Wages Are Up, But Whittled Down by Rising Healthcare Costs


Wages are up 3.2% for 2018, according the Bureau of Labor Statistics.  So, why don’t we feel 3.2% richer? It’s because relentless healthcare cost increases are eating up one-quarter of our gains.

Gross annual pay increased $1,507, but one-quarter of it was taken right out of our paychecks to pay our healthcare premiums.

This brings home the point that healthcare reform is truly a piggybank issue for every citizen. Reason enough for all of us to think, talk and act.


The Figures

Here are the figures.

Private non-farm wages grew from an average of $47,792 at the end of 2017 to $49,299 now a year later, the vaunted 3.2% increase.

However, from that $1,507 increase in gross annual pay, $380 of it (fully 25%) was deducted right out of paychecks for higher healthcare premiums.  Our employers also paid $930 more this year to the insurance companies – instead of to us — totaling $1,310.

The reason is that during 2018, average annual employer-based family insurance premiums went from $18,306 to $19,616, according to the Kaiser Family Foundation. Employers and employees split the cost 71-29.

This Story Is Not New

The story of healthcare eating into wages is not new. A RAND Corporation study revealed that the health premium drain was even worse during the first decade of the 2000s. During that period of even more rapid healthcare increases, all of workers’ compensation increases for higher productivity were offset by rising healthcare premiums.  As a result, they saw no more take-home in their paychecks.

Indirect Costs

Although growth in healthcare spending has slowed to 5.5%, it is still double the rate of general inflation. This means that in addition to the direct hit on our paychecks,  we are all indirectly paying more in other ways. For example, healthcare costs raise the price we pay for cars and appliances. They increase Medicare tax deducted from paychecks. They also mean less money available to repair our roads and bridges. Healthcare spending amounts to an 18% excise tax on all economic activity.

How to Cut Costs

The U.S. has made progress in bringing down the double-digit healthcare inflation of the 2000’s. Some credit goes to innovations in the Affordable Care Act (Obamacare), but most is attributed to general economic slowing during the Great Recession.

Thought leaders have recognized the need for still more short-range measures to rein in costs further.

This blog argues that comprehensive healthcare reform will be the long-range solution. Our paychecks need it.  Our country needs it. 

Now, Take Action.

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Image Credit

By: Ken Teegardin from Boulder, Boulder [CC BY-SA 2.0 (https://creativecommons.org/licenses/by-sa/2.0)%5D, via Wikimedia Commons



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