Europe’s Promise: Why the European Way is the Best Hope in an Insecure Age
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- Retirement and Pensions
- Elderly Care
- Affordable Housing
- Poor Families and the Unemployed
- From Chapter 5:The Myth of the Overtaxed European and Other Modern Fables
Sick Leave European countries also have mandatory paid sick leave. In fact more than 160 nations around the world provide paid sick days, with 127 providing a week or more annually. Unfortunately the United States is not one of them. We are still one of only a handful of nations that have no national law guaranteeing paid sick leave, leaving some sixty million workers—43 percent of the private industry labor force—without paid sick days. In Europe, if you are sick they want you to stay home and take care of yourself, and if your child is sick, they want you to stay home and not worry about losing the take-home pay you need for food or rent. But in the United States, if you are sick we want you to report to work and infect your coworkers and customers; if your child is sick, we force you to choose between being a good parent or being the breadwinner. During the swine flu outbreak in the spring of 2009, at one point President Barack Obama urged workers with flu symptoms to "stay home." But for far too many American workers, especially for many service sector and low income employees, that was easier said than done. There’s a good chance that any employees handling food in a restaurant or handing out change in a grocery store can’t afford to stay home when they are sick. Care for some swine flu served with your French fries, anyone? Health Care Europeans have affordable, quality health care for all—including universal dental care at least until age nineteen and free prescriptions for children up to a certain age—despite spending only about half per person of what the United States spends nationally on health care. Russell Shorto, an American writer living in Amsterdam reports that while he lived in the U.S. with his family of four, he paid about $1,400 a month for a policy that didn’t include dental care and was rife with co-pays, deductibles and exemptions of coverage. A similar Dutch policy, by contrast, has cost him about $390 per month with no co-pays, and included dental coverage; about 90 percent of the cost of his daughter’s dental braces was covered.[NOTE] The World Health Organization rates various European nations’ health care systems as top-ranked in the world, but the American system is ranked only thirty-seventh. In the United States, our patchwork system has left 50 million people without health insurance—over 16 percent of the population, including an estimated eight million children—and more than one-third of Americans go without health insurance for long periods of time. Various surveys reveal that many Americans without insurance are middle class and employed. Numerous studies have shown that people without health insurance tend to postpone treatment until a minor illness becomes worse, and they ultimately die sooner, imposing greater costs on society. Retirement and Pensions Retirement pensions in Europe are far more generous than those in the United States, underscoring the belief that families and workers perform best when knowing that their future is to some extent secure. As in the United States, retirement pensions are funded by payroll deductions from both workers and employers, but Europeans can expect to receive a retirement pension in the amount of 70 to 80 percent of their working salary, compared with most American workers, who can expect Social Security payments of only 33-40 percent of their average working salary. In Germany, about 85 percent of an average individual’s overall retirement income comes from the government pension, compared to only 45 percent in the U.S. Because Social Security payments in the United States are so paltry, most experts believe it will take at least $200,000 to $300,000 in addition to those payments for the average American to have a secure retirement, yet most older Americans have saved only a small fraction of that amount. In fact, many Americans have a low and some even a negative savings rate, portending problems for the future. These working Americans really will have to scramble to supplement their meager Social Security with private savings. Elderly Care According to the OECD, Europe spends nearly 25 percent more per capita of public money on old age care than the U.S. spends.[note]Care for the elderly in Europe relies on the traditional venues of nursing homes and assisted-living facilities, and the care tends to be of excellent quality with professional, trained staff. Education In most parts of Europe, university tuition remains free or nearly free. Even in Britain, which tends to lag behind the rest of Europe in its more American-like qualities, the Tony Blair government introduced a sliding tuition fee based on family income, with a maximum tuition of $4,000 per year. In Germany, some of the state universities recently have begun charging up to $630 per year in tuition. But in the United States the average annual tuition for a four-year university in 2007–8 was $23,712 for private college and $6,185 for a public college. As a result of soaring costs, U.S. college students graduate on average with $20,000 in debt, a figure that has more than doubled since 1995; graduate students are saddled with nearly $46,000 of debt. Nearly one in