Wednesday, September 19, 2007

Kelloggs 6 Hour Day

Kellogg's Six Hour Day, Benjamin Kline Hunnicutt (Philadelphia: Temple University Press, 1996) 261 pages

On Nov 24, 1930 Kelloggs Company President Lewis Brown announced the 6-hour day for workers. There were adjustments and controversies over the years but the policy continued to be an option for at least some workers until 1985, when it came to an abrupt end. Mr. Hunnicutt’s book presents a documented history of the 6-hour day at Kelloggs along with interviews of the Kellogg’s workforce from the shorter hours era. The history and supporting material make the case for a shorter work day, a still relevant but largely ignored policy.
There are nine chapters, which follow a rough chronology from the start in 1930 until 1985. Chapter 2 and Chapter 6 have supporting material with Chapter 2 primarily devoted to organized labors’ efforts to reduce work hours. Chapter 6 discusses human relations theories and the relation between work and human needs.

Chapter one presents the early years of success when management and labor supported the plan and largely cooperated to make it work. Data reported in the book shows Kelloggs had 1,500 workers at the start. With the 6 hour day the minimum daily wage for male workers increased to $4.00 a day. Other wages went up 12.5 percent. Kellogg’s asked for sharing of the burden with workers by sharing a modest weekly pay cut due to the 25 percent decline in hours in exchange for work rule concessions. Kelloggs hired more people and paid more in total wages as a result of 6 hour day. Hourly pay as opposed to total pay was important to the workforce. The 6-hour day was the company's effort to share the benefits of mechanization and productivity with workers and fulfill its obligation to the community. Lewis Brown felt Ford had already proved that shorter hours "was a good cost cutting move."

As part of the deal management insisted on the elimination of the night shift bonus and half hour lunch break when they went to four shifts at 6 hours each. Also the overtime bonus was phased out in favor of a production bonus based on what workers produced not how long they worked. Brown felt this was scientific management with shorter hours giving new opportunities for recreation and enjoyment.

Brown wrote of "another income of which we do not often think, and yet it is the one by which much of our lives is governed. ... Happiness is a bigger 'mental value' ... than the gain in money income ... of the job. The mental income is satisfaction - the enjoyment of the surroundings of your home, the place you work, your neighbors, the other pleasures you have - [which are] harder to translate into dollars and cents." He claimed that the 6-hour day would "revolutionize continuous industry operations" and laissez-faire capitalism because the balance of the workers lives would shift from concerns about work and economic matters to the various kinds of "mental income" life offered. ...

Lewis Brown guided company through the early 6-hour period. By April 14, 1931 Brown decided to make 6 hour day permanent concluding that shorter hours had proven a successful response to industrial mechanization. He found that workers were more efficient and worked harder on 6-hour shifts. He wrote, “workers worked with a will and a spirit in anticipation of the early quitting time; they accepted the "speed ups" and production bonuses because of the lure of leisure."

Brown admitted their jobs were boring and monotonous so that current and future work was likely to be boring and so it was important to work for shorter hours. Brown believed few workers found their work as interesting or fun as their time off. "Leisure" for Brown had matured into an open ended idea like "Freedom" which meant rest, family, life, recreation, education, music, ... cultural studies[sic] ... resulting in a more health, ambitious, alert, and aggressive working force." Since work was becoming more machine like it was better to eliminate it where possible.

In 1935, after 5 years on the 6 hour day, W.(William) K.(Keith) Kellogg Co. recommitted itself to the short schedule, finding that the "burden[or overhead] unit cost was reduced 25% ... labor unit costs reduced 10% ... accidents reduced 41% ... the severity of accidents(days lost per accident) improved 51% ... [and] 39% more people [were] working at Kellogg's than in 1929." "This isn't just a theory with us," W. K. boldly maintained. "We have proved it with five years' actual experience. We have found that, with the shorter working day, the efficiency and morale of our employees is [sic] so increased, the accident and insurance rates are so improved, and the unit cost of production is so lowered that we can afford to pay as much for six hours as we formerly paid for eight."

As we can tell Mr. Hunnicutt lets Mr. Brown and Mr. Kelloggs make the case for a shorter work week. The next chapter, Chapter 2, discusses labor movement history and reminds us that the early days of industrialization were periods of 10 and 12 hour days and 6 day work weeks at least up to the 1920’s. In these earlier periods labor fought to reduce work hours and the days in the work week, but much less for higher wages. By the end of the chapter many readers will realize modern day unions have abandoned the effort for shorter work hours.

