The Overblown Hobby Lobby Decision

This blog isn’t really for political stuff, but this will tie in (slightly), so I’ll put this here.  I’ll start out by saying all for men and women having modern medicine as it relates to sex, and I’m all for access to abortion services, contraceptives, etc.  If I had a company, when it got the size that offering comprehensive health insurance made since, I’d include all those services without any hesitation.  I think the moment a fetus can survive outside the body is the moment it’s murder.  That’s not until at least the third trimester, and even then, if there’s any doubt, the rights go to the woman.  That doesn’t mean I support a person’s right to do drugs while they’re pregnant.  I think that’s fucked up and wrong.  I just don’t think a fetus is a person yet.  That’s where I’m at.

I’m okay with the Hobby Lobby decision.  I don’t feel super strongly either way, but I’m okay with it because it restricts access to relatively cheap services in exchange for more freedom running a business.

It forces Hobby Lobby employees to self-insure for 2 kinds of emergency contraception, each costing around $60 without insurance, as well as for an IUD which costs more like $500 – $1000.  Hobby Lobby doesn’t like the IUD because it can prevent a fertilized egg from implanting, and it considers that abortion.

Hobby Lobby insurance still covers the more traditional pill form of birth control, condoms,  sponges, and sterilization procedures.

So if you work at Hobby Lobby and you want to not worry about getting a morning after pill, you need to have $60 for a rainy morning.  Presumably, Hobby Lobby employees would demand lower health insurance premiums for this decreased level of service, and those premiums over time would pay out $60.  If that isn’t true, an employee could also say, “your benefits suck, I’m going to get a better job somewhere else” and leave.  Then Hobby Lobby incurs associated with employee turnover, and this hurts their profits.

As for the IUD, it’s a harder argument.  Broadly, an IUD costs the same for everybody, it’s just with insurance that cost is spread out over a bunch of premium payments.  It could be argued that insurance companies can negotiate lower IUD prices, so excluding it from insurance increases the cost a bunch.  So people who want IUD maybe won’t find Hobby Lobby’s benefits compelling, and Hobby Lobby will have a harder time finding quality employees.  I don’t believe an IUD is ever an emergency procedure [update: it can be installed “the morning after” as an emergency contraceptive – not sure how often it is used in this way, although it does seem to be very effective as an emergency contraceptive], and it seems there are several insured forms of birth control available under Hobby Lobby’s insurance (pills, condoms, sponges, etc.).  So not insuring the IUD doesn’t really seem like a big deal for most people.  Those people who want to pay $500-$1000 out of pocket for an IUD, yes that’s expensive.  Those people have other employment options.  They can also sell something or get another job.

A point I want to make is that having savings is important so that people can’t fuck with you.  When a morning pill is a big deal because the uninsured cost is $60, you need some more savings.  You can’t arrange your financial life so that $60 causes a bunch of drama.

http://www.usatoday.com/story/news/nation/2014/06/30/morning-after-iuds/11768653/

The overall point I want to make is that despite all the drama, it doesn’t seem like Hobby Lobby’s decision to drop healthcare coverage for these things is going to have a big impact on its workers.  The broader implications are all hypothetical.  Other companies could have chosen to drop healthcare provisions in the past, but they choose not to because they want the advantages of the healthcare and to offer an attractive benefits program.  I may not agree w/ Hobby Lobby’s decision here, but I respect that the founder has earned and given over $500M to causes he believes in.  Most of the people complaining haven’t worked nearly that hard.  Rather than complain, they should work at night to create companies where disgruntled Hobby Lobby employees can enjoy full healthcare coverage.