three college students reported using credit cards to help pay their tuition, up from one in four in 2004, many of them using cards with high interest rates. Rising tuition costs and cuts in college aid have made it increasingly difficult for many young Americans even to complete their university program, causing the United States to rank fifteenth among twenty-nine nations in the proportion of college students who complete university degrees or certificate programs, falling behind most European nations. Unlike American college graduates, European students do not have to mortgage their futures by going into exorbitant debt to pay for a university education. Affordable Housing In the European worldview, affordable housing also is part of the “family values” package. Europeans view adequate affordable housing—sometimes called “social housing”—practically as a right. Consequently, European countries have a more proactive approach, making housing policy a top public priority, with local and national governments having a well-articulated strategy and higher levels of funding. Some of the affordable housing stock is owned by the government, but much of it is owned by private, nonprofit housing associations. The nonprofit associations develop and manage affordable housing as a social-oriented business. In the Netherlands and the United Kingdom, several large nonprofit housing entities own from fifty thousand to seventy thousand dwellings apiece. It is common for a private nonprofit to control more than twenty thousand units, substantially more than most comparable entities in the United States. In London, developers of new housing are required to have 25 to 35 percent of the new units built as “affordable.” In Finland, the Helsinki city council decided that 40 percent of the apartments in new areas had to be “social housing.” The presence of so much social housing acts in a competitive market as a check against escalating rents and mortgages and against speculation in the private housing sector. Compare Europe’s concept of “social housing” to the worldview in the United States, where housing mostly is left to the free market and private real estate developers who focus on the more profitable homeownership market. The recent speculative housing bubble and subsequent collapse was just the latest example of the shortcomings of the American approach. It also reflected the manic overemphasis on homeownership that results in too little new rental housing being built (which is the primary housing for most of America’s low- and moderate-income households). Due to routine underfunding of the U.S. Department of Housing and Urban Development (HUD), the 2008 HUD budget was $2 billion short of the amount needed to maintain contracts on its stock of affordable housing. Because of the mismatch between housing needs and what the free market supplies, in 2005 17 million American households paid more than 50 percent of their monthly income for housing, and there was a glut of vacant condos even as many families were doubling up and grown kids were moving back in with their parents due to the lack of rental housing. And that was before the housing market collapsed in 2008–9. Poor Families and the Unemployed Europe particularly stands out when it comes to helping poor families. As we have seen, Europe’s workfare support state begins at birth, with government payments for each newborn child and generous support for parents. This is hugely beneficial to its poorest citizens. Poor and low-income working families also benefit from access to universal health care, as well as from a much higher minimum wage than is paid in the United States. In the European Union the minimum wage has been 53 percent of the national average wage but in the United States only 31 percent of the average wage (In 1956, it was 56 percent of the average wage in the States). Not surprisingly, the United States has many more low-wage workers than Europe has, with nearly a quarter of U.S. workers classified as low-wage compared with only 6 percent in Sweden and fewer than 16 percent in Germany (though, curiously, Germany has not had a minimum wage). According to a study by Germany’s Institute for Employment Research of the Federal Employment Services, the United States spends a far lower percentage of its economy on monthly compensation for the unemployed than any of the E.U.-15 nations, about half the amount spent in the United Kingdom and only a seventh of that spent in the Netherlands. The unemployed in Europe are given various supports and a measure of dignity and respect that are lacking for their American counterparts. Unemployed European workers not only receive continued health care and a monthly payment of 70 to 90 percent of their last salary for a year or two (up to four years in Denmark, though some countries have a maximum monthly salary cap), , they also receive a helpful level of subsidies for housing, utilities, food, and child care, as well as job retraining and counseling. But in the United States, the unemployed receive a paltry unemployment check, usually no more than 50 percent of the last salary for a period of six months, depending on the state—practically poverty wages if you are supporting a family. That’s if they receive a check at all; according to the U.S. Department of Labor only 37 percent of unemployed Americans received benefits in 2007, down from 55 percent in 1958 and 44 percent in 2001. Astoundingly, six in ten workers