Big Business Sends Jobs to Countires w/ Universal Health Care

[tameszu]

I thought I'd put up an article that messes with some conventional wisdom, both on the right and at lefty places like DU:

A Heftier Dose To Swallow
Rising Cost of Health Care in U.S. Gives Other Developed Countries an Edge in Keeping Jobs

Kirstin Downey
Washington Post
Saturday, March 6, 2004; Page E01

"For each mid-size car DaimlerChrysler AG builds at one of its U.S. plants, the company pays about $1,300 to cover employee health care costs -- more than twice the cost of the sheet metal in the vehicle. When it builds an identical car across the border in Canada, the health care cost is negligible.

In the battle for manufacturing jobs, the United States has always been at a disadvantage compared with underdeveloped countries where wages are low. But the rapidly rising cost of health care in the United States means that even developed countries sometimes have an edge when it comes to keeping jobs, according to interviews with dozens of corporate executives, legislators and health care consultants.

The United States has lost nearly 3 million manufacturing jobs since July 2001, with 43 consecutive months of manufacturing-employment decline, from about 17.3 million jobs to about 14.3 million in February 2004. During the same period, the manufacturing workforce in Canada has generally remained stable, at about 2 million jobs, even though the unemployment rate is higher there, at 7.4 percent, than in the United States, where it is 5.6 percent....

Jim Stanford, an economist with the Canadian Auto Workers union, said employers who could operate in either country save $4 per hour per worker by choosing Canada. "That's a reasonably significant differential. . . . It's one of the reasons Canada's auto industry has done a lot better," he said."

http://www.washingtonpost.com/wp-dyn/articles/A34899-2004Mar5.html">More here

Hey, lookit that--globalization doesn't have to be a race to the bottom: it can be a race to the top, in cases when (as we progressives know) government is better at providing public good and developing human capital. Wes Clark was right: first thing you have to do to create jobs is to cover health care costs. Also, as uber-lefty economist and all-round smart cookie Jim Stanford argues, labor unions should like big business, because they're the ones that support all of the blue collar jobs and whose long-term outlook allows them to soak paying for union benefits.

[SoCalDem]

1. "....allows them to soak paying for union benefits...."

I take issue with that comment.. When I was in a union.. I was a journeyman clerk making $17.00 an hour. I paid $28.00 a month union dues..

For that I had 100% medical coverage.. medical,dental,vision.mental health, $3.00 prescriptions..

That $28 a month was a BARGAIN.. I would not call it soaking..

When I joined and had to pay the initiation fee it was a fee set , based on the apprentice entry-level, so it was not prohibitive, and it was broken into 4 payments..

I will receive a defined benefit pension when I reach a certain age..

Unions are what MADE the middle class, and it's no accident that middle class started its decline at the same time that Reagan started busting the unions, and the 24/7 media started its "union bad...right-to-work-for-shit-wages-good" mantra.

[tameszu]

6. Oh, I'm not saying *you're* getting soaked

What I'm saying is that big businesses are more willing to pay out more in workers' benefits to unions than are small businesses, because they can afford to take a longer term view and to suck up a losing year or two. They know they're in it for the long haul, so unions have more leverage over big business. In contrast, small businesses are often worried about going under in the short run and have less capitalization over which to distribute costs. That's why union economists like Stanford actually like the existence of big business--because, if you have reasonable labor laws, like in Europe, they tend to allow greater unionization.

[iverglas]

13. aha

And the problem is left for the non-unionized, while the unionized get the benefits (that they admittedly fight for). That's why trade unions are really just a stop-gap. When those jobs go, the benefits go with them.

The benefits that unionized workers get are really just a variation on private-pay; after all, they *are* earning the benefits with their labour, and the level of benefits depends on the productivity of the labour.

What's still needed is truly public, egalitarian coverage of the delivery of those goods, like healthcare. That way, when the labour market changes as it has in the last decade or so -- contracting-out and all that -- the workers still have benefits.

