Sutija has a unique perspective on this matter: He is an American who grew up in Miami and, 20 years ago, married a Norwegian woman and moved to Oslo. In 2009, as an employee of Thinfilm's former parent company, he earned about $500,000, half of which he took home and half of which went to the Kingdom of Norway. (The country's tax system is progressive, and the highest tax rates kick in at $124,000. From there, the income tax rate, including a national insurance tax, is 47.8 percent.) If he had stayed in the U.S., he would have paid at least $50,000 less in taxes, but he has no regrets. (For a detailed comparison, see "How High Is Up?") "There are no private schools in Norway," he says. "All schooling is public and free. By being in Norway and paying these taxes, I'm making an investment in my family."
For a modestly wealthy entrepreneur like Sutija, the value of living in this socialist country outweighs the cost. Every Norwegian worker gets free health insurance in a system that produces longer life expectancy and lower infant mortality rates than our own. At age 67, workers get a government pension of up to 66 percent of their working income, and everyone gets free education, from nursery school through graduate school. (Amazingly, this includes colleges outside the country. Want to send your kid to Harvard? The Norwegian government will pick up most of the tab.) Disability insurance and parental leave are also extremely generous. A new mother can take 46 weeks of maternity leave at full pay—the government, not the company, picks up the tab—or 56 weeks off at 80 percent of her normal wage. A father gets 10 weeks off at full pay.
These are benefits afforded to every Norwegian, regardless of income level. But it should be said that most Norwegians make about the same amount of money. In Norway, the typical starting salary for a worker with no college education is a very generous $45,000, while the starting salary for a Ph.D. is about $70,000 a year. (This makes certain kinds of industries, such as textile manufacturing, impossible; on the other hand, technology businesses are very cheap to run.) Between workers who do the same job at a given company, salaries vary little, if at all. At Wiggo Dalmo's company, everyone doing the same job makes the same salary.
The result is that successful companies find other ways to motivate and retain their employees. Dalmo's staff may consist mostly of mechanics and machinists, but he treats them like Google engineers. Momek employs a chef who prepares lunch for the staff every day. The company throws a blowout annual party—the tab last year was more than $100,000. Dalmo supplements the standard government health plan with a $330-per-employee-per-year private insurance plan that buys employees treatment in private hospitals if a doctor isn't immediately available in a public one. These benefits have kept turnover rates at Momek below 2 percent, compared with 7 percent in the industry.
But it takes more than perks to keep a worker motivated in Norway. In a country with low unemployment and generous unemployment benefits, a worker's threat to quit is more credible than it is in the United States, giving workers more leverage over employers. And though Norway makes it easy to lay off workers in cases of economic hardship, firing an employee for cause typically takes months, and employers generally end up paying at least three months' severance. "You have to be a much more democratic manager," says Bjørn Holte, founder and CEO of bMenu, an Oslo-based start-up that makes mobile versions of websites. Holte pays himself $125,000 a year. His lowest-paid employee makes more than $60,000. "You can't just treat them like machines," he says. "If you do, they'll be gone."
If the Norwegian system forces CEOs to be more conciliatory to their employees, it also changes the calculus of entrepreneurship for employees who hope to start their own companies. "The problem for entrepreneurship in Norway is it's so lucrative to be an employee," says Lars Kolvereid, the lead researcher for the Global Entrepreneurship Monitor in Norway. Whereas in the U.S., about one-quarter of start-ups are founded by so-called necessity entrepreneurs—that is, people who start companies because they feel they have no good alternative—in Norway, the number is only 9 percent, the third lowest in the world after Switzerland and Denmark, according to the Global Entrepreneurship Monitor.
This may help explain why entrepreneurship in Norway has thrived, even as it stagnates in the U.S. "The three things we as Americans worry about—education, retirement, and medical expenses—are things that Norwegians don't worry about," says Zoltan J. Acs, a professor at George Mason University and the chief economist for the Small Business Administration's Office of Advocacy. Acs thinks the recession in the U.S. has intensified this disparity and is part of the reason America has slipped in the past few years. When the U.S. economy is booming, the absence of guaranteed health care isn't a big concern for aspiring founders, but with unemployment near double digits, would-be entrepreneurs are more cautious. "When the middle class is shrinking, the pool of entrepreneurs is shrinking," says Acs.
The downside to Norway's security, of course, is that it is expensive. Norway has substantial oil reserves—but most of the proceeds are invested abroad in a sovereign wealth fund. Norway's generous social benefits are financed largely from taxes that fall heavily on the country's richest people. The most controversial of these taxes is a wealth tax, a 1.1 percent annual levy on the entirety of a person's holdings above about $117,000, including stock in private companies held by the owner.
