Welfare Capitalism
Employees are not paid in just wages. The days of earning an honest day’s wage for an honest day’s work are long gone. Can any of us answer the simple question, how much do you earn per hour? Salaried employees might start digging out a calculator and dividing their annual salary by 52 and then again by 40, but before you get too far into the math, let me reveal that I’m an hourly employee, and even I can’t say with any precision how much I earn per hour. Why? Because of welfare capitalism. In America over the course of the 20th century, we have switched from a system where employees are paid a wage to a system where employees are paid a mixture of wages and benefits in exchange for their efforts. I don’t earn x dollars per hour. I earn x dollars plus the value of my employer’s contributions to my health insurance, dental and vision plan, 401k retirement plan, and the value of my vacation package. How much does my employer pay for all of that? I have no idea. I am a little chagrined to say I don’t even have a very solid grasp of how much my contributions to my health and dental plans are.
Slate had an interesting article on welfare capitalism today that goes into the history in more detail and foretells the decline. The Slate article recounts the recent spate of companies in bankruptcy that have decided to stop paying pensions and to drop retirement insurance plans for currently retired people. The article posits that as companies either decide or are forced to abandon their welfare capitalist policies because of market pressure, the government will have to step in to fill the gaps. Note the use of the phrase “have to.” That’s Slate’s usage, not mine. I doubt the current Republican administration or majority Republican Congress would agree that the government “has to” provide social programs. I can imagine Dick Cheney and Dennis Hastert bristling at the idea of being told the government will have to fill in where private enterprise has failed.
Now, as you may have guessed, I’m a liberal and a social progressive. Being liberal simply means I am open to new ideas. Being socially progressive means I favor improving our society through universal access to necessary social institutions such as education, healthcare, utilities, and childcare. That does not mean I necessarily think the government is the best answer to providing these things. As a liberal, it means I favor considering all the options to figure out which are the best ones for making sure we provide life’s necessities to everyone who needs them.
California has a proposition on the ballot that we will be voting on in November that would require pretty much every employer, no matter how small, to provide health coverage to every employee. As a social progressive, I like the idea of making sure everyone has health coverage. But as a liberal, I have to be open to other ideas and consider the alternatives. As a liberal, I can’t accept at face value the idea that forcing employers to bear the burden of healthcare is the best idea. We have to consider just how much weight business can bear. How many of our social needs can we pile onto the backs of businesses? Making employers pay for the solutions to our problems might sound easy, but it really isn’t fair. Sure, in some cases it might be fair – when there is a large corporation with deep assets sufficient to provide a decent return on investment to shareholders, it is fair to redistribute some of that wealth to the employees in the form of health insurance coverage. We know it is fair because that is the system the free market has worked out for itself to everyone’s mutual benefit. Large employers pretty much universally provide health care. But there are plenty of small employers where the difference in wealth between the employees and the owners is so small that it hardly seems fair to ask them to redistribute that scant wealth.
So I get back to my initial question: how much do you earn per hour? What we are learning is that even if you were to find out exactly how much your employer pays for all your benefits and did all the math, you still might not know because some of what you are being “paid” now for your work is deferred compensation that may never materialize. That pension your employer is paying into as part of your compensation package might not be around when you retire. You might be working now in exchange for the promise that your employer will provide health care coverage when you retire, only to discover that when you retire your employer has changed its mind or gone belly up. We don’t know how much we earn because we don’t know that our “pay” is going to be there when it’s due.
Maybe it’s time that we started thinking about getting back to a system of asking employers to just pay its employees their wages - and that's all. Maybe we should stop asking our employers to provide for all our social needs. Maybe its time to start looking for other institutions to provide some of our necessities. As individuals, do we really care whether our insurance is provided by our employer? After all, we don't look to our employers to provide us with car or homeowner's insurance. I think most of us just want to know that if we get hit by a car, we don’t have to worry that going to the hospital is going to ruin us and jeopardize everything else in our lives. A European model of state-sponsored health care is one model we can look to. But I’m open to other ideas. I have to be. I'm a liberal.
Slate had an interesting article on welfare capitalism today that goes into the history in more detail and foretells the decline. The Slate article recounts the recent spate of companies in bankruptcy that have decided to stop paying pensions and to drop retirement insurance plans for currently retired people. The article posits that as companies either decide or are forced to abandon their welfare capitalist policies because of market pressure, the government will have to step in to fill the gaps. Note the use of the phrase “have to.” That’s Slate’s usage, not mine. I doubt the current Republican administration or majority Republican Congress would agree that the government “has to” provide social programs. I can imagine Dick Cheney and Dennis Hastert bristling at the idea of being told the government will have to fill in where private enterprise has failed.
Now, as you may have guessed, I’m a liberal and a social progressive. Being liberal simply means I am open to new ideas. Being socially progressive means I favor improving our society through universal access to necessary social institutions such as education, healthcare, utilities, and childcare. That does not mean I necessarily think the government is the best answer to providing these things. As a liberal, it means I favor considering all the options to figure out which are the best ones for making sure we provide life’s necessities to everyone who needs them.
California has a proposition on the ballot that we will be voting on in November that would require pretty much every employer, no matter how small, to provide health coverage to every employee. As a social progressive, I like the idea of making sure everyone has health coverage. But as a liberal, I have to be open to other ideas and consider the alternatives. As a liberal, I can’t accept at face value the idea that forcing employers to bear the burden of healthcare is the best idea. We have to consider just how much weight business can bear. How many of our social needs can we pile onto the backs of businesses? Making employers pay for the solutions to our problems might sound easy, but it really isn’t fair. Sure, in some cases it might be fair – when there is a large corporation with deep assets sufficient to provide a decent return on investment to shareholders, it is fair to redistribute some of that wealth to the employees in the form of health insurance coverage. We know it is fair because that is the system the free market has worked out for itself to everyone’s mutual benefit. Large employers pretty much universally provide health care. But there are plenty of small employers where the difference in wealth between the employees and the owners is so small that it hardly seems fair to ask them to redistribute that scant wealth.
So I get back to my initial question: how much do you earn per hour? What we are learning is that even if you were to find out exactly how much your employer pays for all your benefits and did all the math, you still might not know because some of what you are being “paid” now for your work is deferred compensation that may never materialize. That pension your employer is paying into as part of your compensation package might not be around when you retire. You might be working now in exchange for the promise that your employer will provide health care coverage when you retire, only to discover that when you retire your employer has changed its mind or gone belly up. We don’t know how much we earn because we don’t know that our “pay” is going to be there when it’s due.
Maybe it’s time that we started thinking about getting back to a system of asking employers to just pay its employees their wages - and that's all. Maybe we should stop asking our employers to provide for all our social needs. Maybe its time to start looking for other institutions to provide some of our necessities. As individuals, do we really care whether our insurance is provided by our employer? After all, we don't look to our employers to provide us with car or homeowner's insurance. I think most of us just want to know that if we get hit by a car, we don’t have to worry that going to the hospital is going to ruin us and jeopardize everything else in our lives. A European model of state-sponsored health care is one model we can look to. But I’m open to other ideas. I have to be. I'm a liberal.
posted by Charles S. Russell at 11:10 AM
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