Creative Leisure News - Business-Wise

Mike's often irreverent, thought-provoking analysis of the industry.

Rising Health Costs, Fewer Jobs

The problems compound each other.

by Mike Hartnett (May, 2004)

There are two issues that I think are of overriding importance to the country, and therefore our industry. If they're that critical, then I should write about them, right? I would have belabored you with my rants on the subjects before this, because I can't think of anything definitive to say. I have no answers.

The subjects? Health costs and overseas jobs.

Politicians argue about buying drugs from Canada and who should pay for them, but that skirts the basic issue: rising medical costs. Got a back ache? The medical profession gives you an MRI, a bill for about $1,200, and another bill for hundreds of dollars for someone to read the MRI. Your back still hurts, and now your wallet does, too.

How many businesses in our industry can no longer afford to provide full medical insurance for employees because the costs have skyrocketed? Or have had to cut back the insurance to the point where employees' increased contributions are more than their raises?

The way costs are rising, soon nobody, neither employees nor individuals, will be able to afford it. For example, recently a well known industry designer was searching for insurance for her family. Her husband has had some health problems but is fine now, and they have a couple of school-age kids. The best insurance she could find would cost $40,000 a year.

Does that mean ultimately we'll have socialized medicine and the government will pay for it? Don't count on it. The federal deficit is going to be more than $600 billion next year � and we have all those Baby Boomers about to become part of Medicare and Social Security.

(This just in: You may wonder why Thomas Hamill, the civilian contractor who was held hostage by the Iraqis and eventually escaped, took a job driving a truck in Iraq in the first place. According to press reports, he was a failed dairy farmer who signed up for the high-paying but dangerous job because his wife needed heart surgery � and he didn't have insurance.)

Outsourcing jobs.

Here's the theory on free trade: If every country is allowed to do what it does best, then everything will be made more efficiently and cost less. If everything costs less, then citizens of each country will be able to buy more. The more the world's consumers buy, the better the economy for everyone.

I agree completely with that theory. The problem is, reality is often quite different. If world commerce is "free," then shouldn't China float its currency, just like the dollar, the yen, the mark, and all of the other worlds currencies? If that were the case, Chinese goods wouldn't be quite as inexpensive. The current system places U.S. manufacturers at an unfair disadvantage that has nothing to do with wages.

If free trade is "free," shouldn't senior citizens and the rest of us be able to buy prescription drugs from Canada? I can buy a shirt from China but can't buy a pill from Canada?

If the free-trade theory is correct, then it imposes a certain obligation on us, too. For example, the workers at the Maytag plant in Galesburg, Illinois are losing their jobs primarily because of NAFTA; Maytag's moving to Mexico. If free trade is best in the long run, and the government signed the NAFTA treaty, then doesn't the government have an obligation to offer these folks job retraining programs? Oh, but overall the federal budget for retraining programs is being cut; hard to argue with that, given our $600 billion deficit.

Free trade ultimately means manufacturing going to countries with lower wages and standards of living: But how strong can a country be if it doesn't make anything? Can the nation survive when all its citizens are salespeople and newsletter publishers?

Tom Ware of Bagworks may have the best analysis: "Loss of jobs to foreign firms kind of falls under the same scenario as the old recession/depression quote: 'A recession is when your neighbor loses his job; a depression is when you lose yours.' When your neighbor�s job is outsourced to China or India, then it�s a darn shame but it's happening all over.' But when your job is outsourced, 'it's time for the government to get involved and stop the blood-sucking corporations from shipping everyone�s job overseas.'"

So what's the answer? "Hell if I know," Tom says, "But we as a nation keep coming up with answers."

I sure hope Tom is right. Maybe I just don't have enough imagination to see what the U.S. would be like with a society of data pushers.

A perplexing example.

The steel industry is a classic example of the problems facing this country.

Fact: The Allies destroyed Japan's and Germany's steel mills in World War II. We then helped them rebuild, which all agree was a good idea. Today Japan and Germany are peaceful and buy billions of dollars worth of U.S.-made goods.

Fact: The new Japanese and German steel mills, being more modern, could produce steel more efficiently and cheaply than U.S. mills which hadn't been modernized. Apparently the execs and workers at U.S. mills pocketed too much of profits, rather than modernizing the mills, when they had so little competition in the post-war era. Maybe the U.S. steel companies paid the workers too much, but how much would they have to pay you to work in a steel mill?

Fact. Eventually U.S. steel mills tried to catch up, but last year the steel companies pressured the Bush administration to slap steep tariffs on foreign steel. The mills argued the competition was unfair, and what would happen to America's defenses if we no longer make steel for guns, tanks, and planes?

The Bush administration slapped on the tariffs, and the U.S. mills immediately raised prices.

Fact. The World Trade Organization screamed bloody murder and some countries prepared to raise tariffs on other U.S. goods. It soon became apparent that if those tariffs were imposed, the U.S. would lose more jobs than it saved from the duties on steel. The Bush administration rescinded the steel tariffs.

Fact. The widowed mother of a well known craft industry figure, whose husband had worked in an Ohio steel mill for 35 years, recently learned that the steel company will no longer be able pay her survivor's pension and health insurance.

Why? The steel mill has declining sales and can no longer afford to pay her insurance premiums.

Note: Do you have any answers or even partial solutions or just want to vent? Email your thoughts to mike@clnonline.com.

Comments on "Crafts."

In the last Business-Wise, Sandra Kay of MagTime Frames and Mike Hartnett debated Sandra's idea of using "Creative" as a noun to replace "crafter," which Sandra thought had too many negative connotations. (You can still read the column by clicking HERE.)

The debate prompted the following letter from Tom Ware of BagWorks:

I believe Winston Churchill once said something like: "A good ambassador is someone who is crafty enough to tell someone else to go to hell and he will thank him for the advice."

Well, I�m not much of an ambassador and I think that telling someone, "Oh, yes, you are definitely a Creative!" is about the dumbest thing that I�ve ever heard. If calling someone a crafter somehow makes them feel less than brilliant, then telling her that she is "a Creative" certainly would make the commentator appear outright ignorant.

There would doubtless be several seconds of awkward silence while waiting for the person to finish the sentence. Then comes the obvious question: "I�m a creative what?" And to capitalize it (Creative), thereby giving it spiritual reverence, is absurd.

"Crafts. Discover Life�s Little Pleasures" was developed several years ago by some very creative people (the word works very well as an adjective) after considerable research and debate. I think that they did an admirable job, but then I�m an old fogey who would rather have a stewardess than a flight attendant and is content to employ a janitor rather than an environmental restroom engineer.

"Crafts" is an umbrella word that can include a wide array of processes, like the word "manufacturer." When I tell someone that I am a manufacturer (or a crafter), they want to know what I make. So I tell them the details � with pride and enthusiasm. And thereby, maybe, I raise their opinion of my products (or crafts).

So call me a crafter, a hobbyist, a craftsman (oops, apologies to Sandra, a "craftsperson"), or even a creative guy, but please don�t call me "a Creative." Our society has bastardized enough of our language without our industry adding to the collection of malapropisms. Let's be creative within our craft and hobby industry and leave language to professional linguists.

Ahhhh�I feel better now.

Note: To read previous Business-Wise articles, click on the titles in the right-hand column.

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