A few years ago I was invited to be on a panel organized by a network of local progressive organizations, to be the voice of "business". About all I could do -- and I did it very pointedly, of course -- was point out that I, someone doing a job that had previously been part of the federal public service and was now being done by me on a self-employed basis, was now considered a "business". There's me, doing the same work, but with no pension plan, no dental & drug coverage, no disability coverage, no sick leave or vacation pay. And of course having to pay far more to get coverage for myself than a large employer would pay, per capita, to get coverage for its employees. Gee. Who wins?

But at least, due to the minimum social safety net that has so far been preserved in Canada, I *do* have complete healthcare coverage and a basic mandatory-contribution public pension. (I'm not whining; I actually do extremely well for myself. It's the principle of the thing, and the people who aren't able to do that, that concern me.)

Someone pointed out here a few weeks ago that the absence of public health care coverage in the US is a deterrent to entrepreneurialism -- who is going to leave a job with benefits and start a business without the security of medical coverage for his/her family? Well, did we imagine that the Bush cabal actually wanted to encourage entrepreneurialism?

In the 30s, my grandfather, a union activist in Toronto, fought for the 40-hour week. Everyone benefited, not just his union's members. One might say that it's high time that unions in the US fought for health care coverage for everyone, not just their employed members. And that the Democratic Party did the same perhaps. The public delivery of public goods is good for a society -- and it might be wise not to wait until the society has been destroyed by privatization to mention it.

.

[tameszu]

16. Heh, look at us

Two Canadians patting ourselves on the back on a U.S. Democratic Party board over the merits of our health care system.

Well, *I* certainly believe the Canadian model is better than the mess they have in the states (which I see around me). The question is, "how do you get there from here?" (politically)

I think the mainstream Dems are on the right track in expanding support for health insurance to try to get as many people covered as possible. Eventually, if you can crank it up enough, the public will get used to 100% of the people being covered, and then recognize that it's ridiculous to allow private insurance companies to be middlemen skimming a huge amount off the top and adding massive administrative costs to what is effectively a system of socialized medicine, and just reform the heck out of it to get something that's as efficient as other OECD countries...

[izzie]

2. You would think the govt would see this.

Not a word comes out about this. Sure makes the business run better in these countries, Their is a lot of that, fishing in many countries in helped by the govt.We seem to want to be pure right to the bottom. We must get off out back sides and start looking at things in this world. This country is so great we do it all right, has got to go. Face it our whole form of govt is a hand me down from others. We are just not the greatest thing that walked on this earth.Time we also learned we can not have it all. We, Like USSR could spend our selfs in to a third world country.

[Kat45]

3. Very interesting. I hadn't thought of that.

It could be a good point to include in debate of the issues of outsourcing and health care. Could be quite persuasive.

[AndyTiedye]

4. They Pilloried Hillary For Saying This

So no politician wants to touch it, even though it is blindingly
obvious.

[iverglas]

5. not just health care -- public goods in general

A comparison of the cost of living in the province British Columbia and Washington state illustrates this.

http://www.policyalternatives.ca/bc/wa-bc.html

For years British Columbians and Canadians have been told that government had to "get its fiscal house in order," that we had to "tighten our belts" and "learn to do more with less." But just when it seemed like the days of sacrifice were finally over-deficits have been eliminated, the debt is under control, the federal government has accumulated a massive budgetary surplus-the goalposts have moved. "Competitiveness" has become the new buzzword in the assault on the public sector in British Columbia. We have to cut taxes and regulations, we are told, in order to remain competitive in the "new" economy, especially in key growth industries like high technology.

This study examines the issues of taxes and "competitiveness" in terms of both costs and benefits. Through a comparative analysis of BC and Washington State (WA), it asks whether or not our taxes, levels of public service, and government regulations really place us at a disadvantage with respect to our economic "competitors."

