Cost of Worker Benefits Weighs on Hiring

Discussion in 'Economics' started by omcate, Mar 13, 2004.

  1. omcate


    Sat Mar 13, 2004 07:19 AM ET

    By Andrea Hopkins
    WASHINGTON (Reuters) - Renee Ray has never had a job that offered health care benefits, but the single mother of three dreams such peace of mind could be hers when she graduates from college in May and starts searching for a job.

    Analysts believe that the cost of that dream -- shared by more than 8 million unemployed Americans -- is one reason U.S. employers have been reluctant to add to their payrolls. And with 2.4 million jobs lost since the U.S. recession began in March 2001, finding workers willing to go without health insurance or benefits is easy.

    In February, 4.4 million part-time workers -- or one in five -- said they would rather be working full time. Moreover, nearly 200,000 temporary jobs have been created in the last 12 months -- one of the few job categories showing any strength in the government's monthly employment report -- far outstripping the meager 122,000 overall gain in payrolls.

    But while increases in temporary hiring have often been seen as a precursor to permanent hiring, the recent anemic job growth suggests employers are taking advantage of the desperate workforce.

    "The worse the labor market is, the more people are willing to accept lower pay and also lower benefits," said Drew Matus, an economist at Lehman Brothers.

    Ellen Bravo, director of 9to5, the National Association of Working Women, knows the burden of employee benefits -- 9to5 struggles to pay the full premiums of its 20 employees.

    "It's one thing to be strapped, it's another thing to say 'Oh here's a good way to cheapen labor and drive up profits'," Bravo said. The solution, she argues, is changing the unique American culture that expects employers to fund U.S. health care.

    "We can't just say, 'Put it all on the employer'. We have to find some solution as a nation. The problem won't be solved until we have some form of universal health insurance."

    The economy is still fragile even after the huge amount of stimulus applied by Bush, Greenspan & Co. After the Sept. 11, 2001 attacks in the United States, the two top officials pushed down the accelerator and saved the economy from ruin. But now, all the king's horses can't get the economy moving fast enough to create new jobs. The stock market's awareness of the problem mounted after February's jobs figures, released last week, showed a surprising lack of new jobs despite bullish forecasts.

    "Unfortunately I don't think it would change much whether it's Bush or Kerry or Mickey Mouse in the White House," said Richard Yamarone, director of economic research for Argus Research. "Presidents can't create jobs. If they could, the unemployment rate in October of each election year would be zero."

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