Monday, November 13, 2006

My Congressman

I happened to listen on the radio last night to Congressman Barney Frank's speech last week to the Great Boston Chamber of Commerce. If I heard correctly, one of his points was that the new Congress should make it easier for unions to organize service employees, unlike industrial workers, because creating more unions in service establishments would not result in any competitive disadvantage to the US because those businesses can not move to other countries.

Do any of you out there have a reaction to this?

9 comments:

BC said...

I often get exasperated with liberal Congressmen like Barney Frank who have never met a payroll. I wonder if he ever even took a course in economics. If his comment about making it easier for service workers to unionize was aimed at hospitals, what does he think will happen to already high hospital costs if large raises have to be granted to most of the hospital's employees? Does he think that hospitals can just raise the rates they charge private insurers while Medicare and Medicaid maintain their dictated prices?

In the public sector, state and local government have caved in to union demands for years. While I'm sure that union members love their gold plated defined benefit pensions and comprehensive health coverage (with minimal or no employee contribution toward the premium), taxpayers are getting killed. At the same time, most state and local governments don't even have a clue about how much their long term pension and retiree healthcare promises will cost taxpayers. Taxpayers are becoming increasingly resentful as the burden of state and local taxes steadily increases.

Yes, it's true that these jobs can't be outsourced to foreign countries. However, union greed and monopoly power can and do cause plenty of economic harm even though it may not always be evident at first.

Anonymous said...

It's not unusual to see hospitals point to the cost of providing uncompensated care for uninsured patients as a significant component of their budget concerns.

Many of those patients who don't have insurance work, but many are working in service sector jobs that often provide little or no health coverage. We've all read the stories of Wal-Mart and other large service sector employers cutting back on already stingy access to health insurance.

Hospitals might benefit if more of those workers could negotiate for better health insurance or help drive change that leads to larger reforms that help hospitals afford the costs of providing care to lower income atients.

If hospitals continue to operate in an environment where good health insurance is scoffed at as an absurd "gold plated" benefit, they will continue to struggle with their bottom lines.

Anonymous said...

It shouldn't surprise you that there is increased interest in unions given the disproportionate share of our nation's productivity that is being allocated to the wealthiest tier. Despite recent economic gains in the U.S. overall, the evidence is clear that this wealth is not being shared with the average worker, who's real wages have actually gone down in the last twenty years, after adjusting for inflation. When society is more fair, unions will no longer be necessary.

BC said...

Approximately one-third of people who lack health insurance work in low wage industries such as retail, restaurants and hotels. If the market wage rate for most of these jobs is $6-$10 per hour, employers generally cannot afford to spend the equivalent of an additional $5-$6 per hour (based on a 2,000 hour work year) to provide comprehensive family health benefits for their employees who are married with children. The probable answer for this group (and others who make up to about 300% of the federal poverty level) is sliding scale government subsidies.

As for uncompensated care provided by hospitals, numbers I've seen suggest that industry-wide, cost shifting to cover the cost of uncompensated care drives hospital prices about 6%-7% higher on average than what they would otherwise be in the absence of uncompensated care. I'm sure this varies widely by hospital which is why there are both federal and state disproportionate share payments. Perhaps Paul could speak to the impact of uncompensated care on prices charged to private insurers by BIDMC.

Anonymous said...

It's also probably worth noting there are other Democrats who join Rep. Frank in supporting this change. Last weekend's New York Times noted that "Representative Jim Matheson, a Utah Democrat who is co-chairman of the Blue Dog Coalition of moderate to conservative Democrats, said he strongly supported a higher minimum wage and the Employee Free Choice Act, the bill that would make it easier to unionize workers."

(http://tinyurl.com/yy3ne6)

BC said...

The minimum wage is a separate issue. I don't have a problem with raising it every couple of years to at least compensate for inflation even though, at the margin, it probably results in the loss of some entry level jobs. Numerous states already have a minimum wage above the federal level. With the overall national unemployment rate well below 5% currently, if we are going to raise the minimum wage, now is a good time to do it.

As for the Employee Free Choice Act, if there were a solid consensus among economists that this was good economic policy, the bill would have strong bipartisan support. Lots of bad legislation has been stopped in the Senate throughout history. If this bill makes it through the House, it will likely go to its grave in the Senate because 60 votes are required to shut off debate.

Anonymous said...

My feeling, as I've said before, is that unions are vital in situations where employers have an unfair advantage and are screwing employees who have no choice: employers accumulating absurd riches while employees suffer, sometimes literally. The mansions in Newport (which I love to visit) were built from such riches, as coal miners suffered what coal miners do.

I personally object to unionization as a way of finding a teat to milk, without regard for whether the milkee is healthy or is also suffering (or doing okay but not exploiting).

In my view, in a tight market the only viable approach is one where the workers and employer partner to keep the ship afloat and healthy.

Patient Dave (having login trouble)

BC said...

I am in general agreement with the most recent post. My overall perspective on pay, benefits, and unions from the view of management, labor, and customers (or taxpayers in the case of public services) is as follows:

Management Provide a compensation (pay and benefits) package that is sufficiently generous to attract and hold employees who can perform their jobs in a competent and professional manner. Provide a clean and safe work environment, and treat people fairly and without prejudice or discrimination. Overall costs need to be sufficiently low to deliver the product or service at a competitive price.

Labor What is the likelihood that the union can help me earn significantly higher pay and benefits and/or materially improve my working conditions without driving my employer out of business? If it can, I would be inclined to support the union. If it can't, I wouldn't.

Customers and Taxpayers Through product prices or taxes, we expect compensation to be generous enough to attract and hold competent people. We don't want to pay for salaries and benefits that are so generous, hundreds or even thousands of people routinely apply for each job opening.

If management is exploiting workers and treating them poorly, workers will have plenty of interest in unionization with or without equal time to present their case. If workers are being paid and treated fairly within the constraints of the marketplace, unions probably don't have much to offer.

Anonymous said...

I wonder if Barny Frank uses union labor to perform his personal services. Do the people cleaning his home belong to the Service Employees Union?