Happy Workers Build Better Cars

Why American Labor and American Corporations Need Each Other — Not Another War

By Bob Gordon
President/Co-Publisher
THE AUTO CHANNEL

EDITORIAL

Maybe we have been arguing about American labor and American corporations the wrong way for the past 50 years.

Without American workers, there are no American cars.

But without successful American corporations, there are no American auto jobs.

We need both.

My grandfather was a founder of the International Ladies' Garment Workers' Union, so I understand why unions were created and why workers need representation.

Organized labor helped establish better wages, safer workplaces, reasonable working hours, pensions and benefits. American workers deserve to participate in the prosperity they help create.

But there is another half of that equation that sometimes gets forgotten.

Before prosperity can be divided, somebody has to create it.

Companies have to raise capital, build factories, develop products, purchase equipment, manage suppliers, find customers, compete around the world and take enormous financial risks.

Corporations aren't some mysterious creature called "Big Business."

They are owned by millions of shareholders — retirees, pension funds, 401(k) participants, mutual funds, individual investors, employees and institutions representing ordinary Americans.

Workers need successful corporations.

Corporations need productive workers.

Neither wins for very long when the other loses.

So Why Are We Still Fighting?

Look at Detroit.

The UAW understandably wants better wages, job security and benefits for its members.

Ford, General Motors and Stellantis need competitive labor costs, productive factories and enough profit to invest billions of dollars in tomorrow's vehicles.

Those objectives don't have to be enemies.

In fact, they shouldn't be.

Because there is one enormous issue sitting in the middle of the bargaining table that has little to do with building automobiles:

HEALTHCARE.

Why Are Automobile Companies In The Health Insurance Business?

Ford knows how to build an F-150.

General Motors knows how to build a Corvette.

Neither company was created to operate a healthcare financing system.

Yet American employers have become responsible for negotiating, purchasing and administering medical coverage for millions of workers and their families.

During its 2023 UAW negotiations, Ford valued healthcare coverage for a permanent UAW-represented hourly worker at approximately $17,500 per year.

That isn't pocket change.

Multiply healthcare costs across tens of thousands of employees and suddenly an automobile manufacturer is spending hundreds of millions of dollars every year on something having nothing to do with designing, engineering or manufacturing an automobile.

What If We Changed The Deal?

Here's an idea worth discussing.

Instead of requiring American employers to purchase health insurance for their workers, let every American business contribute a predictable percentage of payroll toward a universal Medicare-style healthcare system.

Call it:

THE AMERICAN HEALTHCARE COMPACT

The concept is simple:

Every employer contributes.
Every American is covered.
Coverage follows the person, not the job.
Employers get out of the health-insurance business.
Workers don't lose healthcare when they lose or change jobs.
Unions no longer have to renegotiate basic medical security every contract cycle.
Management gets a predictable healthcare cost instead of an unpredictable insurance obligation.

This would not mean corporations stop contributing to employee healthcare.

Quite the opposite.

They would exchange today's complicated and unpredictable private insurance expense for a transparent contribution based upon payroll.

The exact percentage — 7.5%, 10%, 12%, or something else — requires serious actuarial and economic analysis.

And there are legitimate questions about physician reimbursement, hospitals, prescription drugs, Medicare, Medicaid, existing employer plans and how such a transition would work.

This is not something that should be sold with phony arithmetic.

But it deserves to be studied.

The Congressional Budget Office has examined multiple ways America could achieve near-universal coverage and has also modeled Medicare-based single-payer systems. The cost changes substantially depending upon benefits, provider payment rates, cost sharing and other design decisions.

So let's do the math.

Imagine The Next UAW Contract Negotiation

Take basic healthcare off the bargaining table.

Now let the UAW and Ford negotiate about what they actually know something about:

Wages. Productivity. Working conditions. Training. Automation. Profit sharing. Job security. Factory investment. And building great automobiles.

A worker shouldn't have to worry that changing jobs means losing his family's healthcare.

A small businessman shouldn't have to become an amateur health-insurance expert before hiring employee number eleven.

And an automobile company shouldn't have to negotiate with an insurance company before it can determine what an employee really costs.

Better Cars From Happy Labor

There is a remarkably simple business principle hiding underneath all of this:

HAPPY WORKERS BUILD BETTER CARS.

A worker who believes he is being treated fairly is an asset.

A company making enough money to invest in better factories, better technology and better products is an asset.

A union that helps create a productive, highly skilled and prosperous workforce is an asset.

And a management team that understands workers are human beings rather than entries on a spreadsheet is an asset.

America needs all of them.

The objective shouldn't be for labor to defeat management.

It shouldn't be for management to defeat labor.

The objective should be for American workers and American companies to defeat their global competition.

There Is No Fruit Without The Tree

Unions should fight for their members.

Corporations should fight to remain profitable and competitive.

But neither side should destroy the economic foundation the other depends upon.

Without profitable companies, eventually there are no jobs.

Without talented and motivated workers, eventually there are no profitable companies.

Maybe healthcare is one enormous burden we can remove from that battlefield.

Give American workers medical security.

Give American companies predictable costs.

Then let labor and management concentrate on creating prosperity together.

HEALTHY WORKERS.
PROFITABLE COMPANIES.
BETTER AMERICAN CARS.

Now that's a labor agreement worth negotiating.

Editor's Note: The American Healthcare Compact described here is a proposal for discussion, not a completed financing plan. Any national program would require detailed analysis of payroll contributions, existing Medicare and Medicaid funding, provider reimbursement, prescription drug costs, current employer healthcare expenditures and the transition from employer-sponsored insurance.

SO?

bgordon@theautochannel.com