A dynamic model of public sector employer response to unionization

We model the response of public sector employers to unionization using the response of public school boards to teacher unionization as an example. While it is generally believed that public sector employers pay unionized workers more than nonunion workers, there is less consensus about where the money comes from. We model two cases which are possible employer reactions to unionization: re-allocating resources among types of expenditures and modifying the way in which services are provided. The model contains a political equilibrium that determines the union’s preferences and an economic equilibrium that reflects labor market conditions. We compare the predictions of the two cases regarding the effect of unionization on wages, turnover, allocation of expenditures, and productivity. We interpret existing empirical research on public sector unionization in light of these predictions and make recommenda-tions for future empirical work.     

The labor supply effects of child care costs and wages in the presence of subsidies and the earned income tax credit

This paper uses CPS and SIPP data between 1990 and 2004 to examine the effects of child care expenditures and wages on the employment of single mothers. It adds to the literature in this area by incorporating explicit controls for child care subsidies and the EITC into the estimation. Doing so provides an opportunity to examine mothers’ sensitivity to prices and wages net of policies that influence these amounts. Results suggest that lower child care expenditures, higher wages, and more generous subsidy and EITC benefits increase the likelihood of employment. Allowing the impact of child care subsidies and the EITC to vary with expenditures and wages reveals substantial heterogeneity. In particular, the largest labor supply effects of child care subsidies are generated for mothers with higher child care costs, while the largest labor supply effects of the EITC are found for mothers with lower wages.     

Health care consolidation and the changing health care marketplace. A review of the literature and issues

This Issue Brief examines the academic literature and issues in consolidation of the hospital sector in the context of responses to changes in the competitive environment. It analyzes the motivations for consolidation as well as its effects. Hospital merger activity has increased dramatically in recent years. The current wave of mergers is primarily a reaction to a competitive environment that is placing a greater emphasis on controlling costs and forcing high-cost providers out of the market. The growth of managed care has placed considerable pressure on providers of health care and, in particular, on hospitals. The evolution of insurance companies' behavior helps explain the recent hospital consolidation movement. As managed care has become the dominant type of coverage in the last decade, insurance companies have become more active in trying to control costs--a reversion to their previous practices before the advent of managed care. Insurance companies have placed cost constraints on providers, both in the early years of health insurance and currently, when there are strong competitive forces. Hospitals claim that their primary merger motives are improving efficiency and the quality of care. The empirical evidence on this claim is mixed. Vertical integration (between suppliers and buyers of health care services, such as between hospitals and physicians) has appealed to hospitals because of their need to obtain more patients. More research is needed to explore the effects of vertical integration in the health care sector. In one of the more significant recent legal rulings, the U.S. Justice Department lost a 1997 case challenging the merger of two hospitals in the New York City metropolitan area. This, along with other recent losses by the antitrust authorities, does not bode well for the government's ability to prevent hospital mergers in metropolitan areas. It is difficult to generalize on an appropriate antitrust policy for hospital mergers. Hospital consolidation is likely to continue at a rapid pace. Since some developments may reduce the cost of employee benefits while others may increase the cost of these benefits, the final effect on the provision of health care benefits by employers is uncertain. Employers must pay close attention to the hospital consolidation movement because it will lead to important changes in the provision of health care benefits.     