 

It’s the owner of the company who gets to decide how to run the company. When you work nights and start some crap out of your garage, that’s the benefit you get. When you work for somebody else, you get whatever they decide to give you. If you don’t like what your employer is offering, you can start something out of your own garage or go work somewhere else. You could say the founder of Hobby Lobby could resign as CEO if he didn’t want to offer birth control, but that’s kinda the same thing as telling people to leave the country if they don’t follow a certain religious belief. It’s not real religious freedom. I don’t agree with Hobby Lobby’s unusual compensation package, but there are a ton of small businesses with no health insurance plans who are therefore covering zero birth control. Hobby Lobby apparently covers 16 kinds, including oral contraceptives. Of the 3 they don’t coffer, 2 are $60 and easily self-insurable. The IUD is $500-$1000 and usually isn’t an attractive emergency option. The company has a minimum pay of $11, about $1760 a month, so a person can look at that and decide if they’d rather have full IUD coverage and work for $7.25, or whatever their local minimum wage is, and take the $600/month pay cut (I chose Oklahoma, since it looks like Hobby Lobby’s home base). Personally, if I were a woman looking at these kinds of options (I’d aim higher and encourage pretty much anyone to aim higher), to get $600 more to work at a company that has given hundreds of millions to charity but have to pay out of pocket for an IUD (as long as I could put up with the evangelical Christian company values), or work for $600 less at a place with full coverage, I’d probably choose to work at Hobby Lobby. It doesn’t seem like such a bad deal. The overall discussion is absolutely retarded and terribly disappointing. Looking at this subject overall, we probably need to dig into the 1993 religious freedom bill. And healthcare overall… that’s just a big mess. Bottom line is people need to be responsible for their own shit, and this decision isn’t forcing anybody to work at Hobby Lobby. So pay attention to the details of your healthcare plan and have $1000 saved for a rainy day/morning.

Another thing I don’t like about this discussion is that it encourages people to think their healthcare is a function of their employer’s decisions, rather than of their own.

[More about the IUD as an emergency contraceptive, since I wasn’t as familiar with it as I’d like]

http://rhrealitycheck.org/article/2010/08/09/emergencies/

It looks like it isn’t used more often for emergency both because of cost and because of the availability of a doctor to insert it during an emergency time window.

Full text of the decision:

http://www.supremecourt.gov/opinions/13pdf/13-354_olp1.pdf

[update]

As I discuss this more, I think of different things.  My goals are in line with most pro-choice people – for women to have fairly priced and easy access to all reproductive health care options.  I think the idea of “free” reproductive care is a myth – the costs are charged one way or another.  I’d rather they be out in the open.  I just don’t think an employer not offering reproductive insurance is what makes reproductive care expensive.  A byzantine healthcare pricing system, a lack of competition in the IUD space, excessive liability insurance for physicians — these seem like problems worth solving, but they all existed before the Hobby Lobby decision.  Why get mad now?

 

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Gen X Complications

http://online.wsj.com/public/resources/documents/SUN_-A003.pdf

The stories I read about people during the crisis, from boomers and Generation X’rs – they remind me that we don’t know the future, that no matter what generation you’re in or where you are in your life, bad things can happen, and you need to be prepared.  Like last week when my car was vandalized.  Suddenly I had $500 of unexpected bills in addition to a $438 brake job that I hadn’t budgeted for.  I’m only able to pay it because I was very conservative in my spending in the last few months.  If this had happened a year or two ago, I’d probably have to sell something or delay the brake job until my next pay check.

Anyway, back to the article.

#3 “We bought our dream home, and we regret it.”

This rings true beyond Generation X.  For the monster expenses in your life (house and car), be conservative.  This doesn’t mean you can’t have a nice house or a nice car, it just means that you need to make sure they are a small percentage of your income and net worth at retirement.  If you’re early in your life, in your 20s, it means you need to live in something small and cheap.  It’s not forever.  It’s just for now.  The extra cash you’ll have around by not having a high percentage of it go to fixed expenses will greatly decrease the stress in your life.  Is there stress living in a small place? Yeah.  I can’t open my oven and dishwasher at the same time.  Two people can’t be in my kitchen at the same time.  But this stress is nothing compared to how I’d feel if half my paycheck was disappearing and I had no plan for retirement and no option to start my own business.

