Monday, March 30, 2009

Today's Thought: Can Health Care Reform Help Fight Unemployment?

There was a series of editorials on the NY Times site today about applying the European model of shorter work weeks to the U.S.

Basically, in many other countries, rather than lay off workers en masse companies opt for shorter work weeks for all. It means less pay for the individuals, but most people I know, particularly those who actually have been laid off, would have taken the option of a reduced paycheck and the corresponding increase in leisure time over a total layoff.

One of the ideas that stood out, to an amateur ptochologist like myself, was that, since health benefits are paid on a by-worker basis, rather than a by-hour basis, companies still have to pay heavy monthly medical insurance costs, regardless of how many hours each employee works. A reduction of hours, then, results in a small payroll savings per a worker, but no reduction in benefits costs, and an overall reduction in productivity. So, from a bottom-line perspective, if productivity is being lost, then it makes more sense not to have to keep paying insurance at the same rate.

It seems to me that some sort of realistic health care reform would be needed to counteract this tendency. We can go the route of universal government-sponsored health care (and I can hear the cries of "socialism" from the Right over that. Get over it. We pay the government, in taxes, to provide us certain security and services. This is a business transaction that works through economies of scale, not some sinister threat to the ideological fabric of the nation). Or through reforms of the current privately operated system (ditto, look where a lack of regulation got the stock market).

If we could lessen the cost of insuring workers, or remove the burden from employers entirely, it would open up the option of a shorter work week, and reduce the cost of paying workers, making it easier to keep them employed in tough times. There are a lot of details to work out, obviously, but it could help.

The takeaway: Reforming our health care system in a way that lessens the cost to employers, yet guarantees coverage to workers and families, is a pro-business move that could act as a very real economic boost. In a country where unemployment is nearly one-in-ten in some spots, and there are four unemployed competing for each job, shorter work weeks are a very appealing alternative to layoffs. Affordable health care could help make them a viable option.

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