The U’s benefits-wage gap

The University can’t keep wages low while shifting health care costs to employees.

Daily Editorial Board

With a reputation as one of the country’s largest and most recognized research institutions, the University of Minnesota offers an alluring opportunity for researchers and academics in nearly every discipline, from agriculture to public policy.

Because of its key placement in the Twin Cities and its connection to area hospitals and businesses, many potential faculty and other employees are attracted to the University. But another reason people are drawn to work here is access to quality health care.

As Office of Human Resources Vice President Kathy Brown suggested in a Sept. 18 Minnesota Daily article, it appears potential employees are even willing to accept a lower wage in order to receive the “strong” benefits package offered by the University.

The Daily also reported that during the 2011-12 fiscal year, the University employee base pay was nearly $3,300 less than similarly positioned employees around the country. While it is true that many potential candidates are attracted to the University because of its benefits, the quality of its health care plan is under attack. 

Over the summer, the Benefits Advisory Committee discussed proposed changes to the University’s employee health plan, “UPlan,” in efforts to address new requirements outlined in the Affordable Care Act. Some of these changes come as a result of a $48 million federal tax the University is wary of incurring if its health care plans cost more annually than $10,200 for an individual and $27,500 for a family. 

A July 24 Daily article specifies that changes may “raise the cost of copays for primary and specialty care and make employees pay deductibles, which they haven’t had to pay before.”

There is some controversy between the unions that represent University employees and the Office of Human Resources as to the timing of these changes and whether they are really necessary to help the University avoid paying a federal tax on its health coverage.

Though a 40 percent tax on the University’s health care costs may seem markedly high, this provision of the Affordable Care Act aims to keep health care premiums down by discouraging overuse of plans for unnecessary medical tests and procedures. This tax will affect a wide range of companies across the nation, and shifting costs to employees is a concern that various unions have across the country.

The University of Minnesota Clerical Workers, which make up the 3800 branch of the American Federation of State, County and Municipal Employees union, will rally on campus this week to protest health care costs being shifted to employees. They will also be campaigning for a sliding-scale premium plan, which would aim to keep health care costs balanced and in line with employee salaries. 

In a previous Daily editorial published July 31, the president of AFSCME Local 3800 suggested a sliding-scale health care plan could work for the University, and that other universities like Amherst, Dartmouth and the University of California have plans that adjust coverage based on salary.

University administrators might make the argument that lower base salaries for University employees are appropriate if the quality of the benefits package compensates for the gap, but this logic crumbles when considering the cost shifts that are expected to be made to employee health plans. 

The University cannot expect to attract top talent or maintain satisfied employees if there is not a reasonable wage-benefits balance. If the University shifts health care costs to employees in order to avoid the 40 percent excise tax, it should implement a sliding-scale premium plan, as well as make employee base salaries more competitive with other Big Ten schools.

This change will be advantageous for the University’s reputation as a rewarding place to work. And by keeping salary increases on track with market demand both in the Twin Cities and nationwide, the University has a better chance of continuing to lure the best and brightest faculty and staff.