... The major finding - BC has the advantage

Tax-funded public services and social programs make BC a more attractive place to live and work. BC has higher levels of social spending and lower out-of-pocket expenses than WA.

- An average family in BC pays almost $1,700 more a year in provincial taxes than a WA family pays in state taxes. But WA spends more than $1,000 less per person on public programs, and the effects of "smaller government" are evident in higher out-of-pocket spending by WA families for important goods and services.

- Students in WA pay almost $1,700 a year more in tuition fees for public universities than students in BC.

- Families in WA pay $540 more per year for the water, electricity, and fuel they use in their homes.

- At $763 a year, the difference in private spending on health care alone wipes out much of WA's tax "advantage."

- Families in WA spend $2,300 dollars more per year on life insurance, public and workplace pensions (excluding RRSPs), and unemployment insurance than families in BC.

The article points out that public spending also reduces "social polarization" -- the "gap between rich and poor" having all kinds of negative effects, as we know -- and improves working conditions. Worth reading the whole thing.

As to why "the government doesn't get it" -- the present US government -- of course it gets it! And just think how much cheaper it's going to be to do business when not just the government, but employers as well, are not going to have to contribute to paying for these public goods. A huge pool of unemployed unskilled labour -- what the US labour force is becoming -- is not going to be in a position to demand healthcare benefits, union or no union.


I think that the representation of Jim Stanford -- that "soaking" of members paying for benefits -- may have been just a bit coloured, and portrayed as applying more generally than whatever he said may have been intended to apply.

I'm actually not familiar with him, but from what I see from a quick google, he is in favour of more democracy within unions and more assistance to non-unionized workers (e.g. much higher minimum wage). And interestingly, the organization whose website I quoted above published his 1991 paper, "Going South: Cheap Labor as an Unfair Subsidy".

After all, he's an economist with the Canadian Auto Workers union. ;)

.

[Karenina]

8. That giant life-sucking sound

now reverberating across the North American continent... Not too much different from the exploitation the South Americans have coped with since...

Wage Slavery.

The PNAC agenda

IS to wreck lives and profit in the process. So far, they've racked up an incredible bottom line. And the collud girls sing,
"Haaalll-liburton, Haaalll-liburton
Hali-burton, Hali-burton
Haliiiburtooooonnnnn..."
Never mind those lower lifeforms bleeding in the streets. These *guys are raking in DINEROS left, right and center.

Can anyone post a recent pic of St. Quaker Oats Gram Babs whose "beautiful mind," that should never concern itself with those lower lifeforms bleeding in the streets, is so very well reflected in her visage? Anyone ever heard that sprichwort, yo face afta 40 y'own fault? (Read: face=countenance, "fault"=responsibility. LOOK AT WHAT THIS *CABAL IS DOING TO US ALL!!! These *folks need to be beat out of town with a Younassynazi&ugly stick. Where that stick get stashed? I'm gonna find it...

I been searching, searching
searching every which way-ay-ay

What is not to get here? Why's y'all sooo mutterficken laaaannnngsaaaaammmm???? Hey Mr. DJ, please cue up Samuel Barber "Adagio for Strings." Ormandy in Philly would work for me...

[tameszu]

11. Eh, if someone could translate this into English

I would very much appreicate it.

[tameszu]

7. Clarification:

"they're the ones that support all of the blue collar jobs and whose long-term outlook allows them to soak paying for union benefits."

By "them," I meant the big businesses, and by "soak," I didn't mean "get ripped off," but rather "absorb the costs." I don't think big businesses get ripped out by paying out more workers' benefits over the long-run, although of course a lot of execs tend to think short term--and in any given year, big business wants to keep wages and benefits costs down, especially during lean years. But because they're larger, they can distribute costs across time and also across different plants and products, which means that having one bad year, or one dip in sales in one product line isn't necessarily an excuse for them to tell the union that the pantry's closed. Hope this makes it clearer!

