Thus far I have treated this subject as a question of morality. That whether or not government has an ethical duty to provide subsidized medical insurance to its' citizens, to alleviate financial hardship. Well, many politicians ignore this question and say requiring companies to offer such programs will lead to financial disaster. To avoid such a consequence, they contend, businesses will be forced to downsize and take some of their full-time employees and reduce them to part-time status. This will avoid offering mandatory health insurance. However, is this reasoning valid or is it founded in the desire to keep many Americans without health care? Let's create a fictional scenario;
John Doe works for the ABC company. He works forty hours a week and makes ten dollars an hour. His job is to operate a machine that combines two or more parts to create a finished product. While the job is not physically demanding and does not require extensive training, his two years on the job have showed that with trial and error, he has increased his hourly out-put from ten pieces to fifteen. It was all a matter of working more efficiently.
However, the company was now required to offer all of their full-time employees medical insurance, the cost which will be partially subsidized by the federal government. In the end, the company estimates that coverage for John will cost them fifty-dollars a week. So, he and other employees are reduced to part-time status of twenty-five hours a week. Thus, the company does not have to offer health care.
This is basically the reasoning of UNIVERSAL HEALTH CARE opponents. The cost is to much to absorb and remain profitable. However, that is a superficial criticism that avoids many other factors.
- By reducing John Does work week by forty-percent, they are also reducing his total production of finished product by an equal ratio. Since he averages 15/hr it comes to a total of 600 for a forty-hour work week. However, as a part-timer he now produces only 375 for the twenty-five hours worked.
- Remember, ABC company was satisfied with John Does weekly pay, for that was not the reason for reducing him to part-time status. It was only the addition of a health care cost that precipitated the change.
- To justify this change, the employer cost of fifty-dollars per week for a medical plan that John Doe was entitled to as a full time employee would cause an unacceptable decline in profits.
- Since there will be a decrease in John Does weekly production, which viewed in the past as acceptable, it must be made up in a way that will be less than fifty-dollars per week.
How could this be done?
- Increase the workload of other employees to make up the deficiency. If this is possible and there is no decrease in production, why was John Doe not laid-off in the past? However, is it pragmatic to think that these employees can maintain their current level of production, when they have the added responsibility of making up for the decrease in John Does weekly out-put?
- Hire new part-time employees to make up for the loss in production. Even if we allow for the fact that they can equal John Does per hour production by working the fifteen hours that have been cut, it would not be of financial benefit to the company. Even paying these employees minimum wage would still result in a cost of 105.00/wk. As you can see, that is more than the $50.00 it would cost to cover John Does medical insurance.
Look for the conclusion of this article.
Date- 10/1/2013.
