Economics of Wages and Employment

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Economics of Wages & Employment

All Employers Should Be Required to Provide Health Insurance for Their Workers

All employers should be required to provide health insurance for their workers. For employees, such a policy would entitle all full-time working residents in the United States to a standard package of health benefits. For employers, this provides a favorable contrast to the quasi-fixed cost that is the present insurance system as an implicit “tax” on all employees.

It is necessary to understand that employer-provided health insurance has an effect on wages. According to Milt Freudenheim of the New York Times, the health insurance supply and demand curves for uninsured firms are steep. When it is made mandatory for all employers to provide insurance, it is not different from placing a payroll tax on the firms. This causes a decrease on the demand side and Figure 1 displays this labor market change.

The firms’ and workers’ contributions to this provision are determined by the steepness of the demand and supply curves. Figure 1 shows that workers’ contribution is greater than the firms’, and so health insurance is paid by the earlier in the form of lower wages. For uninsured firms, this provision causes a decrease in unemployment.

The story is different for firms already providing insurance. Economists Thomas Selden and Bernard Didem believe that insured firms are likely to see their cost go down due to this policy. A mandatory health insurance system will standardize benefit packages and premiums according to the national average and increase focus on “risk neutrality” (Employer 297). A reduction in insurance cost for firms can be displayed here as payroll taxes for the demand side. Figure 2 shows the change in ...

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...rs worked in Hawaii is relevant to the increase in part-time workers. Employers lay off full-time workers in exchange for part-time workers. For every one full-time worker that is laid off, more than one part-time worker is substituted to compensate for the full-time worker’s production.

Employers will want to know how this policy

Therefore, all employers should be required to provide health insurance to employees in the United States. A standard health care package for all employees is the basis of equality. More generous plans will play in favor of employees with different preferences. The provisions of such a policy increase the number of insured employees for all firms and the labor market participation rates. While more studies and research are necessary to provide recent empirical evidence theory and model are the second best in these predictions.

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