Union and Negotiations Frequently Asked Questions
Below are some questions raised by the Union’s proposals and answers compiled with the assistance of area economists:
Q: What does “self-sufficiency” wages really mean?
A: When people talk about a self-sufficiency wage or “living wage”, what they really mean is a sharply elevated minimum wage. Determining what accurately constitutes a living wage is very difficult and subject to many variables. Is the worker married? Does she have children? What are the ages of the children? Where do they live? These and numerous other factors make it exceedingly difficult to determine a self-sufficiency wage that is universal.
Q: Giving everyone a big raise sounds great. Why isn't this a good idea?
A: The arguments for such a self-sufficiency wage appear, on the surface, to make sense. Pay people more money. They generally spend that money where they live, benefiting the community and stimulating new businesses and more economic growth. But such a scheme can create serious problems.
For example, in most marketplaces, wages are determined by worker productivity. Higher-productivity workers generally get paid more than lower-productivity workers. Productivity is based on many factors, including education and work-related experience. If wages are artificially adjusted upward, the unintended consequence could be increased UNEMPLOYEMENT.
For example, if a fast food owner now has to pay his workers $20 an hour in wages, any workers who don’t produce more than $20 an hour will be quickly replaced by those who do. There is no reason to think a similar situation would not develop in the health care industry or any other industry. If wages were artificially raised beyond what the normal marketplace would set, employers would hire and retain only the most productive workers. As a result, low-productivity workers lose jobs and general economic development is hindered because these workers may not then be able to gain the experience they need to become high-productivity workers. A vicious cycle is thus set into motion.
More Information
Reaction of Anirban Basu, Economist, to SEIU’s Hopkins Wage Proposal
Q: What makes the health care industry so special in Baltimore?
A: According to the Union, Baltimore’s health care industry has a unique obligation to pay its workers higher salaries because the health care industry is itself unique. But the vast majority of the jobs occupied by union members are NOT unique to the health care industry. Those workers in the Services Employees International Unions provide important contributions in such areas as housecleaning, groundskeeping, food preparation, etc., but these same jobs are performed by similar workers for numerous other organizations and companies, including hotels, restaurants and office building complexes. Although these employees may work within the health care industry, they are not directly involved in providing health care.
Q: I still don’t understand how paying some workers more money can hurt the economy.
A: One explanation is that if large pay raises are given to a large group of workers, that money must be recaptured somewhere. What typically happens is that the prices for the service or manufactured product must be increased to offset the additional expenses associated with the wage hike. If hospital wages are drastically increased, then health care itself must become more expensive. Everyone who uses these health care services must pay more. Now, money that might be spent in the community for services and products must now be spent on more expensive health care. Thus, higher hospital wages merely redistributes income from health care consumers to union workers with zero regional economic stimulus.
Q: Can’t Hopkins just raise its rates to increase revenues?
A: No. The escalation of hospital costs has been a major public concern. This concern led the Maryland legislature to create the Maryland Health Services Cost Review Commission (HSCRC) in 1971 to set the rates that Maryland's hospitals may charge. Working together, the HSCRC and Maryland's hospitals have successfully slowed the rate of increase in hospital costs that Maryland residents must pay. Hospitals receive an annual “rate order” from the HSCRC that establishes the rates hospitals can charge during the fiscal year. As a result, The Johns Hopkins Hospital does not have the ability to increase or decrease patient rates in order to meet the growing challenges of the health care industry.
More Information:
High Cost of Needed Health Care Facilities
Q: The Union uses wage data from the Maryland Health Services Cost Review Commission (HSCRC) Wage and Salary Survey to suggest that Hopkins pays it workers less than other Maryland Hospitals. What about that?
A: Good question, since the HSCRC says in its memo of March 19, 2004 that “The Wage and Salary Survey is not meant to determine the appropriate salary of any particular hospital employee or group of employees.” The way the information is gathered makes it useless for determining particular salary levels.
