Last bastion of capitalism with a human face: California!

Capitalism has acquired a human face. Health insurance, defined-benefit pension plans and increased pay throughout one’s career were characteristics of capitalism with a human face.

However, globalization in the early 21st century has brought back capitalism in the raw, and while we glorify it around the world, the new capitalism insidiously eats away at our families’ benefits and compensation. When we choose that $99 flight on Southwest, we affirmatively choose this new form of capitalism.

Critically, in these times of globalization, employment with the state of California is one of the last bastions of capitalism with a human face. Bureaucracies, especially governmental, are slow to change, which is good. Unions, where they still exist, also slow down the relentless rush of American society into this new form of capitalism.

There are four areas where “employee inputs” are difficult to calculate and difficult to evaluate. In each area, the private sector has been relentless in its pursuit of the bottom line–the only constant goal in capitalism.
(1) Health insurance in retirement. Many companies in the 1960s and 1970s added “health insurance in retirement,” and there wasn’t much risk to adding such low-cost items to their payrolls far into the future.

As the years went by, health-insurance costs escalated to where a retiree today costs a company well over $1,000/month. The cost has been escalating for some time at a rate far and above normal inflation. Initially, companies responded by putting a cap on the monthly expenses, with the employee paying the rest of the premium.

In the early 1990s, the accounting standards board for the private sector, FASB, insisted that companies start “booking” the value of their promises of “health insurance in retirement” on their balance sheets. With the alternative of billion dollars in liabilities and insolvency, most private companies began reducing the benefits. Within a few years, “health insurance in retirement” promises to employees disappeared.

The costs were difficult to quantify and could not be attributed to a specific unit of labor. Capitalism requires such calculations.

The state of California continues to offer a “health insurance in retirement” benefit. The benefit has no economic cap and, after 20 years of employment, provides 100 percent of the monthly premium for the retiree.

(2) Defined benefit pension plans. After World War II, many companies adopted pension plans. Some of the early plans were coordinated with Social Security payments to retirees. Over time, they developed as “stand alone” pension systems offering retired employees a guaranteed monthly payment after so many years of service. The size of the monthly payment was directly related to the years of service and salary in the final years of employment.

In the early 21st century, corporations across America started to close their defined-benefit pension plans. Corporations found it difficult to again match “input costs,” the employee’s exact annual cost as an input to “output value,” as the funding of defined-benefit pension plans went up and down from year to year.

The state of California, through CalPERS, offers a gold-plated defined benefit pension plan to each employee. The state cannot close the plan for any employee at any time.

(3) Regular pay raises. Older and more experienced employees in the workforce were paid better. For example, public-school teachers in California start at $40,000/year and end up, on the current pay scale at $87,000/year after 20 years on the job.

In this rather simple example, you can see the problem capitalism runs into. Capitalism in its purest form requires equal pay for equal work. We know a teacher with experience creates move value than a teacher in their first year. We can accept that. But can we accept the value is more than 100 percent? Probably not. It’s probably closer to 30 percent more value.

In essence, older, more experienced teachers are relatively overpaid and younger, less experienced teachers are underpaid. It would be great if teachers started out at $60,000/year and worked up to $70,000/year over a 10-year period. That would keep the pay more in line with the economic value of the input.

In most all organizations, if you are there long enough your pay increases. With California, you can start out without a college degree as an Office Assistant at $24,072/year, achieve 5 percent step increases every year and promote upward when the top of each rate in reached. The career path can take you from Office Assistant ($24,072-$32,796/year) to Office Technician ($30,612-$37,884/year) to Assistant Information Systems Analyst ($36,048-$56,904/year) and onto Associate Information Systems Analyst ($53,604-$68,438/year) all within ten years.

California guarantees those 5 percent step increases, in good economic times and bad ones. For the most part, your promotional path is protected, as state agencies don’t allow outsiders to compete in promotional examinations–your promotions are competition free. In essence, you can triple your pay in ten years with the state and with 10 years of seniority, you would be one of the last employees layed off in difficult economic times.

In the private sector, employees garner less regular pay increases, but corporations tend to give out raises in good years and over 20 years they tend to add up. We expect them as part of the “social contract” we have with capitalism: The more experienced we are, the more pay we receive. However, globalization has dispatched that “social contract” to the dustbin of history.

(4) Health insurance for family members. Here it’s pretty confusing. Most corporations, for example, allow you to add your family members to the company’s health plan. However, as good capitalists they don’t pay for them. How could they justify that? Capitalism requires careful allocation of pay to an employee’s inputs into the system. Does an employee with five dependents provide more value than an employee with no dependents when both employees are doing the same work? The answer is, of course, no. Few private-sector employers pay for dependent health coverage.

California, as an employer, does not have to practice capitalism in its purest form. Therefore, it provides the same level of health coverage for all family members and pays 85 percent of the total cost every month. (However, in 2007, the state began paying only 50 percent of the dependent care for certain new employees in their first year; and 70 percent in their second year).

Why work for the state? Working for the state provides a safe harbor in this period of relentless worldwide expansion of capitalism. When you work for the state, you benefit from capitalism with a human face. You receive the following: (1) health insurance in retirement fully paid for, (2) a defined-benefit pension as long as you live based on age and salary, (3) regular wage increases with no incentive for your employer to treat you as just another equal input, and (4) health insurance that covers the whole family rather than just one person. With great unions and bureaucratic inertia, we expect the state to continue these benefits for a long time to come. It’s time to launch your effort to land employment with the last bastion of capitalism with a human face today!.

Ken Mandler teaches a monthly workshop on How to Land a State Job. The workshop focuses on a variety of tactics and strategies designed to make the state job process an effective one for you. The workshops are three and one-half hours and include over 400 pages of information for your review. The cost is $84. The next workshops are scheduled for Tuesday, April 24, 6:30-10pm; or Tuesday, May 15, 6:30-10pm. You can sign up at or by calling Ken Mandler at (916) 443-6788 today!

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