Questions and answers on health insurance benefit issues

This Issue Brief addresses eight topics in the areas of health insurance and health care costs. Using a question and answer format, the discussion draws largely on EBRI research and the EBRI Databook on Employee Benefits, third edition. In 1993, U.S. expenditures on health care were $884.2 billion, and they are projected to reach $2,173.7 billion by 2005, increasing at a projected average annual rate of 7.8 percent. Health care spending accounted for 13.9 percent of Gross Domestic Product (GDP) in 1993 and is projected to reach 17.9 percent of GDP by 2005. Among the factors contributing to the increase in health care costs are the growth in the number of individuals with traditional reimbursement health insurance coverage, the rapid expansion of technology and treatment options, and demographic factors such as the aging of the population. In 1993, employers, both public and private, spent $235.6 billion on group health insurance, accounting for 6.2 percent of total compensation. Group health insurance is the fastest growing component of total compensation, increasing at an average annual rate of 13.7 percent from 1960 to 1993. An increasing number of employees are required to make a cash contribution to their health insurance plan premium. In 1993, 61 percent of full-time employees in medium and large private establishments who participated in an employee only health insurance plan were required to make a contribution to the premium, up from 27 percent in 1979. In 1993, 185.3 million persons under age 65 had health insurance coverage, while 40.9 million people--or about 18.1 percent of the nonelderly population--received neither private health insurance nor publicly financed health coverage. Of those individuals who had health insurance coverage, 60.8 percent, or 137.4 million persons, received their health insurance through an employment-based plan. In 1993, 15.2 percent of the nonelderly population without health insurance coverage were noncitizens. In six states noncitizens represented a higher proportion of the total uninsured population than individuals in the nation as a whole. An increasing number of employers are self-funding their health insurance plans. In 1994, 74 percent of employers with 500 or more employees self-funded their health insurance plans, up from 63 percent in 1993. An estimated 22 million full-time employees in private industry and state and local governments participated in a self-funded employment-based health insurance plan.(ABSTRACT TRUNCATED AT 400 WORDS)     

Why Third World urban employers usually prefer men

Males outnumber female employees by 3 to 1 in the modern sector of developing countries; moreover, women tend to be concentrated in a limited number of occupations. This underrepresentation of women in employment in Third World countries is generally attributed to the restricted supply of qualified women willing and able to work away from home in modern sector occupations. However, this approach pays insufficient attention to the demand for labor and the recruitment policy of employers. Employer concerns and perceptions that limit the overall demand for women workers and thereby reduce their employment opportunities include the need for pregnancy and maternity leave and protection, absenteeism, turnover, and cultural restrictions. Among the factors that contribute to the sexual segmentation of the labor market are protective legislation that excludes women from certain sectors of the labor market, sex-typing of jobs, and employer perceptions that women lack muscular strength, are not effective supervisors, and cannot work well with men. At the same time, women are preferred for certain jobs because of their greater docility, acceptance of lower wages, household-type skills, and sex appeal. The general factor limiting employment opportunities for women is the employer's perception that women are more costly and less productive than male employees. This perception is directly related to women's role in childbearing and rearing, and is reinforced by legislation that places the costs of maternity leave, nursing breaks, and child care directly on the employer. Thus, women's childbearing and family responsibilities not only limit their availability for work but also discourage employers from hiring them.     

Intersections on the Class Escalator: Gender,Race, and Occupational Segregation in Paid Care Work

As U.S. manufacturing and production industries have declined, the growth of the care sector has increasingly become an important source of jobs for workers without a college degree. Often requiring some form of postsecondary credentialing, many care occupations can provide better wages, job stability, and possible upward mobility for less educated workers. However, employment patterns in paid care work are both gendered and racialized: women and workers of color are overrepresented in care occupations with fewer entry barriers, benefits, and lower pay. Although these patterns are well documented, the mechanisms producing them are less well understood. Using event history analysis and the National Longitudinal Survey of Youth (NLSY79), this study evaluates the explanatory power of neoclassical economic, status attainment, and social closure theories of occupational segregation for black women’s and men’s greater hazard or “risk” of entering care occupations, relative to white workers. Net of individual and closure mechanisms, significant residual effects suggest labor market discrimination remains a primary explanation for the over-representation of black workers in less credentialed care jobs with fewer benefits.     