#4 “Our wives earn more money than we do.”

This was the case for my parents.  And it’s probably a big reason why I’ve tried to get a high income.  Guys are considered stupid at raising kids, bad at remembering birthdays, etc. so also being bad at making money — what’s left?  In fantasy land, the guy’s personality also counts.  But I think in “the real world”, the expectations of a woman’s friends and family, if her man isn’t making most of the money or isn’t being a *spectacular* house husband, then he’s a failure.

#5 “Our children have attitude issues.”

I suspect this is just a function of the age of the children.  I suspect this was really poorly measured.

 

I’d like to see something positive.

Accountability Time

I’ve spent way too much on discounted video games I can’t play yet.  But I haven’t bothered to actually account for them in the budget.  That combined w/ some recent car expenses (at least $938, $500 insurance deductible when somebody tried to steal my car and $438 to replace all 4 brakes, just regular maintenance) means that I’m not on track w/ my savings for Burning Man.  I probably still have enough to handle everything outside of the main $4k/month plan, but I have to actually… see where I’m at.  So here’s the dirt.  Here’s what I’ve spent:

  • 53.73
  • 55.18
  • 14.98
  • 22.48
  • 10.98
  • 32.10
  • 3.99
  • 29.55
  • 7.49
  • 34.18
  • 14.99
  • 15.96
  • 18.45
  • 88.15

Total: $404.21

Arrgh.  I was thinking it was more like $300.  No more for me.  What did I get for that?  I tried to buy games only under $10, so this better be >40 games.  80+ games.  Value wise, I guess that’s not too bad.  Except that I can’t play many of them until I have a PC.  😀  I guess I’m allowed to be retarded once in a while… as long as I recognize it and punish myself for a responsible amount of time afterward.  Burning Man is definitely going to be focused on value this year.  Since I’ve cut up all my credit cards, I really have no choice but to stop spending the money.  Otherwise I’ll have no choice but to cut into the $4k, and emotionally I really don’t want to do that.

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Why to Risk Investment

Investing is a risk.  So why take it?  Let’s look at how retirement numbers work out w/out investing.

15% savings per year from age 30 to age 60.  Let’s say on a $100k salary.

$15k * 30 years = $450k

Awesome!  Retiring at 60 with $450k.  Great.  Oh wait, let’s account for 3% per year inflation.  1.03 inflation * 30 years = 2.42.

So what $1 buys today, $2.42 will buy in 2044.  So if you want the same lifestyle in 2044, you’ll need to earn $242k a year instead of $100k per year.

$450k/2.42 = $186k

Congratulations.  If you don’t invest your money, saving 15% of your income every year will get you less than 2 years of retirement after 30 years of savings.  Seems like a shitty deal.  Let’s look at the results of investing when the market yields 8% average.

$1,835,187.87

And then we account for inflation…

$758k

With a modest rate of return compared with historical values, you still come out 4X better.  If you don’t invest in *something*, you’re hosed, so there’s really no option.

 

Women and Money

Controversial topic time!

It seems like today, if you’re a dude and you say anything other than “Women are treated horribly unfairly and we need to try much harder to help them in every way possible and give them advantages and accommodate them when they are pregnant, etc. etc.” – you’ll get jumped on and yelled at by a bunch of women.

I’ll preface this post by pointing out that I was raised by a single mom with a PhD, a woman who worked in public service for 30+ years and finished off her career with a consulting that paid about 10X per hour what the average american makes.  This is a woman who worked long hours at a relatively high level.  Did she experience discrimination?  Absolutely.  The other person in the household was my sister, who received the top legislative recommendation in the state for both the U.S. Naval Academy and West Point.  She played Olympic Development soccer.  She has one more year of vet school, which she started after serving 5 years in the marine corp, part of that time in Iraq.

Growing up, my sister would sit on my head and fart.  As the youngest and only male member of the house, there was no talk of women being inferior.  It was pretty clear from the beginning that women were pretty badass.