who became unemployed during the economic crash of 2008 did not receive any unemployment benefits because they either did not qualify for various bureaucratic reasons, never applied, or had exhausted their benefits. Those who don’t qualify include an increasing number of part-time workers, since the New Deal–era system hasn’t been updated enough to reflect an age of more frequent job changes, more part-time work, or people who have multiple jobs. If your income is low enough, you can also receive some help in buying food (with the stigmatized Food Stamps program) and paying utility bills. If you are unemployed long enough, you may also receive government-supplied health care through Medicaid. Otherwise you receive health care from a hospital emergency room. You can end up truly hard up and vulnerable, especially if you have a family to provide for in the face of soaring costs for housing, health care, fuel, and more. The stress can be very debilitating. The lack of health insurance for the unemployed in the United States is perhaps the best illustration of the backwardness of the U.S. approach. In America, where health insurance mostly is employer-based, the unemployed are subject to a rather cruel irony: they are dropped from the ranks of the insured at the moment when they are most vulnerable and can least afford to get sick. many unemployed Americans have been struck by such medical misfortune with little safety net to catch them from a really long fall. This social approach strikes Europeans as being particularly backward. A junior minister in Sweden’s Health Ministry told Washington Post reporter T.R. Reid, “It seems to me that your country takes away the insurance when people most need it.” That logic has evaded most policymakers in the United States, at least until recently. The Obama administration’s stimulus package passed in February 2009 subsidized 65 percent of the health insurance premiums for individuals laid off during the economic crisis. That was a good start but it provided coverage for only nine months, and for many of the unemployed even paying 35 percent of sky-high premiums has been more than they can afford. A 2007 study by Harvard and McGill university researchers found that the United States lags far behind virtually all countries with regard to family-oriented workplace policies, such as maternity leave, paid sick days, and length of workweek, among others. Workplace policies for families in the United States are weaker than those of all other high-income countries and even many middle- and low-income countries. “More countries are providing the workplace protections that millions of Americans can only dream of,” said the study’s lead author, Jody Heymann, founder of the Harvard-based Project on Global Working Families and director of McGill’s Institute for Health and Social Policy. "If you look at the most competitive economies in the world, all the others except the U.S. have these policies in place." Europeans are not necessarily aware of how far ahead of the United States they are, just as Americans aren’t aware of how far behind they have fallen. Europeans take much of their approach for granted, viewing their vaunted workfare system as their birthright. And in recent years, as a result of the pressures to keep their economies competitive, many countries have undertaken steps to trim their workfare benefits. It remains to be seen how much the economic crash of 2008 will affect availability and quality of services, but even with recent cutbacks, Europe’s workfare remains far more generous than anything comparable in the United States. One acquaintance from Romania who came with his family to the Oakland, California, area to work as a mental health professional was incredulous over the American shortfalls. Each week he would discover a new omission from the American workfare system. “What, no state-run day care to drop off my children?” he said with exasperation one week. “Pay for my own health care? No maternity leave?” he said another week. Another week he exclaimed, “Only two weeks’ vacation? In Romania we had five weeks!” That’s in Romania, one of the newest members of the European Union but still a poor country, which not that long ago was ruled by the ruthless communist dictator Ceauşescu. From Chapter 5:The Myth of the Overtaxed European and Other Modern Fables Page 93. The typical American retort to the generous and comprehensive nature of the European workfare support system is that Europeans pay much higher taxes. Surely “no taxation without representation” Americans would never go along with that. That’s just one of the many myths and fables that bounce around the American landscape about the European “welfare” state. Let’s look more closely at the tax details of Europeans and Americans. The business magazine Forbes has been at the forefront of this anti-tax mantra, publishing an annual Tax Misery Index which shows European nations as the most “miserable” and the low-tax United States as happy as a clam—right next to Indonesia, Malaysia, and the Philippines. But upon closer inspection, this charge turns out to be a caricature. In addition to what Americans pay in taxes, you would have to pile onto that the tuition, insurance premiums, copayments, hidden fees, and other charges that most Americans pay beyond their taxes to receive various services and benefits. A thorough analysis would need to create a ledger in which all the workfare supports and services