No-one wants to be last

It’s no longer bailout. Now it’s investment! And folks are lining up to be picked as the best infrastructure for the federal government to invest in. Is government worst when it tries to pick favorites? The telecommunications industry might just prove that to be true.

I can see the logic. Just as Eisenhower invested in our great Interstate system, Obama looks likely to want to improve the Digital Superhighway! Not only will it create jobs but it will also grease the skids for many other forms of economic development. Doing business would be faster, the world being brought oh so quickly to your desktop. Customers, suppliers, manufacturers, and distributors would all have more reliable access to one another.

But, fundamentally, in doing so the Federal Government will have to choose which broadband infrastructure to provide, to what standard, and to whom. And therein lies the problem … what criteria will be used to choose? Will it be fair to all providers of broadband? Will it be fair to all users of broadband? And, can we see far enough into the future to make sure we get it right and don’t invest in the wrong technology?

Let’s start with which infrastructure to provide. Should it be wired or wireless? The telephone companies and cooperatives would love it if we said wired. They will argue that they are ‘spade ready’ in that they know how to lay the wires, have the people and equipment to do so, and know where next to do the laying. On the other hand, the wireless folks point out that they, too, already have everything ready to go and point out the improvements to wireless service wouldn’t just be limited to broadband uses. You’d be able to use your cell phone, Blackberry, laptop, and other electronic gizmos more reliably, in more places.

What standard of broadband should the government pay for? Being a bit of a quality freak I would answer the best and fastest it can afford. Beyond the obvious tradeoff between quality and quantity, there’s a few more devils in the details. Cable companies would be over-the-moon if the Feds specified next-generation speeds of 40 to 50 megabits per second. So, should we start digging and start boosting the fiber-optic superhighway? After all, lots of remote communities don’t even have cable yet!

Yep, there’s that tyranny of distance, the digital divide! In figuring out what form of technology to embrace and at what standard, the Federal Government has the chance to right pre-existing wrongs and bring greater broadband capability to millions of currently under served communities. Ah, but those would be the ones furthest away, right? The ones most expensive to serve? The ones with declining population levels? Maybe better broadband can convince the kids to stay on the farm and in the surrounding community!

Those far-out-there communities present another problem. There ain’t much government out those parts (and I think they kinda like it that way). So, who is going to supervise and maintain the broadband infrastructure once it is built? Are we going to give it to likes of Quest and/or Verizon and/or Comcast to manage? Shock! Horror! Those companies have some of the very worst records of customer service and some very interesting business models. Pay-per-view internet, anyone? Or, maybe you like mandatory bundling of services like the cable companies currently favor. Of course, my concerns mirror many of the current controversies swirling around the Federal Communications Commission (FCC).

Maybe the government could own the Information Superhighway, much like we once owned most of the interstates in this country. Long-standing geeks will tell you that the internet was once primarily a military and scientific network. And back them we wouldn’t have dreamed of privatizing those things (I guess we hadn’t heard of Blackwater or Halliburton back then).

So, I’ll be watching the next big economic stimulus package with interest. Who will the Obama administration pick as favorites? Who’ll get picked first? And, who’s going to miss out? I hope it’s not me!

Here’s to your health!

I posted a comment over at NewWest about why business owners should pay for the health insurance costs of their employees. But I don’t think the owner, Jonathan Weber, quite understood my point. Bottom line is that it is best for the business.

Many employees of small businesses can’t afford to get sick. An extended illness or recurring injuring can be financially crippling. Once your sick leave runs out, most of us don’t have any way to pay the mounting hospital bills. Without health insurance the only option seems to be bankruptcy. Given the choice, most of us would take another way out, any other way out. But, that’s the sad truth of the cost of medical treatment – there is no other way out. The bills are just too big. Other than our homes, most of us don’t own sufficient assets to pay hundreds of thousands of dollars of medical bills.

So, while it is the right thing for the small business owner to protect their employees from bankruptcy, it is also in the best interests of the company to do so. Rather than being faced with financial ruin there is a good chance the employee can come back to work. All the time and effort that went into recruiting and training that person isn’t lost. All the accumulated wisdom isn’t lost. And with a bit of luck the business doesn’t suffer too much of a hiccup as they get back up to speed.

Of course, there’s also sound health reasons for providing health insurance. No one wants sick people coming to work, bringing their illness or disease into the work place. Just like lots of places offer free flu shots (in the hope that a flu epidemic won’t break out in the workplace), there is a real cost savings when fewer of your employees get sick. Hence, smart employers remove all possible barriers to folks staying home and getting the care they need. That’s why we have sick leave, that’s why we encourage preventative health care, and that’s why we make it cheap for people to get looked at before the illness or injury gets too bad. Much can be treated easily and cheaply if a prognosis is made early. Folks get better quicker, too. Which means they can come back to work sooner.

