JournalInquirer.com

Taking the good with the bad on economic recovery
CT@Work
By Leo Canty
Published: Thursday, August 27, 2009 12:00 PM EDT

Good news first: Every day more economists — financial experts, along with re-upped Fed Chairman Ben Bernanke — say the worst part of this bad economy is over. Those claims are based on slowing rates of job losses, excess inventories, consumer confidence — and probably some unscientific observations like the thickness of the wooly bear caterpillar’s fur.Wall Street activities such as stock buying, bonus payments, and TARP futures trading seem to be rising with every happy news story. Good economic news breeds good opportunity for everyone with money. Growing fast profits on the upside is helping to regain the lost net from the previous downside. Hooray!

Now the bad news: The good news is being enjoyed by those most of us can only read about.

Sure, your meager 401(k) is growing a bit, but there’s a lot of lost ground to cover before you’re in full recovery. And the even worse news is that the indicators that move the markets aren’t necessarily the ones that help you pay your bills or boost your pension if you’re retired, as in a 0 percent Social Security cost of living adjustment for the next two years.

As the economy shifts into global mode, the upside of recovery will take on a new form.

In a recent New York Times blog post, Nobel Prize-winning economist Paul Krugman drew a great set of incredibly boring but telling charts to show the impact of global economic change on the recovery. The bottom line: When America has invested more in itself — after the 1981-82 recession, for instance — jobs have grown rapidly as the economy recovered. More people have found work, which in turn generated more income, more spending, more production, and then more jobs. By 1984 employment reached pre-recession levels. That was fast.

Today, with so much of the capital and so many jobs spread out around the world, recovery rates will be slowed. The country may end up with fewer jobs than pre-recession, as companies search for profits with workforce replacements elsewhere.When companies do begin to add jobs, Americans may not be the ones invited to fill them. When fewer jobs are available, there’s less income, less purchasing, slower growth, and a snail’s-pace recovery.

We’re living that experience now in East Hartford, as the big contest unfolds between Pratt & Whitney, which seeks to boost its post-recession profits, and the Machinists union, which is fighting to ramp up job recovery here. As the recovery continues, competition between jobs and profits will escalate.

Pratt/United Technologies can operate anywhere in the world. Capital and plants can move faster than ever to Georgia or Singapore or Japan. The quest to provide investors bigger returns drives decision-making — especially after this lag period. And conditions are ripening for better returns. Layoffs and off-shoring the workforce make analysts happy as they calculate stronger earnings potentials. As for the workforce: Buy up the stock market because the job market won’t be the place to be.

American workers could just fold and accept Third World wages to be real competitors. Thailand’s average wage is $5.29 a day. Business and industry have been successfully ratcheting down wage rates in recent years.

But that’s not what America’s all about.

The better option is to create a more level playing field with smart incentives to get the profit chasers chasing profits right here in this country, and meaningful disincentives to prevent business from abandoning the American workforce. Stronger state and national commitments are needed to actively create more jobs and drive more investment in infrastructure that supports old and new industry and technology. Aerospace, fuel cells, biotech, and green products and systems are a few areas to pursue. Retool by building better mass transit, bridges, and structures that will revitalize worn-down cities. Add value to the workforce with more cost-effective health care and pension plans that work.

These are worthy investments that can help generate good news and better outcomes for American jobs and the workforce after the next economic downturn.But first we need to get through this downturn.

Paul Krugman and the wooly caterpillar suggest that as this slow cycle rolls out we may live through a few good reasons to chase those better options.

I’m not sure if that’s good news or bad.

Leo Canty is executive secretary of the Connecticut AFL-CIO and chairman of the board of the Connecticut Health Foundation. He lives in Windsor.

JournalInquirer.com
It’s a case of blood money
CT@Work
Published: Thursday, August 13, 2009 11:57 AM EDT
Leo Canty

There is no question this tough economy has been extra tough on the workforce. Businesses everywhere are struggling to stay afloat and keep their profit margins from turning red. After all, if corporations can’t make ends meet, there won’t be any jobs out there for workers.
One time-tested strategy to keep those jobs around is to make cuts. Cuts in jobs, pay, and benefits all help these corporations to maintain the steady stream of profits to which they’ve grown accustomed. And most importantly, those cuts insure that executive pay, stock options, and bonuses won’t have to be sacrificed.Even nonprofits understand the importance of making cuts to protect executives and the company line.

Case in point: the American Red Cross. Blood is big business, as in $3 billion a year big. With her $565,000 paycheck, Red Cross CEO Gail McGovern understands how big. The Red Cross supplies almost 50 percent of the blood in our nation. Sure, it takes thousands of nurses, phlebotomists, drivers, lab techs, and other professionals to keep that blood supply flowing — including 225 blood collection workers at Connecticut Blood Services Region in Farmington. But let’s face it: In order to keep business booming, cuts have to be made.The Red Cross has borrowed from other “successful” business models. They’ve taken to moving donors in and out faster than the McDonald’s drive-through and extended the hours of the blood drives so they can fit more donors in.But the most important cost savings has been to cut people. Do you really need nurses on site in case someone has a bad reaction? Why have two people doing the job when one person can just work twice as fast? Couple that with cuts to pay and benefits for this reduced workforce and now you’re boosting profits. Oh, and forget about testing the blood — it slows down production. Besides, the FDA fines, totaling $21 million in the last five years for poor blood safety, cost less than skipping the tests.More blood, more cash, bigger bonuses.

