Cartoon 799: Best Scheme

How do you control costs involved in employee compensation? In other words, “cheaper labor”. American business is in a rush to the bottom in labor costs. It is particularly germane for those parts of labor costs that inflate for the business. The answer is disassociate the compensation from being linked to changes in costs.

Their contribution toward heath insurance offered by business was moderately stable for employees over a long period of time. In the last couple of decades healthcare costs have skyrocketed. The increase in costs of the service was sustained by the business. That changed when businesses gave the employee a defined sum that they were to purchase their insurance. The sum does not track with changes in the market place. As the costs rise, the amount offered by business does not increase in lock step, or even at all. Therefore the employee must make up the difference to maintain desired coverage.

This approach is a financial wind fall for businesses. The savings go out the door to investors. Wall Street is happy and accords the stock a more sound financial footing. The loser is the employee.

The marketing has been successful to cause the voucher approach to be an accepted sound financial approach means by the public. In fact politicians want to migrate the approach to more government supported services.

The net result for 90% of American society is that they are becoming poorer in real terms. It is not confined to the infamous 47%.