Moreover, employees with health insurance we have one less thing to worry about and that allows us to focus more on our work. A similar logic is used in Europe and many US corporations that provide child care for their employees. Simply knowing that you are taken care of means a much greater level of productivity and much less lost time.

It all sounds a bit patronizing and nanny-ish, but it does create ‘stickiness’. Employees are less mobile, less likely to flit from job to job, if the conditions at the workplace are good. And, if the work is good and the pay is good, then most of us are content to stay put and continue to grow the business as a mutual project. It gives us something to believe in, something to contribute to, something to be a part of. A sense of we’re all in this together.

Fact is that employing someone is a competitive project. Most businesses want to pay as much as they can afford. And most businesses have to pay as much as they can afford. Otherwise, they are likely not to get a fully qualified person or someone who fully meets the expectations of the job. To get the best you have to offer the best. And that includes offering health insurance. Because of the way the health system is set up today, it is much easier and cheaper for the business to buy into health insurance than it is for an individual to do so (particularly if they are middle-aged or have pre-existing conditions).

Jonathan was right, in a way, when he asked, “A healthy population with access to good medical care is a universal good that benefits everyone, not just employers, so why should employers alone be responsible?” Ideally, we would have universal health care and employers wouldn’t be responsible. But, that’s not the case in this country. And it might never be.

Until that day, it would seem that we have two options. Either the employer pays or the employee does. I would argue that the employee already does. Not only are they the person who is in hospital, but with the extensive co-pay or deductibles we are already looking at quite high bills. (A recent dose of pneumonia cost me over $10,000 and I have pretty good insurance).

I can accept the logic of co-pay to a certain extent in that it makes the consumer a bit more responsible with their selection of healthcare. But, in most cases it is not an ideal market – as patients we have no idea what we are purchasing, nor do we have the information or skills to know how to choose the right product for the right price. Literally, we are at the mercy of the health provider.

Its all an interesting argument, but I am struck with the question of why business owners want to ditch health insurance for their workers. Is it simply a cost-savings mechanism? That is, shift the cost for someone else to pay and forget about the full cost of labor. Socialize the externalities, right?

I admire small business owners. It takes a lot of guts, a whole chunk of money, and a huge stack of time and effort to make a go of it. They’re putting it all on the line and hoping that now is the right time for their great product or service. And in these tough times it must be even harder.

But, for a small business to survive and thrive they are going to need great employees. In sickness and in health!

Are you being served?

Tipping waiters and waitresses is supposed to be about rewarding good service. Unfortunately, in these tough economic times they also illustrate the injustice of piece work. Through no fault of their own, servers are today taking home fewer dollars for the same work.

You’ve probably been there. Sitting in your favorite restaurant, that is. Wondering what you’ll have for lunch or for dinner. Prices have gone up and you’re a little bit worried about whether you can afford that nice glass of beer. Instead you decide to not order the fabulous soup and you know that desert is probably out of the question.

But, when the check comes you are still a bit shocked by the total. It might be more than you were budgeting for. So, you don’t leave as generous a tip. Tonight it might just be 15%, less than you know the server earned. They were patient, courteous, and diligent in their service. But, through no fault of theirs, you can’t leave your normal, generous tip. At the end of the night, sadly, you know that they will be taking home less. No matter how hard they worked.

It gets worse. According to the Wall Street Journal, the minimum wage for servers in many states “has been stagnant at $2.13 an hour going as far back as 1991“. That doesn’t go very far these days. And, some chain restaurants are now requiring servers to share their tips with the folks who seat you, bus your table, and wash your dishes. This minimizes the labor costs for the restaurant with little perceptible difference to the customer.

It’s just like folks who are paid by the number of pieces they produce. As a result of factors outside their control, a worker can see their take home pay decline. Maybe the financial wizards didn’t put the company on solid-enough footing and so must now lower the company’s cost to service the debt. That might mean cutting the piece rate, or worse cutting the number of employees and insisting those who stay to work harder or put in longer hours. Or perhaps the marketing geniuses didn’t have a good year and demand for the product is drying up. Maybe the wrong product was being made or planted. Maybe the delivery contract was poorly negotiated and the product isn’t getting to market in a timely and consistent manner. The list goes on. But, in each case the factor leading to the decline is outside the control of the worker. And you can bet labor costs will be the first and easiest place that managers look to cut costs.

So, if you’re eating out tonight or enjoying a cool beverage at your favorite establishment, give a thought to your waiter or waitress. If the service is up to the usual standard, then tip a little more than you usually do. They’ll appreciate it and with any luck they will be able to stick-it-out through these tough times to serve you again some other time.

Why are we blaming the workers?

Time was this country was proud of its workers. We were proud of the grit and determination, the ethos of pulling yourself up by the bootlaces. They built this country and they saved it in its time of greatest need.

Rosie the Riveter

Now, it seems the Republicans are going to take every opportunity to drag them down. Instead of congratulating them on their solid contributions to domestic manufacturing, now they are to blame for the downfall of all that is wrong with American industry.

