Wednesday, September 12, 2007

Autoworkers Seek Jobs in Health Care: The Very Industry That Is Bleeding The Big 3

From yesterday's WSJ article: "NURSING AMBITIONS: In Shift, Auto Workers Flee to Health-Care Jobs; Many Seek New Starts In Field That Bled Big 3; Detroit's Next Migration:"

Bad News 1: Health care has long been a huge budget item for Detroit's auto makers. Last year, health care cost the three more than $10 billion combined, more than they spent on steel for their cars and trucks. The manufacturers figure that over coming decades, they will be obligated to pay about $95 billion in retiree health-care costs for current workers, retirees and their spouses (see top chart above).

Bad News 2: GM spends about $1600 per vehicle on health care costs, about 10 times the amount Toyota spends per vehicle (see middle chart above).

Bad News 3: UAW membership has declined by 126,000 since 2003, as workers have early retirements or lump-sum buyouts.

Good News 1: The American Association of College Nursing estimates the U.S. currently has 126,000 nursing vacancies. By 2014, the U.S. will require 1.2 million new and replacement nurses, as many of the nation's 2.9 million nurses retire and aging baby boomers need increasing amounts of care.

Good News 2: In Michigan, health care is the only industry in demand across the state, says Andy Levin, the deputy director of the state's department of labor and economic growth. Michigan projects a shortage of 18,000 nurses by 2015. "Every hospital in Michigan needs nurses, and every school has a nursing waiting list," he says. "The health-care industry is a growth sector we want to foster."

Solution: Last year, Ford began offering a buyout package that covers schooling, following an internal 2005 study that showed many of its younger workers would leave if given a chance to attend college. Under this plan, Ford agrees to pay former workers half of their annual pay for four years -- typically $25,000 to $30,000 annually -- plus health-care benefits and up to $15,000 each year for school. Workers surrender retiree health benefits but retain whatever Ford pensions they've earned.

Ford says 40% of its former workers who are going to school are studying in medical fields -- more than half specializing in nursing, followed by radiology, dental hygiene and pharmacology. "Health care is where the jobs are," says Marty Mulloy, Ford's head of labor relations, who helped develop Ford's education buyout plan and is handling this summer's UAW contract talks.

Good News 3: Former auto workers say they are drawn to health care because the jobs pay well and are less vulnerable to being outsourced. Registered nurses currently have an annual mean salary of nearly $60,000, the Bureau of Labor Statistics says. Dental hygienists earn about $62,000. By comparison, auto-manufacturing jobs currently pay about $54,000.

Conclusion 1: The Big Three have almost $100 billion in health care obligations, and some of that money will be spent in the future to employ the autoworkers who have left the auto industry and gone into health care. In other words, Ford's buyout packages will help train the nurses and other medical professionals necessary to provide essentially unlimited lifetime health care for 721,000 current and retired UAW workers. The very industry (health care) that could eventually bankrupt GM and Ford, is nevertheless currently providing many jobs for former UAW workers.

Conclusion 2: Many UAW workers will be better off in the medical field than in the auto industry, and could have greater job stability and higher wages.


At 9/12/2007 7:32 AM, Blogger james said...

I like the overall sounds of it. It looks as though the "invisible hand" is working just as it should be in this situation. As one business plan falters the stronger one capitalizes on the falter.

Although I do wonder when we are going to stop writing the health care industry blank checks for their services? One sign that this may be changing, is the walk in clinic inside my local Meijer store. Surprising as it may sound, they have a small cash clinic with a menu on the wall. Each ailment/solution has a visible price tag. Why doesn't your general practitioner have one of these? Probably the same reason your local used car dealership does not have the price on the car, it takes away your bargaining ability.

At 9/12/2007 8:19 AM, Anonymous Anonymous said...

There's no bargaining for an individual, but the insurance companies bargain and the price is set accordingly. By law, insurance companies cannot be charged higher than a "cash" price." They can, however, negotiate to be charged less. So, someone who has no insurance but has the ability to pay gets charged the top price, the insurance companies get charged a bargained price, and those who cannot pay get charged nothing, which drives the price up for the others.

They can't post a price because it would look like this:

Office Call Charge $0 to $400 depending on who you are.

Price discrimination at its finest!

At 9/12/2007 9:56 AM, Blogger james said...

So why not same price for all? Now we can build the menu. When someone does not have the money to pay, who pays?

At 9/12/2007 10:03 AM, Anonymous Anonymous said...

"So why not same price for all?" Ability to pay. People can't be legally refused emergency medical care if they don't have any money like they could a hamburger at Mc Donald's.

"When someone does not have the money to pay, who pays?" The same person who pays when someone shoplifts in a store--the paying customer.

At 9/12/2007 10:21 AM, Anonymous Anonymous said...

Professor Perry wrote: “Conclusion 2: Many UAW workers will be better off in the medical field than in the auto industry, and could have greater job stability and higher wages.”

I agree 100%. All workers need credentials and a marketable skill-set to sustain them in the event of losing their jobs and/or benefits. No one is “owed” a job.

UAW workers at GM can receive up to $4600 per year for tuition leading to a degree at an accredited college. Sadly, too few avail themselves of this excellent benefit to invest in their future.

At 9/14/2007 7:03 AM, Blogger juandos said...

One of the interesting things I've noted over the last twenty years is that those with insurance cards seem to have more maladies (unknown them until the doctor saw the insurance card) than someone walking into the office with $10k in their pocket...

At 9/14/2007 7:52 AM, Blogger james said...


For once you and I agree my man. I think the Insurance Card has upset the free market that the medical field should be subject to, just like every other market. Lets get these co-pay levels up a bit so that we can get this cost under control. Make people aware of what they are being sold. Medical insurance should not be a necessity just to get a check up. Although it is quickly becoming that way. Just because you have a doctorate in medicine does not mean you are not a sales person for your hospital.

At 9/14/2007 5:20 PM, Anonymous Anonymous said...

Juandos said: "One of the interesting things I've noted over the last twenty years is that those with insurance cards seem to have more maladies."

On the other hand, those without insurance cards postpone trips to the doctor, and that’s not good, either. My friend died at 51 because he did not go to the doctor until he had advanced throat cancer. When he finally went, they spent over $200,000 trying to save his life, but he died anyway three weeks later. He had already declared bankruptcy once because of unpaid medical bills a few years earlier and we figure that he did not want to put his family through that again. He was a proud man. Suicide by doctor? Probably. But, we’ll never know for sure.


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