The effectiveness of health care cost management strategies: a review of the evidence

This Issue Brief discusses the evolution of the health care delivery and financing systems and its effects on health care cost management and describes the changes in the health care delivery system as they pertain to managed care. It presents empirical evidence on the effectiveness of managed care and concludes with an analysis of the potential of future health care reform to influence the evolution of the health care delivery system and affect health care costs. Between 1987 and 1993, total enrollment in health maintenance organizations (HMOs) increased from 28.6 million to 39.8 million, representing an additional 11.2 million individuals, or 4 percent of the U.S. population. At the same time, new forms of managed care organizations emerged. Enrollment in preferred provider organizations increased from 12.2 million individuals in 1987 to 58 million in 1992, and enrollment in point-of-service plans increased from virtually none in 1987 to 2.3 million individuals in 1992. In addition, the percentage of traditional fee-for-service plans with some form of utilization review increased to 95 percent in 1990 from 41 percent in 1987. Measuring the effects of the changing delivery system on the costs and quality of health care services has been a difficult task, resulting in considerable disagreement as to whether or not costs have been affected. In a recent report, the Congressional Budget Office recognizes two new major findings. First, managed care can provide cost-effective health care at a level of quality comparable with the care typically provided by a fee-for-service plan. Second, independent practice associations can be as effective as group- or staff-model HMOs under certain conditions. In the future, we are likely to see a continued movement of Americans into managed care arrangements, an increase in the number of physicians forming networks, a reduction in the number of insurers, an increase in the number of employers joining coalitions to purchase health care services for their employees, and a health care system that is generally more concentrated and vertically integrated.     

Issues in mental health care benefits: the costs of mental health parity

This Issue Brief discusses issues in mental health care benefits. It describes the current state of employment-based mental health benefits and discusses studies and issues regarding full mental health parity. It also includes an analysis of the effect of full mental parity on the uninsured population and the effects of the limited mental health parity provision contained in the VA-HUD appropriations bill. The final section discusses the implications of mental health parity for health plans and health insurers. When employers began to provide health insurance benefits to their employees and their families, they extended coverage to include mental health benefits under the same terms as other health care services. Many employers continued to add mental health benefits through the 1970s and early 1980s until cost pressures required employers to re-examine all health care benefits that were offered. They quickly found that, while only a small proportion of the beneficiaries used mental health care services, the costs associated with this care were very high. As a result, employers placed limits on mental health benefits in an attempt to make the insurance risk more manageable. The general strategies employers have used to manage their health care costs are cost sharing, utilization review, managed care, and the packaging of provider services. Employers' cost management strategies may be restricted, however. Five states have mental health parity laws, but three of the states--Rhode Island, Maine, and New Hampshire--apply these laws only to the seriously mentally ill. In addition, 31 states mandate that mental health benefits be provided. However, state mandates apply only to insured plans, not to self-insured employer plans, which are exempt from state regulation of health plans under the Employee Retirement Income Security Act of 1974 (ERISA). A number of recent studies have examined the effect of mental health parity on health insurance premiums in a "typical" preferred provider organization and on the uninsured. In general, the studies concluded that mental health parity could increase health insurance premiums, decrease health insurance coverage for non-mental health related illnesses, and increase the number of uninsured individuals. All studies of mental health parity, and mandated benefits in general, assume that there is a strong likelihood that increased health benefit costs would be passed along to workers in the form of higher cost sharing for health insurance, lower wage growth, or lower growth in other employee benefits.     

The Hidden Costs of Informal Elder Care

Demographic, socio-economic, and political trends throughout the developed world have contrived to make elder care an issue of utmost policy importance. They also have led to sharp reductions in health and social program expenditures. Policymakers are looking to communities to help meet growing care needs because community care is believed to be better and cheaper than institutional care. However, these beliefs become untenable when costs beyond public sector costs are considered. In fact, informal care carries a number of hidden costs that seldom are considered in health and social policy discussions. This article introduces a taxonomy of the costs of informal elder care, which can be categorized as out-of-pocket expenditures, foregone employment opportunities, unpaid labor, and emotional, physical and social well-being costs. Then, an illustration is provided regarding how the taxonomy can be applied to understanding the incidence, magnitude, and distribution of these costs among stakeholder groups. This taxonomy can help inform ongoing debate about health and social policy reform.     