So, let’s take a look at the situation with the Detroit 3. Republicans, at the last moment, insisted that the unions agree to cut its wages to be competitive with foreign companies such as Honda, Toyota and BMW by a set date. Of course, these politicians know very well that worker wages are not the financial issue. But, it is a handy political issue. Union members don’t tend to vote Republican.

Wages, according to Gwen Ifill of the PBS program Washington Week, account for somewhere around 10 percent of costs in the automobile industry. Chopping down those wages and negotiated benefits are not going to solve the problems.

But maybe if the Republicans are serious they might use the union wages and benefits as a measuring stick. That is, let’s calculate what the workers would be giving up by dropping down to the level of their non-unionized colleagues at Honda, BMW, and Toyota. Let’s make it a percentage of total compensation. Then let’s apply that same percentage drop to all all constituents such as salaried employees and executives, union bosses, shareholders, suppliers, utilities, car dealerships, debt holders and maybe even Michigan politicians. Let’s share the burden equally.

And, let’s see how popular this solution is to everyone. Either it’s a fair assessment of what it is going to take to save this crucial domestic industry, or its not. Just don’t blame the workers if its not a popular solution.

Robbing Peter to pay Paul

Looks like I’ll be paying University of Montana tuition again next semester. I’ll be one of the lucky ones. Because one of the saddest ironies is that in this time of economic crisis we are going to see higher education price itself out of the range of a large chunk of the public.

There will be lots of demands on next year’s State of Montana budget including help for the unemployed, health care for the elderly and those who can’t afford it, school for everyone’s children, and continued protection of our natural resources. Universities and colleges could find themselves at the back of a long line, and it is going to be all too easy for our state legislators to skip their responsibility to fully fund them. The argument will be that there are lots of other revenue sources for the universities, such as tuition, research grants, and private donation. Whereas, other needy government services have few alternatives.

In doing so, state legislators will be continuing the privatization of our colleges and universities. The state now pays less than a quarter of the costs of running higher education. The rest the university has to raise.

However, it is privatization without a plan. The state legislators, and the long line of Governors who have overseen this revenue shift, haven’t thought through exactly what the consequences would be. While many were politically happy to shift it to a user-pays system, those same people had no plan on how the best and brightest in our state would be able to afford to pay. Tuition levels have sky-rocketed, eligibility for financial aid has tightened, and scholarship support for public universities is now being spread even more thinly across many more people who need it. Just like there are those who say not everyone should own a home, we now hear that not everyone should expect the opportunity to go to college.

As universities and colleges face this new reality they, too, have begun operating more and more like a business. They seek out the students who are most likely to be able to pay. They prioritize the students who will graduate the fastest. And they lavish attention on the athletes who keep our alumni cheering on with their donations. The next step will be enrollment caps as they struggle to offer classes for less money. Majors will be cut as professional degrees that involve a lot of laboratory time, field experiences, and specialized instruction will be replaced by large classrooms teaching basic skills and universal subjects like English, Math, Economics, and History. It will be a necessary efficiency in times of reduced funding.

Our public universities and colleges have been severed from the public. We have turned education from a public good (available and beneficial to all in our society) into a private good (available and beneficial only to those who can afford to pay). Whatever happened to the great promise of equal opportunity for all, regardless of race, circumstance, or financial status? Why are President Dennison (of the University of Montana) and President Gamble (of Montana State University) out in the public decrying the educational, economic, and social injustice of the systems they oversee? Their duty should be the provision of a high quality education for all those capable at a cost all can afford.

We used to see higher education as an investment in our children, their talents, and their future contributions to our state. It was all about hope and promise and a firm belief in the goodness of everyone’s kids. Instead, it seems we’ll be building a second major prison complex in eastern Montana, at a cost of more than $371 million. Somehow, that just doesn’t give me as much hope.

To Save or Not To Save the Auto Industry

What should we do with the auto industry? On the one hand, they employ millions of people directly and support businesses that employ millions more. Can ourcountry handle the collapse of this industry in these already disastrous economic times?

On the other hand, I can’t really deny that they cars they make aren’t as good as their foreign competitors. They are less attractive, less functional, and have lower gas mileage than their foreign counterparts. They clearly haven’t done a good job of innovating and staying abreast of changes and trends in the market. Other auto companies aren’t suffering the way they are. So why should we help them? What precedent are we setting? What will be the next industry that we’ll have to help? Where does it end?

I also go back to the union issue. I am strong proponent of workers’ rights. However, even I have to admit that the unions have gone too far. Requiring lifetime benefits for someone who has only worked for the company for five years? I’ve never heard of that…ever. It seems unreasonable to me. Yet at the same time, I don’t buy that the only way that American auto manufacturers can compete with their foreign competitors is to cut employee pay and benefits.

What to do, what to do…