October 13, 2003

We Don't Want Burial Insurance

David Wessel of the Wall Street Journal writes about trying to find a new job in a relatively-bad labor market:

WSJ.com - Clues to the Cure For Unemployment Begin to Emerge: ...Even optimistic observers doubt that much can be done to help many workers approaching retirement who lose their jobs and are looking for comparable work. One option is to offer them a kind of "wage insurance." The idea is to supplement their wages if they take a job that pays much less than their old one. Another possibility is to subsidize health insurance that often disappears with a job, and essentially help these workers get by until they reach retirement age.

The government took a step in this direction last year with the creation of the Health Coverage Tax Credit, which pays 65% of health-insurance premiums for workers who lose their jobs because of trade or whose pension plans have gone bust. Proponents see it as a big step toward a strengthened safety net for older, displaced workers.

The program is making a big difference to Kenneth Kyle, a 59-year-old disabled former employee of the railroad at Bethlehem Steel Corp.'s Sparrows Point plant in Baltimore. For the first few months he was out of work, the company charged him $346 a month for health insurance. Then Bethlehem was sold, and it stopped paying its share of his insurance as of March 30. As required by law, it allowed him to buy it for $1,064 a month, but that's a lot for a worker with a $1,134 a month pension and a wife who works part-time at Wal-Mart.

He paid the premium for four months, then switched his coverage when Maryland inaugurated a new program for people who haven't any place to turn for health insurance. Now, using his federal tax credit, he spends $366 a month for health insurance. But expanding such programs has proved to be difficult, in part because workers who benefit and their unions are unenthusiastic. Explains Gene Sperling, a former economic adviser to President Clinton: "They say, 'We don't want burial insurance. We want new jobs.' "

It's worth unpacking that last sentence. What it means is that labor unions have been a principal obstacle to expanding that part of the Labor Department that helps displaced workers learn new skills and get different jobs in expanding industries. When Robert Reich was Labor Secretary this was one of his major sources of trouble: that the union leaders seemed much more focused on trying to prevent their kind of employment from declining than in trying to get a better life for people who had been members of their union. It was as if workers ceased to exist when they took a job in another industry.

Posted by DeLong at October 13, 2003 07:57 AM | TrackBack

Comments

I get it. We will all leave General Motors for IBM. Just a bit of training and a $70,000 job at GM after 25 years becomes a $70,000 job at IBM with benefits folks. Go to it. To heck with unions, awful awful unions.

Posted by: anne on October 13, 2003 08:58 AM

Spell-it-out department:
1) Unions represent the people who pay dues. The people who pay the dues have a right to expect this. At higher levels union management represents retired workers with an ongoing involvement, such as a pension. The basic mission of a union is to represent the members.

2) Unions usually face a "trade-off" type of negotiation, in which many demands are met by many offers and much time is spent by each side trying to figure out what is the best overall "deal". Part of the trickle down from this are the claims that "the union doesn't want" or "the company won't give" etc etc.

Now we can "unpack" that next-to-last sentence: When Robt Reich was Labor secty, a major part of his problem was that the only people in the country actually lobbying for workers couldn't do everything. Expected to represent not only union members, but also everyone in the country who ever held a blue-collar job, unions fell far short of what Reich needed- a labor movement strong enough to force Clinton to do the right thing.

A real load of baloney, but also a compliment- when you have a job too tough for our "leaders" or American Business, give it to a union man, expect the job to be done right, and complain if it isn't.

Posted by: serial catowner on October 13, 2003 09:23 AM

I can't imagine how a program that allows a disabled worker to pay a mere third of his income (thank goodness he has enough household income for a tax credit to be applicable at all) for health insurance instead of almost 100% shouldn't be lauded as the next best thing since sliced bread. How dare labor leaders suggest that real money for retraining and real income support would be better than putting enormous PR behind "safety nets" that just enable people to drown a little more slowly.

Whatever happened to "polluter pays"?