Yes, Stanford is a labor economist and quite left wing--if you're OK with social democratic corporatism. That has some problems, too, but it's way better than what the U.S. has right now!

[Karenina]

9. Privatize the profits...

Wink, wink, nudge, smile for the camera...
Socialize the co$$$$t...

[tameszu]

10. Compare the inequality in Canada to the U.S.'

(You can use the GINI coefficient, or whatever other number you choose).

And then get back to me.

Unfortunately communism isn't an option, really, unless you can (1) give us a plan of how it will work better this time; and (2) figure out how to sell it democratically.

So I'll take social democracy, thank you very much...

[iverglas]

14. I'm not sure you guys disagree

"Privatize the profits, socialize the costs" sounds just like what I was just quoting in the thread about tempers boiling about academic freedom in Colorado:

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=104&topic_id=1201162&mesg_id=1204405&page=

http://www.mackinac.org/article.asp?ID=6313

Privatize the University of Michigan

... A private U of M could also strengthen its financial outlook by selling its hospital — whose assets alone are valued at more than $600 million, and would likely sell for much more — and adding that revenue to its $3.5 billion endowment. Further, campus institutions such as the Nursing and Kinesiology schools could continue to be taxpayer supported, under contract with a privatized U of M.

<Well damn -- who's benefiting from that degree now? Let the taxpayers pay a big chunk of getting the degree, and let the privateers reap the profits when the people with the subsidized degrees enable their private hospital to earn revenue.>

Yeah, in a "social democray", costs are socialized and profits are privatized -- but to a considerably lesser extent than the puppeteers behind Bush are after, and at more cost, and less profit, to them.

It also isn't quite such a linear thing as "privatize the profits, socialize the costs" sounds. There are social benefits to socializing the costs of things like education and healthcare -- a happier, healthier, more skilled (and enlightened) population/electorate. Those factors do increase productivity, and thus profits, and then there's that bigger pool to tax and thus fund the costs from. Just like tax cuts are supposed to do, and don't.

I like this paper: "Supply Side Social Democracy" --
http://www.econ.usyd.edu.au/drawingboard/digest/0108/wilson.html

The contrasting strategies of Sweden and the United States illustrate the logic of high and low road options in real economies. In the post-war period, the Swedish labour movement’s policy of ‘solidarity wages’ forced innovation on domestic business by imposing uniform wage costs, thereby reducing the viability of low wage, low skill industries. Although this wages model has been dealt some blows recently, powerful coalitions of interests continue to block the deregulation and retrenchment of Sweden’s employment and welfare systems ... .

... Developments in the American labour market since the end of the long boom stand in contrast to Sweden: the US provides archetype of the ‘low’ road, notwithstanding its high-tech sector. The United States allowed both the wage gap to increase and a huge growth in low skilled, low wage services to soak up the labour supply ... . At the same time, average working hours have exploded, bucking OECD trends. The growth of low wage, low skilled services must be put in the bigger picture of institutional design: there are fewer macro limits on downward adjustment in the American model. Hence the growth in ‘low road’ industries, divergent productivity trends and a burgeoning current account deficit.

Without public intervention to regulate and manage ‘institutional design’, even strong economies default in part to the ‘low road’. This is clearly the case because the high road — as the Swedish experience demonstrates — is consciously premised on preventing the low wage, low-skill alternative taking hold. ...

.

[tameszu]

15. Well, I certainly agree with you

I'm really not sure what K is talking about.

I'm not entirely convinced that we'll necessarily get "virtuous cycles" in the way in which your picture paints, but it's a nice thought, and certainly preferable to the mess that the U.S. is in now...

[Karenina]

17. You no grok Greek?

;-)

[Cleita]

12. Duuh....

This has been one of the arguments in favor of NHC. Business would benefit from this, also it would lower their Worker's Comp expense. But until you break the back of the for profit health care industry, it won't happen.