Tuesday, September 03, 2013

Why Are We Doing This

So I am playing this game, Roads of Rome III.  Well it is an alright game, I guess, not Skyrim by any stretch of the imagination, but alright just the same.  It is a resource management game (time management), which means you have to marshal your time and your resources to accomplish your goals.  So I wonder, why can’t we do this in real life?

This is set in Roman times, and I realize we can not do this anymore, times have changed.  This is a completely different world today, or is it.  Is it that it is different, or has the ways changed.

In this way you are controlling a property, and through various resources managing them to accomplish the goals that are set by the game.  There are very different things at play here.  One you can not just have people go out and do work for you, you have to pay them, at least a minimum wage.  Well not just a minimum wage, but a minimum wage, disability payments, workman’s compensation payments, unemployment insurance, and SNAP payments.  That is just the beginning, there are lots of other payments as well.  To really get a good days work from an employee, you will need to pay a living wage at least.  A living wage is based basically on the prevailing wage for the work being performed, with added benefits.

Take the average character in the game, say at the pumping station.  Here you have a worker that works an hourly job, pumping buckets of water.  Now at best they can pump 7 buckets of water per unit of time, say one hour.  For every hour of pay you give them, they will give you seven buckets of water.  So the prevailing wage for that work might be $11.50 an hour.  So you have to pay them a base rate of $11.50 an hour at the very least.  Now on top of that you have to pay WC payments.  This is not an unusually high risk position, so the WC will be relatively reasonable, lets say $14,000.00 a year, which comes out to  $7.00 per hour, and this does not come out of their pay, this is just employer paid.  Keep in mind these are ballpark figures, based mostly on simple math, and my experience as an employer.  Disability, another employer paid expense, is decently cheap at about $4,000.00 per year, which comes out to about $2.00 and hour.  So far we are up to $20.50 an hour.  On top of this we have to pay out unemployment insurance (UI).  There is a complex formula to figure this out, but it comes out to about $1.20 an hour on average that the employer pays, as well as the amount that is taken from the employees gross wages.  Now SNAP has got their hands on the paycheck as well, so the employer pays about $0.60 per hour, and the same amount is taken from the employee.  The employee also must pay their own taxes, which are taken from the gross on top of the UI and SNAP payments.  This means they are down to about $9.50 an hour in net, and the employer is up to about $22.30 an hour.

Now a living wage is called a living wage because it includes benefits that make up for the loses that the employee would incur for the payment of insurances and other things.  This means that the employer must provide health insurance (including dental, eye, and prescription), most likely daycare and/or elder care, compensation for other expenses related to the job, maybe food expenses, maybe even reimbursement for travel expenses and other cost.  Without getting into a lot of complicated math issues, it is safe to say that the average employee doing the average job, in an average state, will cost the employer about $55.00 an hour to pay them $11.50 an hour plus average benefits.  This is on top of other cost, liability insurance, any auto insurance (for transport vehicles or whatever) errors and omissions insurances (eoi), and other cost associated with getting a bucket of water out of a well.

On top of this the employer has to purchase the land (may include water rights, mineral rights, and other rights and covenants), purchase the tools to drill and build the well (or contract such work out as needed), and then maintain the well, as well as the tools and supplies for containing the water, ensuring it meets the requirements set by legislative regulation pertaining to the use of the water, as well as packaging, transport, and in the end, disposal cost of any waste of production.  This is all costed out to the hourly wage, so suffice to say that the average bucket of water cost about $100.00 to obtain.

Now you might wonder why everything cost so much at the store, well you shouldn’t, because that is just the cost being passed down to the consumer.  So the next time you go to the store to buy a bucket of water, to put out the fire in your sawmill, remember the reason you have to pay $150.00 per bucket, is because you wanted to get paid for putting out fires.

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