After a chapter devoted to interviews with the workforce the book reaches 1937 when WK Kellogg retired and new management took over at Kelloggs. It was also the year the workforce elected to have a union. The two changes brought conflict where there had previously been harmony. The new management made it clear they would trade higher pay for longer hours and a smaller workforce. The remaining chapters of the book describe the nature of the conflict that finally brought an end to the 6 hour day at Kelloggs.

Work and pay negotiations and the 6 hour day were suspended during the Second World War and had to be restored by supporters. Management offered a raise if the union would agree to an 8 hour day, but the union voted 1477 for 6 hour day, only 440 in favor. However, the lopsided vote did not discourage management and they continued their pressure to undermine the 6 hour day. The company pressed to have department by department votes. Union pressed for plant wide vote. Company wanted to reduce the workforce and the union wanted to guarantee work for its older workers.

These chapters also describe management’s human relations efforts to undermine support for the 6 hour day among the union rank and file. For example, management began to call 6-hour work women's work and segregated older and partially disabled into 6 hour departments.
Pressure from the company divided the workforce until management had members of the union to lobby their views to others. The union began to speak of "job enhancement,” "satisfaction,” “more money for longer hours” and the "right attitude." Workers began to see favoritism in assignments for those who adopted the "right" attitude because many accepted the new management.

Chapter 8 describes the arguments and disagreements that developed over leisure time. Some argued the management position that leisure was good for nothing but idleness and the foolishness of women. The opposition, who called themselves mavericks by the 1950’s, countered with "the benefits of the 6 hour work day depends upon the quality of the use of time.” … While "crafts," "recreation," "hobbies," "pastimes," "games," “participatory sports’” were discredited in local discussion, many of the activities of the 6 hour day such as home cooking, gardening, sewing, music, home decorating, and conversation are now taken over with passive activities that are commercial. Now we defrost frozen dinners or buy fast food. We buy cut flowers. We do not converse we listen to the talk show.

Chapter 9 briefly recounts the 1980’s style business tactics that ended the 6 hour day at Kelloggs. Demands for tax favors, subsidies and threats to relocate were among them.
Even though the business view prevailed at Kelloggs, the book should be thought of as an important source of arguments for, and defense of, shorter hours. Shortening work hours continues to be relevant in 2007 as it was in 1930. Fewer hours for full time work spreads the work and jobs to more people and Hunnicutt’s use of available archival data and his discussion emphasize this point.

Cutting the work day has important economic effects, but the reader may get the impression, as I did, that the Kellogg position against shorter hours was partly driven by managerial determination to be in control. Longer hours pressures the rank and file to give up control of their time and helps management identify the more compliant people in their workforce.
Neither the Republicans nor the Democrats will touch the issue since business wants longer hours and the hefty increase in labor supply long hours represents. More surprising organized labor has shown little interest in shorter hours at least lately. Where union negotiations bring higher wages, business will economize on labor. Higher wages for fewer people divides the workforce since those left out are thrown into a surplus labor pool to earn lower wages or low wages. Solidarity is hard to achieve with the types of wage divisions that exist today in American labor markets. Labor would do well to think over bargaining for a shorter work week.
Kellogg’s Six Hour Day is an academic work that is logically organized, fully documented and written in a serious documentary or historical style, but not a journalistic or popular style. Nor does the book offer an operational plan to change the current wages and hours act or suggest how unions might bargain for a shorter hours policy. There are many shorter hours policies to explore, but the book avoids direct advocacy as part of the narrative. The reader can tell Mr. Hunnicutt believes America needs shorter hours, but the record from Kelloggs is allowed to speak for itself.

Service Jobs - Social Assistance

Social Assistance

The NAICS committee decided to make Social Assistance a separate service sector in the classification of service industries. It was a reasonable choice but a significant share of Social Assistance services are also provided as a part of the health care industry, government services, and churches or non-profit organizations. Beneficiaries of these services often cannot pay for them, or at least cannot make more than small contributions, which is one reason government and churches also provide some of America’s Social Assistance. Children, the disabled and the elderly typically lack the means to pay so that budgets for social services likely need some tax money or charitable contributions.

The NAICS committee further defined separate categories within Social Assistance: 1. Individual and Family Services, 2. Emergency Relief Services, 3. Vocational Rehabilitation, and Training and a 4th category, Child Day Care. In the first three categories the emphasis is on non-residential assistance: especially assistance for children, the elderly and disabled on a continuing basis, or temporary assistance delivering food, clothing and shelter, or assistance with job counseling or training for the unemployed or disabled.

Child day care services are distinct from these services in that they are weekday custodial care for infants or preschool children and more likely to be provided on a fee for service basis. Elder care jobs are in the health industry and not here.

