The Shadow Welfare State Re: Workers of the world...relax

[Yoshie Furuhashi]

>One of the program planks of the Labor Party is shorter work time including a
>32-hour work week; double time for all overtime; an hour off with pay for
>every 2 hours overtime; 20 mandatory paid vacation days; one year paid leave
>for every seven years of work.
>
>Folks in one chapter did an on-the-street survey picking about six of our
>planks (universal healthcare, right to a job, etc.) and asking whether people
>supported them--the only one that DIDN'T get positive response (under 50%
>positive) was the shorter workweek.
>
>I attribute this to:
>(a) people who work hourly think, shit, without overtime how the hell am I
>going to pay my bills, never mind less time.  For example, one of my roomates
>literally can't make it without the beginning of the semester rush at the
>bookstore he works for.  Overtime, we're addicted to it cause our real wages
>are so lousy--considerably lower than France and Germany.
<snip>
>One culprit here is that our oh-so-American job-based benefits system--of
>which health insurance is the most expensive part--provides greater
>incentives to U.S. employers to keep from adding more 'social security
>numbers'  hence all the overtime--forced or not.  In Europe there's
>considerably less pressure as a result of universal health systems and
>stronger national pension systems. 
>
>Of course, workers can be more militant in Europe when losing your job
>doesn't mean your kids won't get healthcare or you'll get kicked out of your
>house or lose your pension.  This is one reason the Labor Party's top
>priority here is universal health care.  Here, it's a fucking downward
>spiral, we work longer hours as a result of our weakness as a class, which
>further contributes to our weakness as a class, by increasing unemployment
>which in turn undercuts our wages, and leaving us little time to participate.
>  When a tight labor market started to create upward wage pressure ('95-'96)
>they kicked people off welfare and into the labor market, the kind of
>government back-up European employers may crave but currently lack.
>
>Jenny Brown

*****   Journal of Policy History 13.3 (2001) 391-396

Book Review

Labor, Business, and the Politics of the Welfare State

Elizabeth Fones-Wolf

Marie Gottschalk, The Shadow Welfare State: Labor, Business, and the 
Politics of Health Care in the United States. Ithaca: ILR Press, 
2000, x + 288 pp.

...Marie Gottschalk argues that the institutions of the private or 
"shadow" welfare state limited labor's capacity to mobilize 
effectively for universal health care. After World War II, the 
"shadow welfare state"--that is employer-provided nonwage benefits 
like paid vacations, health insurance, and pensions--expanded 
dramatically. Labor was initially ambivalent about company-funded 
pension and health schemes that evoked images of paternalism. But 
when a powerful coalition of business and conservative forces blocked 
passage of legislation that would have liberalized and federalized 
the American social welfare system, unions began bargaining 
successfully for job-based benefits. These benefits, combined with 
high wages, were the central features of the postwar social contract 
or accord between big labor and big business.

Several pieces of legislation shaped a private welfare state that 
ultimately bound the interests of organized labor closely to large 
employers and the insurance industry. Of importance here was the 
Taft-Hartley Act of 1947, which authorized the creation of what 
became multi-billion-dollar joint union-management administered 
health, pension, and welfare trust funds. Common in industries like 
construction, where union members worked for several employers each 
year, the Taft-Hartley fund plans "helped cement the commitment of 
the building trades and other unions to private sector benefits" 
(44). The Taft-Hartley Act put some unions in the insurance business, 
thus weakening potential labor support for a national health 
insurance system. The passage in 1974 of the Employee Retirement 
Income Security Act (ERISA) was the second act that helped keep labor 
attached to a job-based system of health benefits. It exempted 
self-insured employers and Taft-Hartley union funds from state-level 
insurance regulations. Finally, the insurance industry's "experience 
rating" system, which enabled large employers and Taft-Hartley funds 
to benefit from lower health insurance premiums, tended to create a 
community of interests between unions with Taft-Hartley plans, large 
employers, and insurance companies. Gottschalk identifies the legacy 
of the postwar labor-management accord as yet another institution 
that pushed labor toward cooperating with business on health-care 
reform.

