Category Archives: labor

Public option will NOT automatically cause most companies to drop insurance.

There are exceedingly few companies in the United States today that are required by law to provide insurance for their employees.  So why do they do it when it is such a huge expense?

Companies provide insurance benefits to compete in the labor market.

No matter what the unemployment rate, sooner or later companies have to hire new employees.  When they do, it doesn’t matter whether there are three employees available or three hundred… no company wants the 3rd best.  They compete for the best.  They don’t always win the competition, but they try to.

When was the last time you met an electrical engineer with ten years of experience who would even consider working for some fly-by-night company that doesn’t offer medical benefits?  Or a Director of Advertising.  Or a Senior Database Security Analyst.  Or a Vice President of Finance and Accounting?  Or a District Manager of Food Service Operations?  Or a damn good Administrative Assistant?

To compete for the best talent, companies have to offer the most competitive compensation packages, and in today’s world that means health insurance as a benefit is mandatory.

Now, if a company is paying 15% of its payroll to provide insurance and it finds that it can stop doing that and pay just an 8% penalty… of course it is going to want to do that.  But it is only going to be able to do that if workers find that option to be competitive.  If the best quality employees, the ones with the most choices and options of where to work, feel that the public insurance and private insurance are equally as good, but their out of pocket cost is $300 a month for the company that provides private insurance (because of the employer contribution) but $900 a month for the company that makes them use the public option, they will work for the company that offers them the private insurance.  Until, or unless, the company not offering insurance pays them the $600 a month in cash to make them whole.  Likewise, if the out of pocket costs are the same, but the public insurance turns out not to be as good as the private insurance, the best employees are going to either demand to be compensated financially… or flat out refuse to work there.

If it turns out that the public option insurance is as good as the private insurance, and that after paying the 8% penalty and whatever amount they have to pay employees in cash to continue to be competitive it is still economically beneficial for them to do that… well, that will be the proof of the pudding that government can do it better!  We should all applaud.  The employees will be happy, the company will be happy, the taxpayers will be happy… everyone will be happy except the insurance company CEO that can no longer command a $10 million a year annual salary.


Filed under economy, health care, healthcare, labor, Politics

Employee Free Choice? Maybe.

Individual employees have several disadvantages when they are negotiating with a large employer.  First and foremost is that the employer has an information advantage because employees are forbidden from discussing their wages… but the employer knows all of them.  There is also the fact that for most jobs, excluding very specialized ones, having and holding a job is a make or break business for the employee.  Employers, however, are often so lacking in need that managers can’t find the time to conduct interviews.

At their best, unions and collective bargaining in general level the playing field.  They eliminate the information advantage and they make the importance of labor decisions as high to the company as they are to the employees.

At their worst, unions become tools to force companies to employ more workers than are, by any stretch, needed and to create work rules that go beyond safety and fairness and instead head toward abusive.

Unions were created when corporations were badly abusing employees and came under the most vicious and successful attacks when they had grown so powerful they were abusing employers.  After 30 years of union busting, we’re back to a point now where corporations are once again abusing employees with their lopsided power.

The Employee Free Choice Act currently being watered down in the Senate provides a conundrum.  The single most important aspect of it, that unions have stridently wanted, and business has stridently not wanted, is something called the “card check” or “majority sign up” rule.

For this rule to make any sense, you have to understand just a little about the current, highly regulated process of a union “organizing” a workforce.  Without getting into nuance, it is a process with several steps.  The first step involves employees as individuals filling out cards expressing their interest in being represented by the union.  If enough employees fill out cards, then an election is scheduled.  The election, when it happens, takes place by secret ballot and if a majority of employees vote for the union, the union goes in.

This heavily regulated process places strict requirements on both the company and the union.  The union, for instance, is not allowed on company property, and union organizing for the most part is not allowed on company time, until and unless the union is voted in.  Meanwhile, the company is free to hang posters, call meetings, distribute memos and brochures, etc. providing employees with information and, usually, misinformation about what it means to be represented by a union.  Companies, meanwhile, are not allowed to take any adverse actions against employees engaged in union organizing activities so long as they are following the rules.  They often do, though and proving that they have done so is a difficult and costly process few workers can take on.

What the card check rule would do is eliminate the election process if, and only if, during the first phase of seeing whether enough employees are interested in the union to warrant an election, over 50 percent of them filled out the cards.  The goal is to reduce the opportunity employers have to punish union organizers before they have protection and to limit the amount of propaganda the company can deploy before an election.  This curtails some major advantages companies have today.

Unfortunately, it does so by giving the unions a major advantage that is also, not necessarily, in the interests of the workers.  You see, while the unions and union organizers aren’t allowed on company property there is nothing to prevent them from any organizing activities conducted off the property and on workers own time.  In particular, unions have an ability companies don’t have to meet with employees individually, in their own houses, around their kitchen tables, to explain the ins and outs of union membership and, of course, present their own propaganda.

It is often in just this circumstance that workers fill out the cards that express their interest in having an election.  And companies have a valid point when they say that a worker who fills in a card while a burly and passionately motivated co-worker, who can let everyone else in the company know whether or not support was given for the union, sits across from him at his kitchen table, may well be doing so out of a feeling of intimidation.  When the card just expresses interest and the actual voting is secret, that doesn’t matter.  When the card itself gains the weight of the election, it becomes very important.

As much as I want unions to be stronger than they are, as much as I want it to be easier for workers to organize and much more difficult for companies to intimidate and penalize employees, the card check rule does seem to have its own problems.  We’ve all be on the giving and receiving end of peer pressure.  We know how powerful it is.

This one issue has been so important to both sides of the legislation that I’m not sure anybody has any idea what is left to the bill if the card check rule is stripped out.  I certainly don’t know.  I will look into it though, because I do want to see unions strengthened and I do want it to be easier for them to organize.  I hope that the bill, even without the card check rule, still moves in that direction.

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Filed under labor, Politics