In a number of cases, it is better to have an employee who has worked at the company for 20 years than one who has just started. Those employees have demonstrated the utmost loyalty to the company, and continue to work just as diligently towards perpetuating its successes. Additionally, their job security is quite solid (relatively speaking!), so their employment with the company could be sustained indefinitely.
For obvious reasons (from both a production and an ethical standpoint), it is better to have a healthy employee than an ailing one. After all, an employee cannot perform his or her duties to the best of their abilities if they are sick. Plus, an employee’s sickness could become exacerbated simply by continued work (so they don’t miss a day of pay), and then that puts the workload even more far behind.
As we can see here, there are a number of issues addressed when it comes to employees, dedication, and the direction of that dedication. In the United States, we have a philosophy (perhaps associates of the New Deal vision generated by FDR?) that it is the most ideal situation for a company to provide benefits (be they health, financial, retirement, life insurance) to their employees. After all, if a person is to work practically his or her entire life into one company and has successfully assisted in achieving that company’s goals, why can’t the company give something back? A little help with health insurance, a matching 3% on a 401K—why, the employee would stay forever if they could!
I remember it was a dream to transition from a temporary to a full-time employee, because I would gain access to all of those things. What a relief! Especially with the price of health insurance (even with COBRA it is a staggering $449/month for a healthy 28-year-old female), it is nice to know the institution that employs you could support in paying for that.
However, in today’s global economy, this ideal situation is diminishing at an alarmingly rapid rate. What was once a secure idea has now become very unstable. Since many businesses have lost significant amounts of money, and are not generating the profits they formerly had. Now these business must unfortunately must reallocate finances so they can stay afloat in a cutthroat market—even if it means cutting employees’ benefits in half (or completely). This is one negative impact of opportunity cost.
As discussed in the questions surrounding the article on pages 78-79, I believe that the US car companies' obligation to pay health benefits to its current and previous employees does affect comparative advantage. While automobiles now are more expensive (and thusly fewer are being purchased), the other nation who does not charge as much per auto that has national health care may have other problems. Some friends from other nations I have spoken to who have national health care have to wait months and months before they can see a doctor or get a prescription filled. However, on the other hand, a US company may put employees out of work where that employee could conceivably collect months and months of unemployment insurance. It really depends on the opportunity cost in this case as well.
Unfortunately, in the case of the retired workers from the US car companies, I don’t believe it would be fair to downsize their benefits for increasing comparative advantage on their products. After all, who is to say that those retirees are able to start working again? Those employees were in a safe environment. Well, I suppose there really is no safe environment anymore—look at US Treasury bonds.
You make good points about the relative instability of the system as we know it. This will lead manufacturers and employees looking for other ways to accomplish their goals.
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