Posted by: paul on October 13, 2003 09:27 AM

Spell-it-out department:
1) Unions represent the people who pay dues. The people who pay the dues have a right to expect this. At higher levels union management represents retired workers with an ongoing involvement, such as a pension. The basic mission of a union is to represent the members.

2) Unions usually face a "trade-off" type of negotiation, in which many demands are met by many offers and much time is spent by each side trying to figure out what is the best overall "deal". Part of the trickle down from this are the claims that "the union doesn't want" or "the company won't give" etc etc.

Now we can "unpack" that next-to-last sentence: When Robt Reich was Labor secty, a major part of his problem was that the only people in the country actually lobbying for workers couldn't do everything. Expected to represent not only union members, but also everyone in the country who ever held a blue-collar job, unions fell far short of what Reich needed- a labor movement strong enough to force Clinton to do the right thing.

A real load of baloney, but also a compliment- when you have a job too tough for our "leaders" or American Business, give it to a union man, expect the job to be done right, and complain if it isn't.

Posted by: serial catowner on October 13, 2003 09:38 AM

>It was as if workers ceased to exist when they
>took a job in another industry.
Well, they do stop paying dues into the leader's union...

Posted by: Tom on October 13, 2003 09:46 AM

anne--you didn't address the core point: "union leaders seemed much more focused on trying to prevent their kind of employment from declining than in trying to get a better life for people who had been members of their union."

This is a basic structural problem with unions--what's in the best interests of an individual member may not be what's in the best interest of the union leader, anymore than what's in the best interest of a citizen be in the best interest of his political leader. Such problems aren't addressed by union-bashing, but neither are they addressed by "Union Yes." You have to grapple with the details.

Posted by: Sam Penrose on October 13, 2003 09:49 AM

Wasn't it the Wobblies who advocated "one big union, the whole world 'round", or something to that effect ? To the extent that labor unions are still trade unions, their parochialism will prevent them from being the solution demanded by Brad, et al. Hard to blame them for trying to get the most for their members, and Dems are hardly hostage to Labor's demands anymore, anyway. It seems disingenuous at best to blame Labor, unless we are prepared to admit that the right is correct, and we do nothing but pander to interest groups.

Posted by: boonie on October 13, 2003 11:19 AM

Not all trade unions are like US trade unions. You don't have to look to the wobblies which, by the way, still exist at, of course, http://www.iww.org.

There are countries in which the union movement is highly centralised. This tends to make Union leaders consider the general interest since almost everyone is a member of their union.

The argument that a disciplined centralised labor movement is better for workers than separate unions for each industry is called neo-corporativism (really it is corporativism but that was what Mussolini called it so it's a no no word).

The amazing thing is that an amazing number of people, including get this Robert Barro, slip into using the hyphenated world when they try to talk about real world labor market outcomes.

Oh my favorite part of www.iww.org and one of my most favoritest spots in cyberspace is http://www.iww.org/iu120/local/dispepsi.html
but best to read the very serious
http://www.iww.org/iu120/local/gst.html
first

Posted by: robert on October 13, 2003 03:42 PM

It's not inevtiable that structural factors should make a union adopt the goal of "more jobs for the members" as its only principle. Robert points out one way things can work out differently (in the case of non-US trade unions). But there's another example in the US itself: service and retail employees unions confront the reality of people moving in and out of their sector much more frequently than do trade unions, and their conception of what's in the interests of their members is correspondingly much broader than that of the trade unions.

Posted by: aa on October 13, 2003 04:00 PM

This thread illustrates one of the problems with type M arguments. Brad wrote in part
"union leaders seemed much more focused on trying to prevent their kind of employment from declining than in trying to get a better life for people who had been members of their union"

which is a type M argument. I submit that if he had stuck to an analysis of the consequences of the health insurance credit, the issue would have been clearer and people would not be going off track.

Posted by: Arnold Kling on October 13, 2003 06:16 PM
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