Drop in Health-Care Costs Isn’t a Prescription for Bigger Raises

For years, economists and business leaders maintained that one of the chief reasons American workers weren’t getting bigger pay increases was that their bosses were squeezed by skyrocketing expenses for employee health care.

But now that medical costs have been restrained--a new study, in fact, shows that big California employers’ health-care expenses actually declined 2.5% in 1996--will working people finally receive better raises?

Don’t count on it, according to a new forecast by a 13-member panel of business executives, economists and labor experts sponsored by UCLA’s School of Management.

The ad hoc group’s “Human Resources Forecast 1997” predicts U.S. wage increases hovering at about 3.1% in private industry this year, slightly below the 1996 level. The panel’s expectation of skimpy raises is partly due to the fact that it sees 1997 as a year of modest economic growth and mild inflation of about 3%, also down slightly from the 1996 pace.

Just as importantly, the group said that most of the other factors that have kept workers from demanding bigger wage increases since the early 1980s--including weak unions and job insecurities among the nonunion work force--remain in place.

So, even if companies can now better afford to pay heftier raises, “employers don’t just say, ‘We’ve made some increased profits, so we’re going to hand it over to you in higher wages,’ ” said Greg Tarpinian, a member of the panel and executive director of the Labor Research Assn., a New York-based consulting group.

What’s more, the money employers save by switching employees into so-called managed-care programs will largely be a one-time savings, said Audrey Freedman, a New York labor economist who organizes the human resources panel every year. Once the transition among employers to managed care is completed over the next few years, she said, “you won’t see any more big savings from the health benefits area.”

The medical cost savings, in fact, may already be petering out. The same survey that showed medical-care expenses falling for big California employers last year also found that among firms of all sizes nationally, costs rose 2.5%. The gain, while slim, was up from an even lower increase of 2.1% in 1995.

Elsewhere in its report, the human resources panel forecast that:

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* The labor market will be hard-pressed to absorb what could be millions of unskilled workers pushed off the welfare rolls under the federal welfare reforms passed in 1996. One of the main problems: The economy will be overdue for a recession by the time the biggest influx of welfare recipients hits the job market in three to four years.

* The public outcry for immigration restrictions will increasingly collide with businesses’ need for foreign workers. Industries such as computers, telecommunications, health care, agriculture, hotels, restaurants, apparel manufacturing and universities will oppose tougher immigration controls.

Labor Pains

Is California Labor Commissioner Roberta E. Mendonca long for her job? Maybe not.

Mendonca, appointed by Republican Gov. Pete Wilson early last year, must be confirmed by the Democrat-controlled State Senate Rules Committee soon--probably at its Feb. 3 meeting--or her term will expire at the end of the month.

The Democrats plan to grill Mendonca next week on Wilson administration actions that have antagonized organized labor, including a move that cuts the “prevailing wage” paid to construction workers on public works projects. Mendonca will counter by citing her work in expanding her agency’s staff of labor law investigators and in attacking the state’s underground economy, including the abuse-prone apparel industry.

Still, in her 11 months on the job, Mendonca has failed to draw broad support in Sacramento. “She goes in there facing an uphill fight,” said Sandy Harrison, a spokesman for State Senate Leader Bill Lockyer (D-Hayward), chair of the Rules Committee.

Messages for the Boss

If your boss is more concerned about whether you look busy than what you actually do, don’t despair. Jay Schorr, author of “50 Ways to Look Busy at Work Even When You’re Not,” relates some of his favorite techniques:

The Smoking Gun. Leave a steaming cup of coffee sitting on top of your desk as if to say, “Even though I’m not at my desk, I obviously haven’t been gone very long.”

Pensive Doodling. Doodle shapes, letters or caricatures of bosses while wearing an “I’m-on-a-roll-so-don’t-bother-me” expression.

In by Ate. Heap food wrappers, empty soda cans and used napkins around your desk. The aim: to leave the impression that you were so busy you didn’t have time to go out to lunch.

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Times staff writer Stuart Silverstein can be reached by phone at (213) 237-7887 or by e-mail at stuart.silverstein@latimes.com