It comes as no surprise the Red Cross is borrowing another page from Corporate America’s anti-union playbook. In regions across the country, including Connecticut, it is refusing to enter into a fair agreement with the very workers who protect the quality and integrity of the blood supply. Red Cross is practically daring the workers to strike, no doubt in the hopes of replacing those pesky union workers who actually care about safe blood with a lower paid, more compliant, and more transient workforce. Think Wal-Mart, but instead call it Blood-Mart.

Now, what would Clara Barton do? She founded the Red Cross and the first local chapter was opened up in Dansville, N.Y., on Aug. 22, 1881. I can’t imagine that a founder planting seeds to grow a caring, kind, humanitarian, organization would cherish an enterprise that beat up its workers and offered volunteer donors the same love that vampires give mortals. Maybe Red Cross management should get a session with Dr Phil. He is, after all, a member of the “Celebrity Cabinet” and might find a humanitarian reason to get the sociopathic managers into therapy. Might even be a good show for TV, so the rest of the corporate bums that do the same thing might learn something.

In the meantime, Red Cross blood-collection workers in Connecticut see this awful corporate behavior continuing. It is making an impact not only on workers, but donors and volunteers. The workers have a union and are pulling together on this front, actively fighting back. They believe donors deserve safe, protected blood drives. No patient receiving Red Cross blood should worry about the quality. They have to fight for a safe environment for their co-workers and a fair wage and benefit plan. They donate their own blood for the cause and are pushing to rebuild the spotty reputation of the uncaring, greedy management.

So they are picketing and kicking up some dust and fighting the boss. Good for them. Good for us. Someone has to stand up to this profits and bonuses vs. people at work contest. There’s too much management-first style management going around already. The last thing we need is to have every employer out for blood.

Leo Canty is executive secretary of the Connecticut AFL-CIO and chairman of the board of the Connecticut Health Foundation. He lives in Windsor.

JournalInquirer.com

The health-insurance industry’s state of denials
CT@Work
Published: Thursday, August 6, 2009 12:08 PM EDT
Leo Canty
How do you prepare for this kind of fight for your life — a knockdown, drag-out contest that’s all too common between subscribers and their health-insurance company? The scrapping comes into play when care or payment is denied or an insurance policy cancelled, leaving the sick and dying in an awful predicament.

Those who still have their medical plans think they are reasonably set if they need to see the doctor or get treatment. After all, you and your boss pay big bucks on health-care premiums, so you expect to get the care when you need it … right? Think again, because your opponent in the other corner, the health-care industry, is struggling to keep up with losses as costs rise and consume profits. But the driving formula — premiums paid minus health-care costs equals profit — affords few options.

If companies charge more for premiums, business is lost. Dropping the profits chases investors away. CEO compensation reductions may save a few million but more is needed. And there are efficiencies and cost cutting. In that option an increasingly common practice is claims denial. By some estimates 10 to 15 percent of claims are being denied for a wide range of issues — wrong information, paperwork snafus, treatments that are deemed ineffective, and many others.But a fellow named Wendell Potter has a different angle. “Insurers have every incentive to deny coverage,” Potter says. “Every dollar they don’t pay out to a claim is a dollar they can add to their profits, and Wall Street investors demand they pay out less every year.”

Potter is a Connecticut resident and former CIGNA communications executive who is speaking out about what he’s seen and previously defended in health-care industry practices. In his revealing PBS “Bill Moyers Journal” interview last month Potter also said, “You don’t think about individual people. You think about the numbers, and whether or not you’re going to meet Wall Street’s expectations.”

So let the health vs. wealth battles begin.

The industry is active and hard at work in this game, but most people aren’t prepared unless you’re among those in training. They are the ones quitting the cigarettes, booze, fatty foods, and sleeping eight hours after a daily two-mile jog. To those who think that regimen sounds more painful than being beaten up by Dr. No and the uh-uh team at the HMO claims denial department, call this number: 1-866-466-4446. It’s the Office of the Health Care Advocate.

Health insurance is complicated, and even more so when one loses coverage. Those finding themselves in this state of denial have an advocate that can help win in memo-to-memo health-care combat. Gov. Jodi Rell and the captains of health-care business and industry know the value of this phone call. They supported a plan to cut the budget for the phone, and all the staff — in the name of shrinking the size of government, of course.

Kevin Lembo and the Office of the Health Care Advocate announced this week big claims about the effectiveness of their efforts. Last year, their $1 million in advocacy tax dollars returned $5.2 million in savings as denied claims were reversed, getting coverage for the unprepared, sick, and dying customers of HMOs and insurance companies.

“We won 85 percent of the cases,” Lembo says. Since the win rate is so high, and many people are not prepared to get in the fight, it seems like there just might be a pretty large pile of profit to lose if this fight for your life stuff catches on. But that wouldn’t be a reason to shut down the program … would it? They’ve only saved $2.1 million as of July 1 for this year.

So far Lembo is on the job and his phone is still working. But who knows what the budget slicing and dicing may finally produce. If Rell and the Big Insurance profit protectors really support cost-cutting measures, then they would praise the million-dollar investment that returned $5 million in savings. If the plan is to make sure the health-care industry remains fully able to respond to the investors’ call, they will send Lembo packing.

There seems to be a common thread running through Rell’s treatment for Lembo’s office, and the recently vetoed Sustinet and pooling bills. As much as Rell and her investor friends love a fight, they hate a level playing field. You can’t deny that.

Leo Canty is executive secretary of the Connecticut AFL-CIO and chairman of the board of the Connecticut Health Foundation. He lives in Windsor.