Labor unions are a bit of an afterthought today. They shouldn’t be and it wasn’t always so. The United Auto Workers (UAW) was founded in 1935 and after several years of getting automotive plants unionized, and after World War II interrupted the union’s march to power, the period from 1945 to 1970 provided labor unions in general and the UAW specifically with an era to thrive.
Healthcare wasn’t the main issue on workers’ minds. A mother could go to the hospital, have her baby, stay a week, and be presented with a bill between $70 to $130 when the new family was headed out the door––all costs included. The average salary in 1950 was $3,300 and grew to $5,400 by 1960. So that hospital stay could be covered with about a week’s pay. The auto workers had other fish to fry.
Unions successfully negotiated a limited work-week, which had the added benefit of creating more jobs; higher salaries; and most importantly, pensions. The auto industry was mainly located in Detroit, Michigan and consisted of General Motors, Ford Motor Company, and Chrysler. They made money hand-over-fist because demand for new cars every year was through the roof. Any self-respecting American would not be seen driving a car more than two years old––many traded every year when the new models were unveiled in a fanfare.
Auto companies were making lots of money and unions wanted their share. They got it. This was the only time in history when supply-side economics, or trickle-down, worked. It wasn’t due to economic theory, it was due to threat of strike and subsequent lost profit. The union played one company against the other by threatening, and often executing, a strike against one that would improve the profits of the other two. The targeted company would soon settle and every worker got the benefit. Auto companies paid up with great salaries, paid vacations, and solid pensions. Almost as a side-note, healthcare insurance became part of the UAW benefits package in 1955.
The “what’s good for the goose is good for the gander” philosophy of economics held by the UAW worked great as long as the companies were making record profits. Problems arose in the 1970s when the foreign market began to make inroads in U.S. sales and demand fell at the same time. The companies were not as profitable, but the unions refused to back-off their negotiated, diamond-crested contracts. With much less money, companies had to pay an ever-decreasing number of workers and an ever-increasing number of retirees. The companies went bankrupt and needed government bailouts that have recurred as recently as 2009. Much of this can be directly linked to the union’s stubborn attitude about ceding gains during periods of ebbing profit. This view hurt the companies and ultimately caused damage to the unions.
Unions today are not as prevalent, although still important to the labor market. One union that has maintained its strength is the Culinary Workers’ Union, a local organization based in Las Vegas, Nevada. The union has always been concerned with wages, working conditions, and pensions, but its shining accomplishment is the healthcare it provides for its 60,000 members. Over the years the Culinary Workers’ Union has created their own Health Maintenance Organization (HMO). They are rightfully proud of the network they have for members, and like the UAW before them, the Culinary Workers’ Union is not interested in backing off negotiated, landmark strides in worker benefits. All the resorts, hotels, and casinos pay for the workers to have clinics, doctors, and medicine coverage at their fingertips. Employees like and feel secure about their health concerns and don’t want to give it up, even for a plan that has the potential to be even better. The resorts and hotels aren’t making noises about eliminating the healthcare negotiated by the union, some Democratic politicians are.
The bottom line is that the Culinary Workers’ Union is pushing back against the call for Medicare-for-All (MFA) because they don’t want to jeopardize what they have. The culinary workers are not the only ones who like their employer-sponsored medical insurance. Nearly half of all Americans get employer-sponsored insurance. One of the talking points against a public operated healthcare system like MFA, is choice. While it is true that MFA would eliminate any choice of private insurance carriers, in truth, employer-sponsored healthcare offers even less choice. Employers offer a policy and employees have to accept. They must be seen by network providers chosen by their employers’ policy underwriters. They have no say in the portion of premium they pay, and they must contribute any co-pay amounts for care and drugs. It is also employer prerogative to change carriers, dollar amounts, or even eliminate the offer of a coverage benefit. MFA offers much wider choice in selecting doctors and policy security than employer-sponsored benefits.
It appears there may be some cracks in the monolith the union presents. The union failed to endorse Sen. Bernie Sanders (I-VT) largely due to his promise to insert MFA as America’s healthcare insurance provider. In years past the union members would have taken the union’s words to the ballot box, but did not in the Nevada Democratic caucus. They voted strongly for Sen. Sanders against the wishes of union officials.
Stay tuned. This complex healthcare insurance story is far from over.