Health Care & the Piece-Work Economy

The following is a quote from Kristi Vogel of The Gulf Stream in late 2008:

Piece work is a term that dates to the 16th century, in the context of the guild system for master craftsman, and is perhaps the oldest type of performance-related pay. The concept is quite simple: the worker is paid a fixed rate for each item or part produced, or for each operation or task performed. In the US, many assume that the piece rate pay system is linked with low wage jobs in which the workers may be exploited, such as garment assembly in sweatshops, or field laborers in agriculture. However, this pay system also applies to craftspeople in the modern economy, e.g. those who produce custom furniture, handmade clothing or jewelry, and artwork. As a teenager, I learned the hard way that this latter path to financial independence can be very difficult, perhaps impossible . . .

In academic science, at least in the US, most of us are paid neither by the piece, nor by the hour. Calculations for hourly pay can, in fact, lead to temporary depression, especially when compared to those for other professionals. But what if researchers could be paid a fixed rate for each item produced or task performed? Imagine for a moment that you could charge your boss or your collaborators for certain assays or computational analyses or microdissections or imaging techniques at which you’re particularly skilled … how much would you charge for each “piece”? Would such an economy benefit anyone . . .

I can state now that many of my friends in academia already have resorted to participating in a piecework style economy. Mostly they are doctoral students with strong math or economic skills. I also have friends who make their living by blogging (usually for clients, sometimes blog-for-pay), and many Washington colleagues who work for themselves as consultants, strategists, event planners or lobbyists. My point is that this is becoming more common in white collar jobs and some have predicted it is direction that our economy is evolving - most people paid for piecework and few permanent jobs except for a shrinking elite. As an aside, in 1995 Newsweek dubbed the then-likely emerging elites as the "Over Class.'

If our society is moving towards a piecework economy, then it is crucially employment and health insurance be de-linked from each other. Otherwise, continuity of health care coverage becomes almost as greater a problem than lack of insurance itself. To adapt to this new economy, health care either needs to be made radically cheaper for individual purchasers through the tax code and market incentives, or we need to establish dome type of national health system, again based on the free market. The single payer, government program many desire just isn't feasible for a nation with $52 Trillion in unfunded obligations, regardless of its merits.

Oh, and complaining about health insurance anti-trust exemptions just reveals a lack of understanding of math. Health insurance costs are based on actuarial science - variations of risk and expense based on population characteristics. Two companies competing for the same pool of customers will arrive at the same cost for insuring that population. Without anti-trust exemption, you could have the ironic result of one insurance company dominating so much of the American market, that their market power would allow them the ability to dictate payment terms to doctors, hospitals, and pharmaceutical companies.