The Social Assistance employment totaled for just the Social Assistance sub sector comes to 2.67 million jobs. Social Assistance services have employment growth rate of 4.2 percent even though the growth rate in jobs from 2000 in the national economy was .12 percent. However, 855.5 thousand of these jobs, or 32 percent of them, are in child day care, which was growing faster than the other social assistance sub sectors until 2009. After subtracting Child Day Care service jobs, only 1.81 million jobs remain. The 1.81 million undercounts employment in Social Assistance efforts, since it does not include the government’s Social Assistance, or the health care industry’s Social Assistance services as mentioned above.

Professional occupations needing college degree skills in social assistance come to 546.5 thousand jobs, which is nearly 21.2 percent of the social service jobs. Two occupational groups dominate professional employment in social assistance: Counselors and Social Workers. More and more employers want counseling and social work job candidates to have master’s degree training and virtually all of the states require licensure or certification to be a practitioner.

Professional counselors and social workers deliver most of the actual assistance in social assistance. There are about 1.18 million counseling and social work jobs in all establishments with about 248.1 thousand, or 21.2 percent of these jobs in the Social Assistance sub sector. Another 32.1 percent are in health care, and 43.6 percent in education and government with the remaining few jobs scattered around in non-profit organizations.

The work of social workers and counselors overlaps. Both are helping people solve individual and family problems, although social workers probably have more administrative duties and spend more time negotiating with others on behalf of clients.

Educational, vocational and school counselors and child, family and school social workers have the highest percentage of professional jobs in social assistance. Counseling specialties in mental health, substance abuse and behavioral disorders counseling and mental health and substance abuse social workers are the next most important specialties.

Child day care services are the fourth category among the social assistance services, although parents generally pay and these services are less likely to be subsidized by government, or private charity. Employment growth in childcare services averaged nearly 4.5 percent a year beginning in 1990; more than triple the growth in national establishment employment. Jobs in child care increased every single year from 1990, more than doubling employment.

Back in the 1950’s when the labor force participation rate for women was under 40 percent, childcare was more of a do-it-yourself occupation. It tended to be the unrecorded and untaxed work of moms. Now that the labor force participation rate for women approaches 60 percent, there are many more two income households needing childcare. Establishment employment in child day care services averaged 388 thousand in 1990, but 855.5 thousand in 2012. More two-income households mean more transactions, which help raise growth in GDP. More working moms mean more jobs in child day care services.

The 855.5 thousand in child day care undercounts actual childcare because it does not count work in private households. Around 270 thousand work in childcare in private households where childcare workers are better known as nannies.

With a 115.3 million service jobs, administrative support and social assistance employment gives us 2.67 million jobs, but that is only 2.0 percent of establishment employment. Social service employment continues to grow faster than the national rate and gained an increase in share of national employment every single year since 1990. Expect more jobs in this sector but it is too small to help meet the need for America’s job requirements, we still have74.6 million service jobs left to fill.

Saturday, September 15, 2007

Michigan Jobs

In the Detroit News of September 8, 2007 the paper asked readers "Do you think Michigan's strip clubs should be allowed to go nude and serve alcohol?" There is no mention of jobs in the question, but one of the 11 respondents caught on right away. The answer below belongs to Pradeep Srivastava of Detroit who appears to know that the right regulation will help keep Michigan employed.

"If Michigan's strip clubs don't allow nude dancing and alcohol, people who are interested in that kind of stuff will simply go to Windsor or Toledo and Michigan will lose its tax revenue and jobs to those cities. We cannot legislate morality, for that comes from within."

We want to commend Pradeep Srivastava for helping to save Michigan’s nude dancer jobs. Still we want to know, Where was Pradeep Srivastava when Michigan had better jobs to save?

Thursday, September 13, 2007

Service Jobs - Health Care

Health Care Services

We are looking for 92.8 million more service jobs. How about health care? For the sick or injured what could be more important than health care services? Employment in 2012 in the health care sector is 15.6 million divided among three sectors: ambulatory care, hospital care and nursing and residential care.

The federal government’s Standard Occupational Classifications define a group of 52 health care jobs called health care practitioners, who are mostly doctor, dentist, pharmacist, nurse, therapy and technology jobs. Health care practitioners actually deliver health care to patients and the jobs tend to have college and professional degree requirements. Few can be performed without a license. Combine all the health care practitioners and the total is 6.1 million jobs, which includes 539.9 thousand physicians and surgeons, 104.2 thousand dentists, 75.1 thousand pharmacists and 2.41 million registered nurses, the biggest occupation in health care.