For thirty years, despite these institutional imperatives, unions 
were one of the foremost advocates of national health insurance. 
Labor recognized the inequities of the private employment-based 
health insurance system, which excluded many citizens and provided 
limited coverage of health costs. National health insurance, financed 
by a payroll tax and general revenue tax, would sever the link 
between health care and employment and cover all Americans while 
reducing medical costs by eliminating commercial insurers. During 
this period, for reasons that Gottschalk fails to adequately explain, 
labor's structural attachment to the private welfare state did not 
prevent unions from advocating fundamental reform of the health-care 
system. In the late 1970s, however, labor took "a major step away 
from the principle of universalism" when the AFL-CIO embraced the 
idea of an employer mandate. This proposal required employers to pay 
part of their workers' health-insurance premiums and left the private 
welfare state of job-based benefits with all its inequities intact. 
According to Gottschalk, while the institutions of the private 
welfare state (the Taft-Hartley funds, ERISA, and experience rating) 
predisposed unions to back the employer mandate, political and 
economic factors, especially worries about escalating government 
spending and inflation, ultimately triggered labor's shift in policy.

Throughout the 1980s, the AFL-CIO leadership maintained its 
commitment to employer mandates, hoping to foster an alliance with 
big business that would ensure passage of health-care reform. Still 
influenced by the legacies of the social contract, some unionists 
accepted the business community's contention that escalating 
health-care costs were impeding American corporate competitiveness. 
It seemed possible to form a constructive partnership with the 
elements of the business community, especially the unionized sector, 
that had expressed interest in greater government involvement in 
health care as a way of reducing costs. Moreover, the institutions of 
the private welfare state made some labor leaders antagonistic to the 
growing interest in a single-payer health-care system.

The 1993-94 struggle over Clinton's health-care initiative revealed 
the extent to which labor was misled by business and the 
ineffectiveness of its political strategy. In reality, there was 
minimal business support for any kind of comprehensive health-care 
reform, even the employer mandate. Indeed, the AFL-CIO had placed its 
faith in business at a time when corporations were attempting to 
weaken their bonds with labor by outsourcing or hiring part-time or 
contingent workers who were not eligible for benefits. Moreover, the 
labor movement was divided over the Clinton plan. Angry at the 
Clinton administration's support of NAFTA, suspicious of business, 
and attracted to the single-payer solution, rank-and-file activists 
from unions such as the Oil, Chemical and Atomic Workers joined with 
public-interest groups like Ralph Nader's Public Citizen in rejecting 
employer mandates. The hoped-for winning coalition never emerged.

Gottschalk seeks to show how the institutional contours of the 
private welfare state constrained labor policy on health care. She 
builds a strong case for the importance of institutions and 
acknowledges the powerful barriers to the creation of a universal 
health-care system. Yet, throughout the book, Gottschalk scolds 
unions, perhaps too vehemently, for failing to challenge these 
institutional restraints and laments that labor was unable to use the 
issue of "universal health care as a pillar on which to build a wider 
critique of the role of corporations in the United States" (147)....

Elizabeth Fones-Wolf is an Associate Professor of History at West 
Virginia University. She is the author of Selling Free Enterprise: 
The Business Assault on Labor and Liberalism, 1945-60, and is writing 
a history of labor, business, and the mass media during the CIO era.

<http://muse.jhu.edu/journals/journal_of_policy_history/v013/13.3wolf.html> 
*****

*****   One for All (Spring 2001, Number 8)

Unions and the Prospects for Universal Health Care

by Marie Gottschalk

The 2000 campaign largely neglected the plight of the uninsured, in 
part because a powerful social movement or reform coalitions has yet 
to form around the issue of widening health care inequities. Unions, 
which in the past played a critical part in the passage of a number 
of major pieces of social welfare legislation, notably Medicare, will 
be essential to a universal health care coalition. However, a 
commitment from organized labor to sweeping health care reform will 
not come easy.

