yves engler

Shouldn’t people’s ability to find work be central to any economy? Isn’t the point of an economy all about fulfilling human needs, one of which is meaningful work? Not according to today’s monetarist economists who only three years ago were warning of the dangers of the unemployment rate dropping below four percent. Then the business community and their economists were fearful that lower unemployment rates would increase labour’s bargaining position, which would drive up wages and inflation.

Unfortunately full employment was never reached. Alan Greenspan, with the backing of the other monetarists who dominate today’s economic discourse, increased interest rates to deflate the economy. It worked. Unemployment rates began to climb. Officially it’s now at 6.1% but that number masks the huge number of people who’ve simply given up looking. In August, 93,000 jobs were lost and now there are 2.1 percent fewer workers on payrolls in the U.S. than there were two years ago, which doesn’t even take into account the needed job growth to keep up with population increases. (Business Week September 29)

Yet as GDP rises again, at a rate of 5% this quarter, the economists are talking about a “jobless recovery” — the meaning of which was explained in a recent Financial Post article. “The total net worth of America’s richest people rose by ten percent to U.S $ 995 billion this year from 2002, according to Forbes Magazines annual ranking of the countries 400 wealthiest individuals.” (The four hundred richest U.S. residents wealth is now about the size of Canada’s economy, the eight largest in the world). In 2001/02 the 400 wealthiest people saw a slight decline in their wealth, as was the case for most of the population with some 1.7 million people in 2002 that joined the 34.6 million people living in poverty. (WSJ September 29)

But now the rich — if you’re talking to economists, the essential part of the economy — are recovering. No matter that since the ‘recovery’ started in November of 2001 some 1.2 million more people joined the dole lines and “the number of people without health insurance shot up last year by 2.4 million, the largest increase in a decade.” (NY Times Sept 30) And, the past twenty years of neoliberal attacks against social entitlements such as welfare (the non-corporate kind) unemployment benefits, and social housing has made this unemployment crisis that much more painful. Homelessness and hunger are increasing, especially amongst the Black community where the job loss rate has been even more severe (On top of an unemployment rate that already doubled that of the white population.). 

This combination of GDP growth and increasing unemployment is no longer out of the ordinary in the context of the de-industrialized U.S. economy. According to Patrick Barkey in the East Central Indiana Star Press, “jobless recoveries have become normal recoveries, at least for the U.S. economy. There is no ‘bounce-back’ in hiring in the aftermath of recession because employers have made adjustments to permanently eliminate the need for the lost jobs. At least that is what the data for the last two recessions, in 1991 and 2001, tell us.” The USA Today further elaborates on the issue; “To see whether a pattern is developing Kansas City Fed economists looked at boom-and-bust cycles dating to 1960. They found that, on average, employment grew 2.7% in the first year of a recovery, except in the early 1990s and now. Put another way, the economy shed thousands of jobs during the initial year of the recovery, compared with more than 2 million created on average in previous rebounds.” (October 1) GDP now has to increase by as much as 4% for there to be any job growth.

One reason for the jobless recovery phenomenon is the reduced manufacturing base. According to the Bureau of Labor Statistics, in July 14.6 million of 129.9 million payroll jobs were in the manufacturing sector down from a peak of 19.4 million in 1979.

(http://www.bls.gov/news.release/empsit.nr0.htm)

Automation of work has been used by the corporate sector to reduce companies’ payrolls. The effect of this downsizing is often an increased work hour burden and pace, for those fortunate enough to keep their jobs. As opposed to almost every industrialized nation U.S. residents are now working 200 hours more than they did in the early 1970s, which often adds to people’s stress levels. (NY Times April 12) Similarly, a heightened pace of work can increase workplace injuries. However from a business perspective, more hours per employee through automation and increased work pace usually increases GDP without increasing employment. In addition, U.S. jobs are being lost because the liberalization of investment and trade has allowed U.S. based multinationals to scour the globe – from Mexico to China to Vietnam – for the cheapest most compliant labor.

One reason for job loses, however, that hasn’t received much attention from either the corporate or left media is the ludicrously inefficient U.S. health system. At the start of this year, Canada’s Financial Post explained that “rising health-care costs may be one reason why jobs keep disappearing in the United States – a situation that’s hard not to compare with Canada, where the labour market has been booming and health care is publicly funded. (National Post Jan 20)”

On Monday the Wall Street Journal reported that “health-care costs have become one of the largest expenses for many employers.” The articles goes on to say; “Employers’ health-care costs are expected to rise 12% next year, marking the fifth year in a row of double-digit percentage increases and a doubling in costs since 1999… On average, health-care costs for each active employee will total $7,308, or $742 more than in 2003.”