Women and changes in the Chilean economy: some questions

The author argues that a new development model that encourages greater participation of women in the work force in domestic piecework, temporary work, and subcontracting may further lead to the exploitation of women in Chile. The importance of women in economic development in Chile should be based on building skills, providing support child care services, reorienting women's education, and tax incentives. Chile over the past decade has achieved relatively stable economic growth and increased employment of women. During 1990-93 the growth of women in the work force increased at a rate of 16.8%, while men's presence increased by only 9.8%. The Chilean economy is based on a sophisticated modern sector and a labor-intensive informal sector. The Chilean model of development relies on cheap, flexible labor and a government approval of this model. Increased participation of women in the labor force is usually perceived as increased economic empowerment. A 1994 Oxfam study found that women were being forced into the labor market due to declines in family income and low wages. 46% of men and women received wages that did not cover basic necessities. The Chilean labor market is gender-stratified. Men are paid better than women for the same work. Men are in more permanent positions. Labor laws are either inadequate or violated, particularly for hours of work and overtime pay and conditions of employment and benefits. Traditional female jobs are those that rely on women's natural attributes. These unskilled attributes are rewarded with low wages. Little opportunity is provided for upgrading skills or acquiring new skills. Some women turn down advancement because of a lack of role models. Women have little opportunity to develop their self-image as workers. Poor self-images affect women's work attitudes and motivation. Some firms use competition between women to boost production. Chilean women remain in subordinate roles.     

Questions and answers on employee benefit issues

This Issue Brief addresses 19 topics in the areas of pensions, health insurance, and other benefits. In addition to the topics listed below, the report includes data on the prevalence of benefits, tax incentives associated with benefits, lump-sum distributions, number of private pension plans, pension coverage rates, 401(k) plans, employer spending on group health insurance, self-insured health plans, employer initiatives to reduce health care costs, and employers' response to the retiree health benefits accounting rule, and flexible benefits plans. In 1992, U.S. employers (public and private) spent $629 billion for noncash benefits, representing nearly 18 percent of total compensation, excluding paid time off. In 1992, 71 percent of the 50.1 million individuals aged 55 and over received retirement benefits, including distributions from private and public pensions, annuities, individual retirement accounts, Keoghs, 401(k)s, and Social Security. Among the 76 percent of all private pension plan participants who participated in a single plan, 30 percent named a defined benefit plan as their pension plan type, 58 percent named a defined contribution plan as their pension plan type, and 12 percent did not know their plan type. Private and public pension funds held more than $4.6 trillion in assets at the end of 1993. The 1993 year-end assets are more than triple the asset level of 1983 (nominal terms). According to the Congressional Budget Office, U.S. expenditures on health care were expected to have reached $898 billion in 1993, up from $751.8 billion in 1991, an increase of 19.4 percent in nominal terms.     

WAR AND PESTILENCE AS LABOR MARKET SHOCKS: U.S. MANUFACTURING WAGE GROWTH 1914–1919

This paper explores the effect of mortalities from the 1918 influenza pandemic and World War I on wage growth in the manufacturing sector of U.S. states and cities from 1914–1919. The hypothesis is that both events decreased manufacturing labor supply, thereby initially increasing the marginal product of labor and wages. The results reveal that states and cities having had greater influenza mortalities experienced higher wage growth—roughly 2–3 percentage points for a 10% change in per capita mortalities. World War I combat mortalities also had a positive, but smaller, effect on wage growth. ( JEL N62, N32, N92, I12)     

Defined contribution health benefits

This Issue Brief discusses the emerging issue of "defined contribution" (DC) health benefits. The term "defined contribution" is used to describe a wide variety of approaches to the provision of health benefits, all of which have in common a shift in the responsibility for payment and selection of health care services from employers to employees. DC health benefits often are mentioned in the context of enabling employers to control their outlay for health benefits by avoiding increases in health care costs. DC health benefits may also shift responsibility for choosing a health plan and the associated risks of choosing a plan from employers to employees. There are three primary reasons why some employers currently are considering some sort of DC approach. First, they are once again looking for ways to keep their health care cost increases in line with overall inflation. Second, some employers are concerned that the public "backlash" against managed care will result in new legislation, regulations, and litigation that will further increase their health care costs if they do not distance themselves from health care decisions. Third, employers have modified not only most employee benefit plans, but labor market practices in general, by giving workers more choice, control, and flexibility. DC-type health benefits have existed as cafeteria plans since the 1980s. A cafeteria plan gives each employee the opportunity to determine the allocation of his or her total compensation (within employer-defined limits) among various employee benefits (primarily retirement or health). Most types of DC health benefits currently being discussed could be provided within the existing employment-based health insurance system, with or without the use of cafeteria plans. They could also allow employees to purchase health insurance directly from insurers, or they could drive new technologies and new forms of risk pooling through which health care services are provided and financed. DC health benefits differ from DC retirement plans. Under a DC health plan, employees may face different premiums based on their personal health risk and perhaps other factors such as age and geographic location. Their ability to afford health insurance may depend on how premiums are regulated by the state and how much money their employer provides. In contrast, under a DC retirement plan, employers' contributions are based on the same percentage of income for all employees, but employees are not subject to paying different prices for the same investment.     

