Pensions And Healthcare Are History

Pensions and healthcare are falling out of favor in many companies. As a Chicago Tribune article recently pointed out, companies are trying to move their risks onto their employees and customers. Part of this trends is because globalization has made the world more unstable, and pensions require stability to work. Second, healthcare costs keep going up and companies don't want to foot the bill nor have to plan based on uncertain future healthcare rates.

The pension and healthcare plans they do offer are becoming limited in coverage and force more expensive patients to pay more out of their own pocket. 401 plans are replacing pensions because they don't hang a future burden on the company. 401 costs are known from year-to-year.

Is this just part of LifeIsCheapAndGettingCheaper?

Dunno, but it's almost certainly OffTopic and an AmericanCulturalAssumption?

Shareholder Benefit. Equity acquisition. "Globalization" is not a cause, it's a symptom.

It's not a "trend" in the it's-happening-to-us-and-there's-nothing-we-can-do-about-it mode, it's a set of habits of management that have become a trend in the nobody-has-shot-us-for-doing-this-yet-so-let's-carry-on mode.

As long as employees are willing to accept that they are worth orders of magnitude less than owners and managers, then "costs" stay down. Once employees get uppity and start believing they're worth a bigger piece of the action, then "globalization" can be created by shopping the employees to a place where they're either willing or forced to accept orders of magnitude less compensation.

Pensions and other benefit structures are a good thing when the perception is that turnover is expensive.

When turnover is meaningless (by virtue of employee venue shopping) then those benefit structures are perceived as cost centers with little or no return, so it's time to dispense with them.

Shareholder greed. The illusion of profit. Here we have (in the main) shares on which no dividend is ever paid, so the only purpose in owning them is to sell them. To someone else who is willing to pay more than we did. Because ... why? He's going to get paid a nice dividend? No, he's going to pray that someone else will eventually value them more than what he paid. And that would be because ... ? Because someone says the profits or earnings (of which we will see nothing) are up.

How sick is that!? Amalgamated Widgets sells stock. We buy it. We have no say in how the company is run and will never be paid any portion of the company's profits. Amalgamated releases Widget 2.0 and this stock, which has abso-friggin-lutely no intrinsic value, is suddenly worth more. Welcome to the Wall Street Casino, where we print our own money and the value of any particular currency on any given day is subject to whim and rumor.

When the disconnect between share value and actual production is as dramatic as this, when the whole reason to have a profit is so that the stock will become more desirable, then if you can redefine profit in a way that disconnects it from what you actually earn and actually spend, you can create a balloon of meta-money, sell it for real cash, and step gracefully off the sinking ship onto the deck of the next.

I work for a company whose whole upper executive structure is on five-year contracts. They're not here for the long haul, and they've pretty much quit pretending. We have employees who've been here for 7, 10, even 21 years. They are the company. But they aren't the owners. The upper strata have a compensation package with generous stock options. The game is to convince the shareholders and "the market" that the company is doing well for long enough to a) acquire a significant portion of equity and b) cash out that equity at a higher share price than they got it.

Now, if "company doing well" depends on keeping turnover down, and if the only way to do that is health care and pensions, then find a benefits package that doesn't hurt the profit illusion any more than we have to. I hear we can hire 20% to 30% of our talent from [developing nation here] and we don't have to provide benefits. Looks better on the books.

Whether that will be viable long-term is not really interesting, since we won't be here in five years. Can't say that in public, because it sounds crass and uncaring. What's really important is whether we can, in the short term, show profits (or at least earnings) up for the quarter or maybe year-on-year for the quarter. The health of the company (and its 7, 10, and 21 year employees) six years from now is not our problem.

This is not a "trend" or a "phenomenon" or any other expression that can be made to sound like a law of nature. It's quite simply people behaving badly.

I used to work for a company that provided enterprise software to [large hospitality group]. The new CEO (ver 6.0) found that he wasn't going to get his new boat unless he did something about the "fixed costs" and did the only ethical thing he could -- fired 15% of engineering. The amount of talent and intellectual capital that walked out the door that month was staggering. The shareholders were pleased. CEO 6.0 got his boat. I was recently contacted by one of my fellow developers (who, like me, was shot during that purge). He's back there. The offshoring fad is in remission. The folks at [large hospitality group] became seriously disenchanted with the product quality and support performance. They're hiring back as many legacy software people as they can a) find, and b) convince it's worth taking another chance. The company will probably survive and eventually thrive again, as they don't have to compete in a commoditized market. Oh, the executives? Meet the new management team. CEO 6.0 gets to keep his boat. We'll have to see how CEO 7.0 does.

It's not "market forces" or any other pompous-sounding pseudo-natural phenomenon. It's people. It's people and what they decide and the things they do.

I do think it's largely due to globalization. Globalization has forced "expensive" economies (sometimes called "first world" economies) to dump commodity businesses/tasks to the 3rd world that don't require a physical presence. This means the churn is higher in order to chase the Next Big Thing; and higher churn means there is less value or need for long-term employee loyalty. They want employees to leave so that they can hire a new batch trained for or prepared for the latest fad or trend. They want just-in-time skill-sets. -t

CategoryEmployment