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Brooks Wilson's Economics Blog: Market Incentives and Health

Thursday, November 5, 2009

Market Incentives and Health

There were two interesting stories yesterday about public health.  (HT Drudge) In the first, Maggie Fox reports on emergency Congressional legislation to require employers to pay wages to sick workers (Reuters, "Proposed law would require pay for sick workers"). 
U.S. employers who tell workers to stay home when they are sick will have to give them paid time off for up to five days under new federal legislation proposed on Tuesday.

The emergency law would cover pandemic H1N1 flu or any other infectious disease, said California Representative George Miller...who chairs the House Education and Labor Committee and who introduced the bill.

"Sick workers advised to stay home by their employers shouldn't have to choose between their livelihood, and their co-workers' or customers' health," Miller said.

"This will not only protect employees, but it will save employers money by ensuring that sick employees don't spread infection to co-workers and customers, and will relieve the financial burden on our health system swamped by those suffering from H1N1."

Representative Miller should think more about the incentives the legislation would create.  Under current law, employers have incentive to protect themselves, their business, their customers, and the public at large by sending home employees who may be sick.  The legislation would undermine that incentive creating a new financial cost for sending home sick workers let alone the new incentive workers would have to escalate allergy symptoms into early stages of H1N1.  Nor do business need government to force them to do what is in their own financial interest.  Alas, Miller does not show the same concern for employers that he shows for workers.  By shifting costs of illness to employers, the legislation would slightly increase the number of failing businesses.  Employers shouldn't have to choose between their livelihood, and their workers' or customers' health. 

If the public has a health interest, and I believe that they do in this instance, let the public pay for it through taxes.

In a second article related to consumer health (Dan Childs, "E. Coli Concern: Once-Tainted Meat Allowed Back Into System"), ABC does and admirable job of agenda setting, telling the public what issues are important by insinuating one story into another story.  In this case, the story is about E. coli in fresh ground meat and its potential threat to public health.  The insinuated story is about E. coli in cooked beef which, as the story notes, does not present a health threat but is "icky."  How much would you add to your food bill to eliminate a perfectly healthy product to silence the icky factor?  If you have any doubt as to what ABC wants you to think, listen to the video on the linked story.
Imagine a ton of freshly ground beef. The company in charge of processing this meat finds out during a routine test that it is contaminated with E. coli. They record the test results, which are read by a government inspector, who acknowledges that the meat is indeed tainted.

You might think that this beef would be headed straight for the garbage bin. But in many cases, this meat is instead cooked, prepared and packaged as a pre-cooked hamburger patty that you pick up from the grocery store. And it's all completely legal...

The issue of cooking and reselling formerly tainted beef comes to light as another E. coli scare has now spread to 11 states, although the meat in this new case was fresh ground beef, not pre-cooked meat that had been repackaged..

Dr. Ira Breite, assistant clinical professor of gastroenterology at the New York University Langone Medical Center, agreed that tainted meat is indeed safe to eat if it is properly cooked to decontaminate it. But he added that many consumers would not relish the idea of eating meat that had been considered tainted with E. coli at any point along its way to their tables.

"If something is coated with E. coli and you cook it, the E. coli is gone," Breite said. "So could you eat it? Yes. Would I want to eat it? No. Is it gross? Yes... It's the ick factor."


  1. Hunter Tunmire10/11/09 5:37 PM

    This seems to be an interesting case of what you don't know can't hurt you. What I mean to say is the use of decontaminated tainted meat has happened over a long period of time, and no one was concerned about it or died of it. The point made about agenda setting is also valid as the points made are solid, but have no statistics to verify wheteher their fact or opinion.

  2. This hasn't been a major issue yet in the food industry. If it has about to be one the FDA would take some action and warn consumers and the processor about the potential major risk for both the market and the consumers. But regardless, consumers should be more aware of what they buy at the groceries. In this economy today we don't want to take the chance of getting ill.

  3. Ester Anderson said....
    I think it would be good but I don't care for us working to pay taxes to keep someone home that is sick.However I do agree it is a big concern for markets and the consumers if they are owners of a fast food resurant because I wouldn't want to eat food prepared by someone who is sick.I also don't want to give up my money to pay my bills either, so I guess it goes both ways.

    I don't it is something people in general pay attention to simply because it is at the grocery store.It's on our shelves for us and in my eyes it means it has been approved for us.I bought a jar of tainte peanut butter and had to take it back when it was recalled ,thankfully it wasn't opened yet.However How would I know something was wrong with it.