Health Care Costs and the Future of U.S. Labor

Madeleine Brand discusses the national employment outlook with Andrew Stern, president of the Service Employees International Union, the largest and fastest-growing union in the United States. Stern warns that mass layoffs — such as those announced earlier this week by GM, which plans to shed 30,000 workers and close North American production facilities — will continue unless the United States moves away from a health care system that places most of the financial burden on employers.

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The news this week that GM was shutting down plants and cutting some 30,000 jobs was another blow to the labor movement. Labor has seen its influence decline as the number of union workers--once one in three--has declined to less than 10 percent of the work force. One labor leader determined to reverse that downward spiral is Andrew Stern. He's president of the Service Employees International Union. He leads a group of unions that broke away from the AFL-CIO earlier this year. Stern says GM's woes are part of a larger problem that the whole country needs to face: the high cost of health care and the burden it places on both employees and employers.

Mr. ANDREW STERN (President, Service Employees International Union): We need to get rid of the employer-based health-care system. You know, when people can go across the river and around the world and produce cars without any health-care costs and GM in the US at least is paying $1,500 a car, that is just unsustainable. And that's just true for all of the high-performance companies, whether it's Intel, GM or GE. We just can't have an employer-based health-care system and compete with the rest of the world.

BRAND: But that's not the only problem that GM and the other companies are facing. And they've also got pension costs. They've also got high wages.

Mr. STERN: We are in a world where mass production is moving to the lowest point. We're not going to compete on wages. You can't compete with China on wages, so you're going to have to compete on productivity, efficiency, design, creativity. And we need a modern labor movement that can be good partners with employers to be successful.

BRAND: Now you're organizing the new economy, in a way. You're organizing service workers, and most notably home health-care aides and janitors. But these are people who earn at the lowest end of the economic ladder. Their wages are still very low. How much power can these people wield?

Mr. STERN: Well, I mean, janitors in New York City now, you know, make $18 an hour, they have fully paid health-care benefits, because in the service economy, where competition isn't global, you can build a partnership about increasing quality, about taking wages, you know, from being out of competition, the not having the low-wage model, and still have employers be successful.

BRAND: But only 7.9 percent, about 8 percent of the private sector is unionized. So you really do face an uphill battle.

Mr. STERN: Yeah, we're climbing out of a hole. You know, there's only two ways American workers have had their wages raised historically over time. One has been the government through taxes and other benefit provisions, and the second has been unions. And both--the unions are too weak and government is redistributing wealth back up to the wealthy again, and this is all not good for America. Alan Greenspan said the gap between the rich and the rest of the population is growing so wide, so fast that it threatens democratic capitalism. And America is at a threshold moment, GM is on the front lines and we have to ask yourselves: Are we going to have a GM economy or a Wal-Mart economy? Are we going to have jobs that you can raise a family, or jobs that you live in poverty?

BRAND: Well, speaking of Wal-Mart, I imagine a huge feather in your cap--in fact, the whole bird--would be to unionize Wal-Mart. So why has it been so difficult to organize the world's biggest retailer?

Mr. STERN: Well, first of all, we have our own issues about being late to watch the development of what's now the largest employer in the country and not paying enough attention to it. But secondly, we have an employer that will go to any extreme to not let their workers have their own voice. They'll close down plants in Canada, they close down meat packing in Texas. I mean, there's consequences for that in terms of the ability for unions to organize. I think what we're seeing now is America's beginning to look at Wal-Mart and say those low prices have some pretty high costs. They mean that some of us are paying for Wal-Mart's health-care benefits. It means that American jobs are going overseas to China. And the beneficiaries now are not all of America, but five family members who have $19 billion each.

BRAND: Mr. Stern, where do you stand in terms of the government stepping in and enacting protectionist measures to keep wages at a decent level?

Mr. STERN: We're not going to stop trade, we're not going to build barriers on our borders, we're not going to turn back the clock of time. I think the question only is, you know: How do we make sure that with all the growth that's occurred in our country's economy, how is it shared? And if people want the government to share it 'cause they want to get rid of unions and they want, you know, national living wage laws and national employment laws, I guess that's one solution. Seems to me we did a lot better when we had people deal sector by sector in a thoughtful way about how we could build partnerships on success. But we're not going to go into the 21st century by looking into the rearview mirror.

BRAND: Andrew Stern is president of the Service Employees International Union. It's the largest and fastest-growing union in the United States.

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