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Comment by bsg75 | Hacker News Reader

I doubt this is a new observation, but what strikes me is that the US employment system is based on benefits via employment (healthcare, retirement).

The current "gig economy" trend removes these benefits from employment, and with a government currently opposed to public benefits, the US could be headed towards a problem within a single generation.

This race to the bottom (disruption) seems counter productive for anything but short term investment.

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In the case of health insurance, it mostly came about because of wage controls during WW II. Companies couldn't offer more money in a tight labor market but they were allowed to offer fringe benefits like insurance.

401(k)'s history is almost wacky. It was an obscure provision in 1978 tax law and a benefits consultant figured out a way to turn it into something that companies could easily offer to employees as a tax-advantaged benefit.

Of course, once a benefit becomes the norm, it's almost impossible for individual firms to not offer it.

> Companies couldn't offer more money in a tight labor market

It was illegal for them to offer more money - Roosevelt instituted wage fixing. Offering benefits was a way around the law.

> Of course, once a benefit becomes the norm, it's almost impossible for individual firms to not offer it.

The real reason is that health insurance paid from pre-tax money by the employer makes it cheaper than being post-tax money by the employee. It's the tax system that binds workers to jobs via health care benefits.

Another reason people want wage increases in the form of employer-paid benefits is then they get to lie about the terrible pay they get, because they never ever account for the value of the benefits.

For example, whenever the teachers complain about their salaries, never mentioned are the generous benefits package they get.

Teachers don't get paid enough.

While true, they get paid substantially more than people with the same salary and no benefits.

And that is a problem too.

Still, teachers are not paid enough.

More about benefits is driven by the tax code than probably should be. But the issue is much more that many people can't simply buy the same insurance offered by their employer (whether with tax-advantaged dollars or otherwise)--and it's an expensive benefit, which means a lot of people feel they can't afford it unless someone else is paying.

Now, sure, supposedly salaries would go up if the company no longer offered health insurance but there are lots of moving parts and people and any such transition would be difficult.

401 (k) history is something I've wondered about. Why is it provided by the employer, as opposed to you choosing your own IRS-approved provider and telling your employer to send a portion of your check there?

I am by no means an expert but my understanding is that it's mostly a function of its somewhat accidental history. Which also makes things like rolling over 401(k)s from previous employers way more convoluted than it should be.

You do additionally have a personal option, IRAs, that you can establish at the broker of your choice that give you a lot more flexibility. You can probably setup payroll auto-deduction in many cases.

In my experience, it's not complicated at all to roll a 401k from a previous employer into a personal IRA at provider such as Vanguard, Schwab, etc.

I've done it and know others who have. It's "complicated" in the sense that it wasn't just click some things online. That may be a good thing from a security perspective but it's still a PITA.

Lobbying by employers I would guess - this is strictly verboten in the UK due to various reasons, Robert Maxwell plundering of his company's schemes for example.

I am surprised that post enron that US pensions where not reformed.

You're conflating 401(k)s and pensions. 401(k) accounts are in employees' own brokerage accounts. The company can't touch them. All the company does is decide what funds and stocks to make available, do payroll deduction, and contribute whatever matching.

Defined benefit pensions are different and are much less common than they used to be. So mostly they have been reformed by ceasing to exist in the US. There are various protections for pensions but they're still an issue--especially in municipalities with financial issues.

ADDED: And there's actually a lot of sensitivity these days to 401(k) options that are perceived as risky. Such as a company's own stock.

As opposed to the much better final salary pension 401's are a pretty rubbish way to implement pensions.

Pensions worked a lot better when employees were often with IBM or Dupont for decades. And, even then, there was no guarantee that someone would be around to pay out the pension after a few decades--although there were various insurance mechanisms.

Someone always needs to bear the risk that the planned payout will be less than forecast. Whether it's the employee or the company. And, at some point, if the money's not there it won't be paid out.

There's already tens of millions of people with no employer provided healthcare or retirement savings. The gig economy is reducing wages and stability.

> The gig economy is reducing wages and stability.

Edit: And in turn purposefully growing an existing problem.

Good point..

>This race to the bottom (disruption) seems counter productive for anything but short term investment.

And you know who most benefits from this type of investment (basically the ones with the big money to invest with little to no real risk to their way of life). So I don't see it ending any time soon...

This has happened before in history, and it doesn't turn out well for the people with big money.

Here's hoping.

Big money is doesn't matter when its denominated in fiat.

Probably this is one reason why gig economy is much bigger in the US than elsewhere (excluding cross-border services delivered from poor to rich countries). Airbnb is big in other places, but Uber much less so.

It just seems easier to just give these benefits from public institutions then so employers don't need to give them.

“Easier” in the sense that it removes the illogical connection between employment and access to health care.

Definitely not easier in the sense that a sizeable plurality of the country, currently in control of both houses of Congress, the Presidency, the Supreme Court, and the majority of state legislative and executive branches, think this is a terrible idea that they equate with creeping Communism.

Or, we could have people buy health insurance with their own money, and provide assistance to those who can't afford it. The same thing we do with food, housing, transportation, and basically everything else.

So your arguing for the NHS model brave choice in the US system and also doesn't work well unless you strip a lot ow power from the individual states.

The German style system is as probably the system you could have got if people weren't so obsessed with Obamas skin color.

Yeah, the gig economy in many ways is better suited for the average industrialized welfare state.

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