Starting in the early 1980's, organized labor sought to forge an 
alliance with business on health policy. In doing so, unions 
acquiesced to a redefinition of the terms of the health care debate. 
Whereas earlier struggles for universal health care, notably in the 
1940's and early 1970's, were waged around issues of social justice, 
concerns about the economic competitiveness of U.S. companies 
predominated in the 1980's and 1990's as organized labor staked its 
strategy on working closely with business.

In contrast to what the Canadian labor movement and Canadian 
advocates of national health insurance had done on behalf of 
universal health care in the 1950's and 1960's, unions in the United 
States did not embed their health care strategy in a longer-term 
political strategy derived from a comprehensive and independent 
analysis of the rapidly changing political and economic context that 
addressed broader issues of equity.

The 1993-94 debacle over President Bill Clinton's Health Security Act 
helped fuel an insurgent movement within the AFL-CIO. In 1995, after 
assuming the presidency in the federation's first contested election, 
John J. Sweeney attempted to present a more complex understanding of 
the U.S. political economy. Instead of simply blaming escalating 
medical costs for pricing U.S. workers out of the international 
market and hurting their economic livelihoods, he castigated U.S. 
firms for taking the low road and for believing
  that "the best way to compete in the global economy was by driving 
down labor costs."

However, despite labor's new political activism and its greater 
willingness to embed its social and economic policies in a more 
nuanced understanding of the U.S. economy and global economy, it is 
not championing universal health care. During the 2000 campaign, 
Sweeney and other labor leaders did not publicly challenge the 
ever-so-modest proposals to increase health care coverage advanced by 
their candidate, Al Gore.

Moreover, unions are continuing to become more significant 
health-care providers. This will further strengthen their attachment 
to the private welfare state of job-based health benefits and to 
private-sector solutions for health care reform.

If the past tells us anything, as unions invest heavily in HMO's that 
they create, seize opportunities to expand the Taft-Hartley funds 
(the union-run benefit plans that provide health care coverage to 
tens of millions of union members and their families), and enter the 
lucrative health-insurance market in other ways, they will be less 
likely to embrace calls for an overhaul of the health car system to 
make it more equitable.

At the same time, there are some unions that single-payer advocates 
can look to as allies. The Service Employees International Union 
(SEIU) renewed its commitment to a Canadian-style, single-payer 
solution after the defeat of the Clinton health care plan. The 
recently formed Labor Party has developed a detailed proposal for 
national health insurance called "Just Health Care" and designated 
universal health care a top priority.

The AFL-CIO has yet to make a campaign for universal health care the 
centerpiece of its political activities, however. It is deja vu all 
over again as the AFL-CIO works side-by-side with business and 
consumer groups for a "patients' bill of rights" to regulated managed 
care. All the political brouhaha that this issue has generated 
obscures the fact that this measure amounts to little more than a 
Band-Aid on a health care system that remains in critical condition.

Success for organized labor in both the workplace and in the wider 
political arena must depend on a simultaneous revitalization at both 
the top and within the ranks. The grass roots just do not have the 
resources to do it on their own, though admittedly some of labor's 
greatest victories in the battle to reduce health care inequities 
have come at the state and local level in recent years.

Today the health care crisis is worsening. Confronted with 
double-digit hikes in premiums this year, employers are shifting even 
more of the costs of health care onto employees and reducing 
coverage. Predictions are that the number of the uninsured could 
reach 50 million or more if the economy goes into recession.

These inequities in health care coverage have the potential to ignite 
a broader debate about widening inequalities in other areas of 
American society. Labor unions, though they face significant 
obstacles, have the potential to be pivotal actors in that debate and 
in mitigating health care and other inequities in the United States.

Marie Gottschalk is an assistant professor in the Department of 
Political Science at the University of Pennsylvania. She is the 
author of The Shadow Welfare State: Labor, Business, and the Politics 
of Health Care in the United States (Cornell University Press, 2000) 
and is currently working on a book tentatively titled, Black Flower: 
The Politics of Mass Incarceration in the United States.

<http://www.healthcareforall.org/newsletter/spring_2001/unions_prospects.html> 
*****
-- 
Yoshie

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