Europeans receive are listed on one side and the amount of taxes and any additional fees they pay are listed on the other, and then do a similar analysis for Americans: on one side of the ledger list the same level of benefits and services as those received by Europeans, and on the other side list what Americans must pay in the form of taxes as well as out-of-pocket expenses for those same services. This would clarify that for Americans to acquire health care, university education, parental leave, child care, elder care, retirement pensions, and so on—the things that Europeans receive for their taxes—we have to pay additional fees, premiums, deductibles, and out-of-pocket charges beyond our taxes. For example, my siblings and some of my friends are saving about $100,000 for each of their children’s college education, even as European children attend universities free of charge or close to it. According to the OECD, in the United States public spending on old age care is nearly 25 percent less per capita than in Europe, but private spending on old age care in the U.S. is nearly three times higher per capita than in Europe because Americans mostly must self-finance their own senior care. Either way, you pay. [source is OECD Social Indicators database] Many Americans are scraping to save the hundreds of thousands of dollars experts say they will need for retirement beyond their Social Security, trying to stuff as much as possible into their IRAs and 401(k)s because the Social Security pension is so paltry and American businesses are walking away from providing guaranteed pay-out pensions. But the European state retirement systems are more generous and better funded, providing individuals a greater share of their retirement income.[NOTE] (this disparity in retirement benefits between Europeans and Americans increased dramatically when so many Americans saw their 401(k)s take a steep nosedive during the Crash of 2008). Also, many Americans are paying extra for child care, self-financing their own sick leave or parental leave after a birth, and more. But Europeans receive all of these and more—in return for paying their taxes. Beyond paying their taxes, many Americans pay out of pocket for escalating health insurance premiums, deductibles, and copays. I met one taxi driver in San Francisco who self-financed minor surgery for his mother so that her monthly premium wouldn’t increase. Other taxi drivers I have met of South Asian descent have traveled back to India for major dental or medical work, since it is much less expensive to pay for services there, even with the cost of airfare factored in, and the quality is good enough. The Centers for Medicare and Medicaid Services found that U.S. households in 2007 paid 31 percent of total health care expenditures out of pocket, an amount equal to approximately $2,306 per person per year. Shannon Brownlee, a scholar at the National Institutes of Health Clinical Center, has found that the average family of four in the United States is coughing up $29,000 a year for health care due to out-of-pocket medical expenses, taxes, and lost wages resulting from employers paying higher insurance premiums and lower salaries. It may not be in the form of taxes, but Americans are paying significant amounts for services that Europeans receive for free or nearly so in exchange for their taxes. Europeans of course pay the notoriously sky-high VAT, which is short for “value added tax” and, like our sales tax, is a consumption tax charged for most purchases. The VAT can range anywhere from 16 percent in Spain to 25 percent in Sweden, compared with approximately 6 to 8 percent sales tax in the United States, depending on the state. But what is missing from this “tax misery” calculation is that, in addition to sales taxes, Americans pay a bewildering number of “nickel and dime” taxes and hidden fees that for the most part Europeans don’t pay. The assorted taxes, surcharges, and fees charged on bills for telephone, cell phone, cable TV, and gas and electric utilities often come to well over 20 percent of the total bill—as much as the VAT in most European countries. Tax code analysis by political scientist Jacob Hacker reveals yet another way that the tax situation in the United States has been falsely portrayed. It turns out Americans are paying higher taxes for their substandard health care than they realize, because these costs have never been presented to the American public in the form of a bill. Instead they’re hidden in the form of huge tax deductions given by the U.S. government to private employers for the health care coverage they provide to their employees. In 2005 alone, the government gave more than $300 billion in tax breaks to businesses for their employee health benefits, $1,000 for every man, woman, and child in the United States—forty-seven million of whom have no health insurance at all. That amount is easily sufficient to finance a real universal health care system covering every American. Says Hacker, “If America’s tax code and private benefits are taken into account, U.S. social spending is slightly higher than average compared with other rich countries—higher, in fact, than the spending of Denmark.” In other words, the U.S. government is spending our tax dollars like “socialist” Europe, but they’re poorly spent and have done little to bring our health care system or workfare supports up to European standards. These sorts of complexities are not calculated into Forbes’ tax misery index or other attempts to compare transatlantic tax burdens. When all of these different fees, premiums, tuition, deductibles, and hidden taxes are added up, it turns out that many Americans actually are paying out as much as Europeans—we just receive a lot less for our money. It really depends on which American you are and whether you need to purchase any “extra” services to keep your family healthy and prospering. The American attitude seems to regard things like quality child care, higher education, sick leave, vacations, parental leave, efficient mass transportation, and even health care as luxuries. But increasingly these supports are necessary to enjoy a decent quality of life in today’s insecure world. Europe regards these as essential features of its workfare system, helping to create personal security for all. Without access to a system that makes these workfare supports easily obtainable, many Americans simply choose to do without them. They live a riskier and less insured lifestyle, either because they can’t afford these premium services or because they would rather take their chances and keep their money in their pockets. But too many Americans who accept these risks pay a price in the long run, through either poorer health or a poorer quality of life. When their risk goes awry, for instance, when someone without health insurance winds up in the hospital, then all taxpayers assume the cost of that risk. One way or the other, someone has to pay. In a sense then, the European system is more honest about the shared societal costs and the individual benefits and services needed for a decent quality of life. Interestingly, while Europeans supposedly are taxed to death and have a lower per capita income than Americans, almost by magic they have managed to maintain a much higher savings rate than Americans. The French and Germans have a savings rate of around 12 to 14 percent of their income, compared with a zero or even a negative savings rate among “lightly taxed” Americans. Americans can’t save in part because they are spending so much of their disposable income on purchasing these other necessary workfare benefits and services out of pocket. Unfortunately, most Americans are only vaguely aware of these complexities and nuances, having been barraged with the stereotype of the “poor overtaxed Europeans.” Even American leaders at the highest levels of government and business display a shocking degree of ignorance. A few years ago, an American acquaintance of mine who lives in Sweden told me that, quite by chance, he and his Swedish wife were in New York City and ended up sharing a limousine to the theater district with then–U.S. Senator John Breaux from Louisiana and his wife. Breaux, a conservative, anti-tax Democrat, asked my acquaintance about Sweden and swaggeringly commented about “all those taxes the Swedes pay,” to which this American replied, “The problem with Americans and their taxes is that we get nothing for them.” He then went on to tell Breaux about the comprehensive level of services and benefits that Swedes receive in return for their taxes. “If Americans knew what Swedes receive for their taxes, we would probably riot,” he told the senator. The rest of the ride to the theater district was unsurprisingly quiet. So the “overtaxed European” is another stereotype, like the myths of double-digit unemployment and the sick, sclerotic European economy, which are used to scare Americans away from the European model. It cannot be emphasized enough that this is not “welfare,” as many American pundits and leaders derogatorily refer to it. Instead, the European economy and the workfare system are two halves of a well-designed system that work in conjunction, as a single unit, to keep workers and families healthy, happy, and productive. And Europeans are willing to pay for these workfare supports because they know the supports are an integral part of their success story. Europeans’ taxes allow the creation of institutions and support structures that help individuals and families to be better prepared for the insecure times that are inevitable in everyone’s life. In today’s world, a middle-class standard of living is not only about income levels and economic growth rates but also about adequate support for workaday people. The Europeans have established the right set of institutions and workfare securities to create a more symbiotic balance between workers and their employers, between corporations and communities, and between the steady state economy and the social system. This is social capitalism in action, and this is turn imparts yet another advantage to Europe over its competitors. Directory: sites -> files sites -> Memorandum of agreement files -> Information security policy university administration and services (uas) files -> Chris ham: reforming the nhs lessons from the past and pointers to the future files -> - files -> A guide for parents and carers files -> Ariel M. Sheetrit files -> Chapter Calendar of Events –July 2017 For the benefit of our members and customers please coordinate the scheduling of dates to prevent overlapping events. In the event of conflicting dates it is recommended to personally notify the other chapter of the files -> Collective redress in england & wales files -> County No Treasurer’s Elderly and Disabled property tax credit request affidavit Download 92.53 Kb. Share with your friends:
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