INTEGRATING ECONOMIC DUALISM AND LABOR MARKET SEGMENTATION:

Although the U.S. economy of the early twenty-first century is vastly different from the U.S. economy prior to the 1970s, the nature of these economic changes and their impact on U.S. workers is unclear. This article claims that despite contemporary economic shifts, differential labor and employer power continues to segment the economy, and workers' position in the labor market continues to predict their rewards, beyond the effects of gender, race, and human capital. Drawing on segmented labor market and dual economy research, we propose a four-category model of the structural factors that influence variance in work-related rewards. We examine the distribution of jobs in each of four categories between 1974 and 2000 and observe that losses and gains across categories are unevenly distributed by race and gender. While white men have experienced the greatest declines in employment and earnings, they have maintained their absolute advantage over women and nonwhites. In multivariate analyses, we find that the structural position of employment continues to be a significant determinant of wages. Although women and racial minorities have experienced sizable increases in employment in primary labor market jobs in the core of the economy, both groups remain overrepresented in low-paying jobs. Moreover women, but not nonwhite men, consistently receive significantly fewer rewards for their labor in both low-paying and high-paying jobs. Our findings suggest that structural factors continue to influence earnings inequality, especially across race and gender lines.     

OFFSHORING PRODUCTION: A SIMPLE MODEL OF WAGES,PRODUCTIVITY, AND GROWTH

We examine the relationship between offshoring and the labor market in an occupational choice model of trade and endogenous growth where workers are employed on the basis of their individual skill levels. Trade liberalization leads to offshoring and reduces employment in the manufacturing sector. Displaced workers move into traditional and innovation sectors according to their skill levels, shaping real wages and aggregate productivity in the manufacturing sector. The paper aims to show how inter‐sectoral labor market adjustments, highlighted by skill heterogeneity, could be a possible explanation for the simultaneous rise in productivity and reduction in real wages that have coincided with the sharp escalation of offshoring activities in the U.S. manufacturing sector since 2004. (JEL F16, F23, J24)     

The impact of P.L. 93-641, the National Health Planning and Resources Development Act, upon health and mental health programming

Federal legislation regarding health care in the U.S. has increased rapidly in the past few years. A major law with potential far-reaching effects was enacted as a result of increasing legislation and rising health care costs. This law,The National Health Planning and Resources Development Act,has created a network of over 200 local, mostly nongovernment units, called health systems agencies. These agencies are responsible for areawide health planning, plan implementation, review and approval of federal health care expenditures for local programs, and facilities review. They will affect health and mental health programs at the local level. The article is directed to local health and mental health care providers who will, of necessity, deal directly with the local HSA's.     

