantages my wife as compared to an otherwise single female or male doing the same job as her. Our university has a strict policy that does not allow workers to negotiate the proportion of their compensation package that is to be paid as wages versus the proportion of non-wage benefits. We basically offer everyone a similar benefits package and then alter wage rates / salaries based on the positions. One of my benefits as a lecturer here is that I can be a part of the university’s health insurance program. It is a closed program in the sense that Blue Cross / Excellus surely negotiates a university-wide budget with the U of R that everyone is a part of, we can examine the particulars in a future post. I happen to use a high-deductible HSA eligible plan. My contributions to the HSA are in the $3,000 per year range, and my monthly withdrawal from my paycheck is tiny – on the order of $30.
However, this $30 is not “all” that the health insurance program costs me each month. The university “chips in” the vast majority of the premiums to Excellus/BCBS on my behalf as part of my non-wage benefits. So my health benefits really come from two places. First, the U of R negotiates a group insurance policy that I probably could not negotiate on my own and lets me be a part of it no questions asked – whether I smoke 2 packs per day and drink a case of beer per night, or whether I do none of those things. But second, it pays lots of the cost of the insurance premium “for me” as a non-wage benefit.
The estimated contribution of the U of R on behalf of my family plan? A little under $1,000 per month – let’s just call it an even $10,000 for the year.
Several points here:
(1) This is cheaper for both me and the university than if they paid me $10,000 in wages that I valued just as much as the health benefits. Why? These are paid with pre-tax dollars on both sides.
(2) Employees cannot really choose different insurance packages. The only difference in the insurance policies offered really are on they payments side, the differences in treatment options, who is in and out-of-network, etc. are negligible. And the U of R basically contributes the same amount on our behalf regardless of what front-end payment option we choose.
(3) Empirical research (referenced even in Paul Krugman’s Principles textbook) indicates that workers pay almost all of this (the research is on the payroll tax, so this is not apples-to-apples entirely). So, although the college “pays $10,000” on my behalf, it turns out that my wages are almost $10,000 per year lower as a result of this program.
That said, if I turn down the offer of health insurance, I am not able to get any of that compensation back. In other words, I would have to be crazy not to take the health plan, even if it is only worth 1 cent to me. Now, when I am the only worker in my family perhaps the decision is easy. But I am not the only worker now. My wife works in the hospital here.
And she has turned down the health insurance benefits that are offered to her as a condition of her employment. Why would we need a second family insurance plan? What would that even mean? Since she and the kids are already covered by my plan, it makes no sense for her to accept this deal. But, remember that we are not able to negotiate for additional wages even if we do not accept the very “generous” health insurance benefit (I say “generous” because it is no such thing, we are paying it ourselves). The plan my wife would be able to get is identical to mine. In other words, she is turning down at least $10,000 in benefits by virtue of being married to me, and she is not able to be compensated at all for them. Now I can imagine that these cost savings are not real for the U of R because I suspect they negotiate a global budget that they pay to Excellus, so they don’t see their bill dropped by $10,000 when my wife does not accept the health plan, but that is immaterial from the standpoint of my wife, and equal pay, and discrimination against women and families.
So let’s put this together with the above illustration.
In other words, for a job paying $50,000 per year, my wife takes home $15,000 less than an otherwise similar unmarried person. And there’s nothing she nor I can do about it. I am waiting to see when someone decides to sue over something like this. Our tax and compensation policies are anti-family and anti-women. Welcome to “progressive” America.
UPDATE: And now I am pointed to this. So not only will my wife be discriminated against in the labor market, she is being discriminated against again for being married to me. With her additions to our income, we squeak our way into being eligible to pay some higher taxes due to ObamaCare. Great. I never knew I was in the Top 1%.