Tonawanda News

Columns

July 17, 2013

Competition under the employer mandate

Tonawanda News — Much has been said over the past few years about Obamacare’s employer mandate and what the new cost structure will mean to compliant businesses that will be forced to charge higher prices for their products to cover their newfound, or higher, health care expenses. Those costs can be dangerous for those businesses when competing against manufacturers from other nations that already lack some of the cost and regulatory burdens our producers face.

Surprisingly little has been said about another competitive factor, one that affects domestic operations — labor.

Just as businesses compete against one another for market share in shared and similar industries, they also compete against one another across multiple industries for labor. In order to fashion the highest-quality goods and services, employers have to attract and retain the best labor possible for the best accumulated cost that their customers are willing to pay as a component of the end product’s selling price. By “accumulated cost,” one has to consider everything that goes into the price of labor for an employer. It’s not just the wage rate; it’s also paid holidays and vacations, workers comp and disability insurances, pensions or 401(k)s, and health insurance.

Since the Second World War, when our government interfered in free markets and froze wages, health insurance has been perhaps the most important of those cost factors — those marketing tools — that employers use to bring the best workers into their organizations and keep them there. The competitive worker knows healthcare’s value isn’t chump change; the typical single plan has an annual cost in excess of $4,000 while double plans exceed $8,000 and family plans surpass $11,000. So, if he discovers that a large portion or all of his health insurance will be paid for by an employer, he will choose that firm over another of similar — or even higher — wage and often entirely dissimilar industries.

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