U.S. immigration policy: the guestworker option revisited

In guestworker programs foreign nationals are admitted into another country on a nonmigrant status with severely curtailed social and limited labor market rights. The duration of stay is always finite and compliance with the terms of the contract are entered through a network of legal arrangements which allow officials in the receiving country a substantial amount of administrative discretion. Pro-guestworker arguments say that the borders cannot be closed, that guestworkers can be substituted for illegal aliens, that guestworkers are better than illegal aliens, and that additional labor benefits the US economy. Those against guestworker programs stress longterm socioeconomic issues rather than short-term economic advantages, saying that guestworker programs are no quick answer for illegal immigration, for domestic labor shortages, or for the US poor population. Guestworker programs, its opponents say, provide short-run economic benefits to a few employers and individuals at the expense of more widespread and longterm socioeconomic costs. They oppose: 1) the concept of admitting foreign workers with restricted rights, 2) the concentration of any negative labor market impacts on already disadvantaged domestic groups, 3) the proliferation of "jobs which Americans won't take," 4) many temporary guests ending up permanent residents, and 5) that exporting workers is as likely to impede as accelerate job-creating economic development in immigration countries. Most economists believe that diminishing marginal productivity produces downward-sloping short-run demand for labor schedules. The European experience with these programs has been different than those in the US since foreign workers in Europe were initially recruited in response to actual labor shortages and have always had legal status, but both Europe and the US have experienced large contingents of workers who remain in the countries and are at a pronounced power disadvantage regarding the society's institutions. Studies of guestworker programs have shown that worker flows eventually become impervious to the receiver's actual labor needs as employers disaggregate jobs into components which match the low skills of migrants and create additional foreign worker jobs which are then shunned by native labor, thus perpetuating a need for such labor. If the US opts for a large-scale guestworker program this will only replace 1 set of problems with another and it is not at all certain that large-scale guestworker admissions will proportionately reduce illegal migration inflows.     

EVIDENCE ON PRICE ADJUSTMENT COSTS IN U.S. MANUFACTURING INDUSTRY

This paper investigates the degree of rigidity in prices of manufactured products in the U.S., conditional on labor costs. I extend Rotemberg's model of quadratic price-adjustment costs and find that prices are costly to adjust: after a year, about 40 percent of adjustment remains to be completed for aggregate manufacturing, while for some industries the adjustment is twice as slow. But manufacturing prices are less sluggish than prices in the U.S. economy as a whole. Thus, nominal rigidity in other markets, such as those for services or labor, may be important.     

Gendered,Invisible Work in Non‐profit Social Service Organizations: Implications for Worker Health and Safety

Nonprofit organizations (NPOs) play an important role in the provision of health and social services. In Canada the nonprofit sector includes 7.5 million volunteers and employs over 1.6 million paid workers. The sector is overwhelmingly female‐dominated — women make up over 80 per cent of workers in these nonprofit services. Work performed by women has traditionally been undervalued and invisible. It has often been considered safe by researchers, employers, policymakers and sometimes even workers themselves. Although there is some indication that jobs in the restructuring social services sector can be characterized by constant demand, high stress and violence, research into the working conditions and health hazards of these types of jobs has not been a priority. Using data from a qualitative study examining work in NPOs, we trace the ways that work performed in these workplaces is both gendered and invisible. We identify three types of invisible labour. ‘Background work’ facilitates and supports more visible and recognized organizational activities. Certain organizational language obscures the full spectrum of work that takes place in the organizations and the risks it may involve. ‘Empathy work’ includes the relationship building, counselling and crisis intervention that comprise key components of social service delivery. ‘Emotional labour’ involves the management of client emotions and workers' own emotions in the process of working with clients and delivering care under conditions of scarcity and contraction. The invisibility of these activities means that much of the day‐to‐day work done in the organizations, while particularly important in the context of social service restructuring, is taken‐for‐granted and undervalued by organizational outsiders. As a result, many of the hazards present in the jobs are hidden from view and workers' health may be compromised. We argue that the invisibility and taken‐for‐grantedness of certain types of work in NPOs is reflected in, and constitutive of, particular exclusions and shortcomings of current occupational health and safety systems designed to protect the health of workers.     

Power and change: primary health care at the crossroads in Sweden.

This paper is based on in-depth interviews with members of Sweden's medical interest groups involved in a national effort to control health care costs. Sweden is faced with escalating costs due primarily to a growing high technology hospital sector. Simultaneously, consumer demand for primary care services and for gerontological care is rising rapidly. The Swedish way of changing the health care system is described and an analysis of the power struggle between physicians, health care bureaucrats and politicians is presented.