There are 15 additional healthcare support occupations with 3.4 million jobs, all of them with aide, assistant or attendant in their job title. Nurse’s aides, orderlies and attendants are the second leading occupation in health care after registered nurses.

While a license is unusual for healthcare support jobs many of them have certificate or other formal training as eligibility requirements; usually these are vocational training or an AA degree rather than 4 year college degree training. Just like educational certification, health care degrees and certification programs provide a double employment benefit, keeping people out of the workforce and supporting employment at medical schools and college programs in allied health.

Licensed practitioners closely supervise nurse’s aides, orderlies and attendants or occupational therapist aide, physical therapist aide, pharmacy aide. Support jobs as health care aides free up time for licensed practitioners so their work tends to be filling forms, preparation and routine duties.

Health care practitioners and health care support occupations are two of what are really three segments of employment in health care. The third segment might be called administration and overhead. If we composed a one sentence summarization of health care jobs, here is how it would go: 6.1 million health care practitioners work to deliver health care with 3.4 million health care support staff along with 6.1 million other jobs as managers and non medical administrative staff.

If the American health care system had a similar history as public education it might not be as bloated with administration as it has come to be. With education people live somewhere and that somewhere is in a school district. Families with school age children send their children to the school in their district. The schools are publicly funded because they are vitally important to the social well-being. If we spend all that public money getting people educated it is not good for them to be ill and miss work, or die and not work at all, for lack of health care. Americans could have universal health care for all in districts like schools.

Instead America’s health care system is the evolution of political struggles beginning in the early part of the 20th century. By 1915 medical knowledge of antisepsis and anesthesia increased demand for health care enough to begin generating proposals for wide access to health care services. The American Medical Association was founded in 1847 so it was already well organized to oppose any plan that did not allow fee for service medicine. Even during the depression era when patients were unable to pay their bills, the AMA opposed government funded health care. They supported prepayment or private insurance plans like Blue Cross plans, but opposed proposals for health care coverage where the government would have a role.

Health care issues did not disappear with AMA opposition. The Truman administration supported a system of national health care with public funding and pushed hard for passage. The effort failed but political wrangling continued then as it continues today. In the arguments over government versus private insurance the Congress worked out various compromises that allowed a role for continued private insurance along with government funded health care programs. The political compromises in healthcare create bureaucratic employment: lots of it.

American health care has evolved into a decentralized public and private health care system with three large groups making transactions among themselves and with patients. On the medical side we have health care venders: hospitals, laboratories, clinics, HMO’s, PPO’s, independent practice offices, groups and associations. They do business among themselves and with the second major player in health care: private insurance companies. Federal, state and local government health care administrations round out the trio.

Universal coverage would consolidate administration and reduce the need for the multitude of separate bureaucracies. With universal health care it is easy to imagine standard forms and standard procedures. Since the health care industry supports 2.6 million jobs in Office and Administrative occupations, there are lots of jobs at stake. These include nearly 614,940 jobs as bill and account collectors, billing and posting clerks, file clerks and general office clerks involved with the billing shuffle. Bill processing needs computer support and there are about 98,660 jobs in computer work within the health care industry. Add over 764,030 jobs as secretaries, 415,380 jobs as receptionists and information clerks, and another 100,860 jobs in bookkeeping and accounting.

The Office and Administrative jobs and computer jobs just mentioned are all jobs within the health care industry, meaning ambulatory health care, hospitals, nursing and residential care. However, when bills and accounts are prepared for processing they have to be sent somewhere and to someone. Sending out is only half the transaction; someone else has to take them in; a someone who is part of another bureaucracy.
In a mixed public and private health care system lots of bills go to private insurance companies. There are 461,800 jobs in companies primarily engaged in underwriting health and medical insurance. For companies primarily underwriting health care insurance we have to figure most of those 461,800 jobs are health care administration since insurance companies do not deliver services to patients.

Claims adjusters are 10 to 12 percent of jobs in the health insurance industry and more than 10 percent are customer service representatives with some individual firms having over 20 percent of their staff in customer service. Customer service representatives within the health care industry total 89,700 jobs so we can see where billing troubles end up. There is more private sector health care administration because health care delivery continues to get more decentralized into independent practice associations, preferred provider organizations and HMO’s offering new forms of health care coverage. Some of these new groups are contracting their billing services to companies in the administrative support services industry.