And part of the reason more than 2.7 million manufacturing jobs in the U.S. have been lost in the last 3 years is that health costs tend to be higher for companies’ in the manufacturing sector. (USA Today October 1) Manufacturing jobs have higher unionization rates than the rest of the private sector and collective bargaining improves workers’ ability to draw concessions from companies on health insurance. General Motors for instance spends “5$ billion a year to cover all of its 640,000 workers and retirees.” (Business Week may 19) According to the Canadian Auto Workers, “automakers get a $10 (US) hourly cost advantage per worker in Canada compared to American autoworkers. That’s about $20,000 per worker each year in Canada.” The majority of Canadian workers health costs are paid for by the state so companies’ share of health costs is comparatively low. But in addition, the U.S. health system is exceedingly inefficient (Not to mention not very effective at keeping people healthy. U.S. life expectancy is lower than almost every industrialized nation at 24th highest in terms of number of healthy years.) (WHO.org)

Health costs are exceedingly high because the U.S. is the only industrialized nation where the profit motive overwhelmingly dominates the insurance, hospital, doctor and drug establishments. The U.S. spends by far the most money on health care of any country in the world, about 14.5% of gross domestic product. (WSJ Sept 12) The next closest country spends just over 10 percent. Not only do Americans allocate a larger percentage of GDP to health care, they spend more in absolute dollars. Americans pay $4,637 on average for health coverage while Canadians, the fourth biggest spenders, shell out $2,200 (US). (Globe and Mail)

The less ideological segments of corporate Canada understand that a more efficient government provided health system is in their interests. For this reason some of corporate Canada’s biggest names want politicians to invest more money into Canada’s (socialized) health system. The Canadian heads of Ford, DaimlerChrysler and GM recently joined CAW president Buzz Hargrove in signing a joint letter calling on politicians to recognize the critical role publicly financed health care plays in Canada’s economy. The letter stated that approximately half of the labour cost advantage Canadian auto plants enjoy over American competitors can be attributed to Medicare.

U.S. corporations could benefit, as companies based in the U.S.’ single biggest trading partner do, from the lower health costs associated with a universal single-payer (government) insurance scheme. Nevertheless, the Financial Post reports that “there still appears to be little taste among U.S. business for Canadian-style medicine. While health care may cost companies less in Canada than the United States, there is a fear any difference would be made up in higher taxes elsewhere.” (January 20)

This fear has no basis in reality. According to the Globe and Mail, “[Canadian] governments spent 7 per cent of GDP on health in 2001, while American governments spent 6.7 per cent.” (04/21/03). Basically, Canadian and American governments already spend the same amount on health even though in Canada unlike the U.S, the state provides universal health coverage.

Still, much of the business class isn’t satisfied with their rising health costs. In fact, if an advertisement in Monday’s Wall Street Journal for a “Health care cost and quality” conference is to be believed it’s the “#1 concern of CEOs.” Companies such as GM, Motorola, and Caterpillar are campaigning to eliminate the special 30-month patent protection drug companies can claim after their 20 year patent expires. As of yet, however, these companies have shown little willingness to challenge more directly the interest of the ‘bio-medical industrial complex’, which is politically well connected 1/7 of the U.S. economy. (They’d prefer to move abroad or if non-unionized offload health costs onto employees.) 

In this vain some of the candidates for head of the Democratic Party have designed health proposals that will surely benefit some of the 60 million who go insured annually. These, health proposals, however, are, maybe primarily, designed to benefit the wider business class without greatly impeding the profits of the ‘bio-medical industrial industry’. The most ambitious of the proposals amongst the likely contenders, Richard Gephardt’s proposal, should be understood within this context.

The USA Today reports that, “Gephardt has proposed a plan that would cost the Treasury more than twice as much as Clinton’s plan, although it involves fewer structural changes in the way health care is delivered. (June 2)”It’s a plan that won’t upset the insurers, hospitals, doctors or drug companies who, no matter how inefficient their practices, will continue to profit. For the wider business class, “Gephardt’s plan would require employers to offer health coverage and would give them a tax credit to offset 60% of the cost — more than twice the tax benefit available to businesses in the current system.” Under the plan the main responsibility for covering workers and their families would be given to employers, who would expand coverage to part-timers and others without insurance costing some $700 billion over its first three years. (USA Today April 26)

Obviously this plan will harm companies that don’t currently provide health insurance and will have to pay 40% of employees’ health costs. Nevertheless, think about how much GM and other corporations that provide decent health coverage will save. With total health costs at some $5 billion GM is bound to shift a billion or more worth of its health costs to the government. And then autoworkers might not be willing to sign a contract, as they did last week, that protects them from increases in health costs yet, according to the World Social Web Site allows “the auto manufactures to eliminate 50,000 jobs through attrition over the next four years, bringing the total number of jobs cut at the five companies to more than 100,000 since 1999.” (October 1)

To reverse the jobless “recovery” plague full employment monetary and stimulus policies should be pursued. In addition, employment creating trade policies and a shorter working week would help. It seems, however, the unemployed also need a medical recovery.

 

yves engler is a montreal based activist/writer. he can be reached at [email protected] 

---