Will Obama transform the American workplace?

Nov 06 2008 by Nic Paton Print This Article

It may still be two months before he is sworn in, but President-elect Barack Obama could prove a transformational leader when it comes to reform of the American workplace.

The new president has already outlined a range of radical policies that, if implemented, have the potential to change American workplaces significantly.

Key among them is his "pay or play" plan for a new national health system for all Americans, including self-employed workers.

This would massively expand access to healthcare, with universal health coverage the over-riding goal.

While employers will still be able to offer health-care coverage to their workers, those that do not do so or fail to make a meaningful contribution Ė though what "meaningful" actually means in this context is as yet unclear Ė will be required to contribute a percentage of their payroll toward the cost of the national plan.

There will also be a National Health Insurance Exchange programme, a sort of government-backed "clearing house" to fund private health insurance, through which individuals and small businesses could buy coverage.

During the campaign, Obama said: "If you already have health insurance, the only thing that will change for you under this plan is the amount of money that you will spend on premiums. That will be less."

The intention is also to make savings through better preventative care and better management of people with chronic health conditions and better use of health information technology.

Small businesses will also receive a new "Small Business Health Tax Credit" that will provide them with a refundable tax credit of up to 50 per cent on premiums paid on behalf of their employees.

Another key element of the public plan is that it will be portable, so allowing workers to move from job to job more easily without changing or jeopardising their health-care coverage.

Along with the wider issues of restoring the economy to health and carrying forward the Bush-era financial bail-out of the banking system, Obama has proposed a number of specific measures for businesses.

These include a $3,000 refundable tax credit for each additional full-time employee hired during 2009 and 2010, eliminating capital gains tax on investments made in small and start-up businesses and extending unemployment insurance benefits for up to an additional 13 weeks.

For retirees, the plan is to introduce automatic workplace retirement accounts to encourage greater saving for retirement but at the same time to reduce the tax penalties for withdrawals from retirement accounts.

There will be, as the debate over "Joe the plumber" during the campaign highlighted, higher taxes for those families with incomes of more than $250,000 but more tax breaks for middle-income families.

As a senator, Obama has also long supported greater transparency over executive pay and was vocal on this issue during the campaign. In the current climate, this is unlikely to be something he back-tracks on.

As a senator, for example, he introduced the Shareholder Vote on Executive Compensation Act (known as "Say on Pay") in the Senate after it had passed through the House of Representatives.

This would give shareholders the chance to signal their displeasure with executive pay with a non-binding vote.

On work-life balance, Obama has said he will extend the Family and Medical Leave Act, which allows workers to take time off to care for elderly dependents or help with children's school activities, to include businesses with 25 employees.

He has also proposed that all employers be required to offer seven paid sick days a year.

Federal government should, too, become a "model employer" for flexible working and tele-commuting, he has argued.

Consultancy Hewitt Associates, which has collated a post-election report covering his proposals, has argued that Obama's plans could result in significant change in the workplace.

"President-elect Obama's proposals could transform U.S employer-provided health care and retirement benefits in the coming years," it said.

"In addition, President-elect Obama has proposed changes to employer-paid leaves of absence, the rules governing union elections, immigration, and the federal minimum wage," it added.