I have no doubt that women are treated unfairly by men.  I’ve seen it myself.   The statistics and the anecdotes don’t lie.

But I also have no doubt that whining about it isn’t going to change anything.  If you’re a woman and you’re upset that there aren’t more highly paid female engineers, reading MySQL documentation is a faster path to success than complaining about attitudes towards women in science and math education.  My sister didn’t get into the Naval Academy complaining that only 11% of her class was female.  She got in by running until they had to add titanium to her foot to keep it going.  She got in by staying after school every day for ROTC.

Complaining that there aren’t more female executives is similarly fruitless.  If you’re female and you want to be a CEO, then look at the resumes of CEOs and copy them.  Marissa Mayer and Sheryl Sandberg gained a meaningful voice *after* they’d reached highly visible career positions, not before.

This isn’t to say that you shouldn’t be assertive while you’re climbing the ladder.  Don’t let people patronize you.  Don’t let people overtalk you.  It’s important to call people on their bullshit.  Sexist attitudes are so engrained that even the most well-meaning man will make mistakes in this area.  If they’re smart, they’ll appreciate being pulled back in a direction of fairness and meritocracy.

But if you’re not the first and last person in the office every day, don’t be surprised when your salary matches up with the sad statistics.  Is it fair?  No.  But we’re not talking about fair.  We’re talking about what a person needs to do to accomplish a goal.  Some people are born with larger piles of shit and smaller shovels, but that’s not the point.

The point is that we’re scooping hard and spending our nights carving out bigger shovels, so that someday we can use our dump truck to bury the haters in a giant pile of their own crap.

Women are badass, but I don’t see enough of them seeking out technically challenging work.  Man or woman, if you want to get ahead in business and you’re not super-gifted, you’re probably going to have nuke that whole work-life-balance thing, at least for a while.

The Definition of Affluence

One of the most eye opening things I’ve read recently was when the author of “The Milionaire Next Door” claimed that affluence was a function of net worth, not income.

Seems about right to me.  When you think of an affluent person, you don’t think of someone who needs to work.  There’s a stereotype of the “lazy rich person.”  I’m cool with that.  It would be great one day if I was allowed to be lazy.  It might even be called retirement.

The book recommends to measure economic decisions as a ratio of your net worth rather than as a ratio of your income.  For a person who wants to grow their wealth by leveraging investment, this makes a lot of sense.  You can’t earn much money through investment unless you have a substantial amount invested, and for most people, that substantial amount is going to be most of what they have.

So when I read lines like this from the NYT:

For those who can crack the top 20 percent, there is great promise. Most people in that elite group, Rank told me, will spend at least part of their careers among the truly affluent, earning more than $250,000 a year.

I have a little brain fart.  A person isn’t among the ranks of the “truly affluent” when they earn $250k in a year.  Certainly not if they spend it all.  Which isn’t difficult.  Of $250k, the government will take $100k.  You’re left with $150k.  That’s quite a lot . . . but if you have high expenses:

  • 2 kids in private school ($40k)
  • $600k mortgage on your 3 bedroom, 1600 sq. ft. $800k San Jose house ($65k)
  • Food for a family of 4 ($12k)
  • child care ($12k)
  • House bills (insurance, electricity, water, gas, internet, cable, etc.)($12k)
  • Vacation ($5k)

= $146k

Not much left over for retirement.  Not saving for kid’s college.  You’re living a good life, but in an expensive area, but you don’t live in a mansion.  If one spouse loses a job, your life gets difficult really fast.  Is that affluent?  It’s certainly better than living below the poverty line, but at the end of the day, it’s just a gold-plated rat race.

Salary isn’t really the relevant thing.  It’s net worth.  Mark Zuckerberg has no salary, but wouldn’t you call him affluent?

So if you’re making a bunch of money right now – great.  But you haven’t “made it.”  You’re not “doing well” if you spend most of it.  Especially if you’re young.  As long as people keep internalizing income-based views of wealth, they’re going to have a hard time reaching financial independence.