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Analyzing the 'Next Social Contract'
Proponents of reforms affecting health insurance and retirement -- particularly removing such programs from employment-based systems -- should get their facts straight before proposing massive changes.
Dec. 3 found Carl Camden, CEO of Kelly Services, and Andy Stern, president of the Service Employees International Union, on the same stage in Washington talking about "America's Changing Social Contract: The Rights and Responsibilities of Employers, Families, Government and Civil Society." Camden and Stern did not agree on all points, but they presented one voice in their declaration that "employment-based health benefits are dead." What became clearer in the conversation that followed was that they wanted them to be dead for two very different reasons. Camden takes the libertarian position that individuals should be the locus of insurance coverage. He shares the position of the Heritage Foundation and GOP presidential candidates such as Arizona Sen. John McCain and former New York Mayor Rudy Giuliani that employers should be freed from the burdens of health insurance sponsorship and payment in favor of an individually based system. There are differences on the extent to which mandates should be used, but not on the fundamental point of removing the employer from any role. Stern, who argues that employers should be put out of the business of providing employee benefits, be they health, welfare or retirement, takes what I term a new "individual labor organization" position. He argues that individual workers should join "the" union regardless of whom they work for, just as those over 50 join AARP, and "associates" join the AFL-CIO to gain the "benefits of membership." Stern suggests that individuals would be responsible for their own health benefits, and that his new organization model would become the provider for those who want private group provision. As now, government programs would fill special population needs. When asked whether his goal was to duplicate an AARP member financial and health benefits approach for the full working population, he responded that this would be a fair reading of his goal. No candidate for president of either party is currently advocating the approach discussed by Stern. Regarding government's role, Camden argues that the government should also remove itself from the provision of health and financial security benefits for most families -- a view that is set apart from Stern, who still argues for a substantial government role as a program sponsor, not just as a regulator. The "next social contract" is a project of the New America Foundation. The world view it sets forth fits with the core of Camden and Stern: Move all benefits from their attachment to the workplace. This is described as "citizen based," "with full portability," and fitting well with a growing contingent workforce and the workforce flexibility "demanded" by global competition. Stern noted that "the best way to predict the future is to create it," and that is what the New America Foundation sees as the objective of the "next social contract" movement. That the advocates at this Washington meeting have such different views of the desirable role of government is striking, given that they are driving together to eliminate employment-based benefits. And, some of that drive is based upon premises not supported by hard data. Camden argued that 30 years ago, everyone got a pension, and since employers can no longer provide that, employment-based pensions should not be allowed. Government data, however, shows that fewer than 10 percent of all retirees over 65 in 1975 reported pension or annuity income from a private sector job. In 2005 the percentage of such retirees was about 24 percent. Speakers suggested that 30 years ago, there was a low-turnover workforce, most workers spent full careers with one employer and workers held few jobs over a career. Government data shows that all of those statements of conventional wisdom are wrong -- as median job tenure since 1950 has consistently been at about four years; fewer than 20 percent of older workers have ever reported having spent a full adult career with one employer; and in the post-World War II period, seven-plus full-time jobs as an adult has been the rule, not the exception. Camden and Stern both argued that employment-based health coverage was dying. Government data found 88 percent of workers 18 to 64 were offered health insurance by an employer in 1988, and 78 percent took the insurance, compared to 84 percent offered and 74 percent taking the insurance in 2005. A decline on both counts, yes, but with 71 percent of workers 18 to 64 having employment-based heath insurance in 2006, does the dire language match the reality? I will leave that conclusion to others. The message for CEOs and CHROs is clear: As your organizations determine positions on public policy and think-tank proposals such as the "next social contract," give careful and thorough scrutiny to the actual trends and the actual numbers. Make sure the rhetoric can be backed up by the hard historical numbers. Make sure the talk actually walks. December 20, 2007 Copyright 2007© LRP Publications |
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