Friday, October 29, 2010

Labor News: Retire Later and Pay for Your Own Health Care

2 million marched in France yesterday to oppose the new pension “reform.” According to a Le Parisien poll, the demonstration had 65% approval by the French people, while Sarkozy’s approval has fallen to 29%. The U.S. media has focused on the fact that the minimum retirement age will go up from 60 to 62, making it seem like the French workers are crying over spilt milk. However, the new law also increases the age at which French workers can receive full benefits from 65 to 67. In the U.S., that age is still 65, for those born before 1959. For those born after 1959, the full retirement age is 67.

French workers continue to strike and blockade many ports and refineries, despite the fact that the changes have been already been voted into law and in spite of attempts by their union leadership to quash the protests. As a result, ongoing fuel shortages are still crippling the French economy.

Meanwhile in the U.S., rather than increasing full health coverage for all, Obama Care has created incentives for U.S. employers to drop employee health coverage, which will force workers to purchase insurance on the open market at inflated prices beginning in 2014.. The penalty for not covering employees is only $2000 per employee. With insurance costs averaging $9000 per employee per year (and expected to rise sharply in the coming years), the most profitable choice is clearly to drop employee coverage entirely.

While this is not yet occurring on a large scale, many employers are putting artificial caps on their  contributions, forcing workers to pay for the balance of any rate hikes. They are also increasing deductibles and copayments and reducing benefits. Each of these moves causes a decrease in compensation for employees and a decline in income.

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