Health care administration generates jobs in hundreds of decentralized state and federal offices administering Medicare, Medicaid, Social Security Disability, Workmen’s Compensation or the Veterans healthcare administration. When private health insurance expanded rapidly in the 1950’s the companies realized quickly that high risk individuals are unprofitable. Insurance companies do not want disabled, heart, diabetes, or arthritis patients so they tend to exclude them as having preexisting conditions. But private insurance will always leave out large numbers because many are too expensive to insure, or too poor to pay their premiums.

The unwanted groups have been big enough that political pressure brought a succession of unplanned and erratic compromises, which have at least one thing in common. They create separate programs with separate bureaucracies that create lots and lots of administrative jobs. In the public realm we have Medicaid, which is health care for the unwanted poor. Medicaid is a federal program with federal guidelines but it is administered through 50 state bureaucracies. The law includes authority for the states to customize their programs so Medicaid is different from one state to another.

Also in the public realm, we have health care for the unwanted retired and elderly, which is Medicare. Medicare is also a federal program, but it is administered state by state with separate administrative contractors processing claims. Medicare does not cover an entire bill so private insurance companies sell Medigap policies to millions so one hospital visit or one physicians service visit can generate two bills and brings action at two bureaucracies.

Difficulties with the Medicare billing system brought Congressional modification in the early 1980’s. Congress decided that medical venders should be responsible for filing Medicare claims rather than patients. At that time they instituted the Assignment billing system. Under this system if medical venders accept the Medicare payment amount, meaning accept assignment, they receive rapid payment directly from Medicare. If they wanted to charge more they would file the claim but request larger payment from their patient and the smaller Medicare amount would eventually go to the patient.

Using the new system required a delicate judgment by medical venders. Will the patient have the money and the willingness to pay? If the vender does not accept assignment and then cannot get full and timely payment from their patients, collection can take lots of staff time or bills may have to go to collection agencies. For anyone who has worked to decipher an Explanation of Medicare Benefits form it is easy to understand Medicare generated job creation in collection agencies.

Workmen’s compensation, which is really health care for people injured on the job, operates under federal guidelines through 50 state bureaucracies, but the states allow private companies to write the insurance so it supports jobs in private companies and independent insurance agencies. Military veterans have a separate health system, which supports another bureaucracy. Disability coverage supports additional bureaucracy since administration is through the social security administration and several specialty programs passed by Congress as well as private companies.

National health care should lead to standardization and efficiency. But we have to be careful about efficiency. Even though there is plenty of opportunity to be more efficient with health care, a modest 10 percent improvement in the health care office productivity would eliminate at least 260,000 office and administration support jobs. That is just the health care industry jobs; private sector insurance and government jobs would decline as well. Advocates of universal health care will need to consider how they will cope with these job losses.

Jobs requiring specialized professional degrees in medicine make up only 6.2 percent of health care employment. The total includes pharmacists, optometrists, dentists, orthodontists along with the physicians mentioned above. Another 3.1 percent need graduate degrees to be qualified to do some types of medical research, counseling, or physical therapy jobs. Jobs that use BA degree skills are more likely to be in health care management, finance or computing than delivering health care to patients, but these jobs have 7.8 percent of employment in health care.

Associates degree skills have more importance to health care than the BA degree with 20.9 percent of health care jobs that need AA degree skills. Partly that is due to nursing since AA degree candidates qualify to take state nursing exams even though many registered nurses complete BA and MA degrees. Registered nurses make up 14.6
percent of jobs in health care.

The associate’s degree in specialized health programs also assures entry level skills for 15 other health occupations as health technologists and technicians including diagnostic medical sonographers, radiological technicians and technologists, nuclear medicine technologists, medical records and health information technicians and others. Their numbers continue to rise.

If we total jobs that need college degree skills in professional, graduate, BA, and AA degree programs it comes to 38 percent of health care employment. Post secondary training leading to a certificate or similar non-degree award make up another 18 to 19 percent of jobs in health care. Programs last from a week or up to as much as a year or two. These additional jobs include licensed practical nurse, medical transcriptionist, orderlies, and nursing assistants. Remaining jobs need only walk on skills for a high school graduate of GED graduate.

With a 115.3 million jobs to divvy up health care employment gives us 15.6 million jobs and that is 11.7 percent of establishment employment. Health care industry employment has been growing at double the national rate since at least 1990, despite leaving millions without health care insurance. The high growth rate will help to employ some of the new entrants to the nation’s growing workforce, although it could help much more if health care coverage was available to all. Combine health care jobs with professional, scientific, technical services and education services and the total comes to 38.1 million service jobs. We have 77.2 million service jobs left to fill. Remember agriculture, mining and manufacturing jobs are in decline. We cannot expect to have more jobs in these industries. In the United States a job is a requirement and America needs to be meeting its requirements. We need service!