Outline

Bargaining Subjects Pensions Healthcare

Grievance Procedures

Again…more things that you’ll need to know even if you never think about unions again after our final exam

News of our Class

April 4, 2011 Unions Rally, Linking Their Cause to Dr. King

After WW II the Bargaining Table Expands

1949 Supreme court rules non-wage matters were legitimate subject of collective bargaining United Mine Workers win medical in 1947 Steelworkers get Pensions in 1949

These benefits set standard throughout economy for union and union-union companies “The unions role in developing this system…was central. By

the early 1970s, pensions, health insurance, and the like had become so commonplace that millions of Americans took these hard-won benefits for granted. Few remembered the generations of militancy that paved the way…”(Zieger, p.153)

These subjects have become MAJOR sources of conflict in collective bargaining today

All Societies Must Grapple with the Questions?

What happens when workers are too old to sell their labor power? “When you’re too young to die but too old to

work.” Victor Reuther, in movie we saw earlier this semester

Pensions Provide…but who should provide pension?

In America…where do we get the money that keeps alive when we’re too young to die, but too old to work?

Old Age in America

Pensions Provide…but who should provide pension?

Govt. Provides a pension via1935, Social Security

Federal Insurance Income Contribution Act (FICA Born after 1960…Full at 67 1972, COLA provided

Social Security & Poverty

How does Social Security work?

“Pay as you go” Current generation taxed to pay current retirees

In 2010: 6.2% payroll tax on earnings up to $106,800 Employer and Employee both pay

Benefits as Percent of Past Earnings Typical low-wage workers will receive annual

benefits that are 57% of their average yearly earnings (EPI 2005

Benefits for high-wage workers are on average 38% of their annual earnings (EPI 2005)

Note graph…most people are very dependent on social security for their income during retirement

Pensions

If state pensions are not enough, then unions will pursue via the employer through collective bargaining…

If state provides bulk of pension, unions will pursue politically Recent Greek and

French General Strikes

Social Security

Current Situation: 1950, 16 contributors for each recipient 1999, 3 contributors for each recipient 2020, 2 contributors for each recipient

2007 Social Security Trustees report that it will be able to pay full benefits until 2041 and about 75 percent of promised benefits after that, if no changes are made to the program (CBBP 2007)

Then what???  

All Solutions: Someone Takes a Hit

Cut benefits and/or raise retirement age Future Senior citizens (me and you) take a hit

Raise Payroll Taxes All workers & employers take a hit

Lift $106,800 cap & tax more or all earnings Top income earners takes a hit (15% or so of population)

Change entire system to Personal Retirement Accounts & bet that market investments grow to cover gap Workers invest % of payment in stock market Problems:

How fund current retirees as money is diverted? $2 to $4 trillion dollar gap

What if retire when market is down?

Collective Bargaining & Pension Plan s

Government Provides Social Security but it isn’t enough for workers to maintain standard of living

Post War: Unions Push for Supplemental Pensions Inland Steel v. NLRB…Becomes mandatory subject of

bargaining

At present 55% of Americans have pensions but they are provided by almost all CB agreements 87% of union members get vs. 49% of non-union

There are different types of pension plans…anyone?

Pension Types: Defined Benefit

Defined Benefit Plans Union 78% vs. Non Union 19%

the employee gets a specific the employee gets a specific guaranteed or or “defined” monthly retirement monthly retirement benefit, typically for the rest of his/her life typically for the rest of his/her life (Cutler, 2005)(Cutler, 2005)

Employer creates separate account that employer and employees pay into

Account administered by bank or board Invested to provide future benefits to worker

Service Requirement

Most pensions require minimum years of service for eligibility Age 55 or 60 20 and out… Both

Currently something Police and Fire fighters are being confronted over

Vesting Time required for employees to accrue an irrevocable

right to pension contributions made by an employer My first job…needed 7 years…I only worked 3…so I lost

everything

Benefit Formula

Amount of $ known in advance of retirement

$= years of service x base pay x ____% % usually 2 or 3 Base pay often yearly average salary for last 3 or 5

years Post 9/11 retirement wave by cops, firemen,

construction workers… Anyone guess why?

Pensions are usually not indexed to inflation Permissive Bargaining Topic…but not mandatory

So retirees sometimes get jammed Formula becomes important

Christie wants to change the formula in NJ…lots of retirements to beat changes

Defined Benefits

Why do workers like these pensions best?

Defined Benefits

Advantage to Workers Guaranteed pension for life

Promise workers a specific monthly benefit

Employer bears the investment risk

Even if employer goes out of business or their pension plan runs out of assets pensions are provided by Federal Government’s Pension Benefit Guaranty Corporation (PBGC)

But worker may take a big hit…note next slide

Good Pensions + Bad Business + Cut Taxes + Wall Street Declines = Pension Problems

Private Problems Judge clears United Airlines pension takeover

A federal judge ruled Tuesday in Chicago that United Airlines can walk away from 6.6 bln usd worth of retirement obligations to 119,000 current and former union employees, handing the program over to the government in a move the company argues is essential to getting out of bankruptcy. The ruling also paves the way for the federal Pension Benefit Guaranty Corp's biggest retirement plan takeover yet and will result in lower benefits for thousands of workers. The PBGC caps annual payouts at 45,600 usd a year. http://www.forbes.com/feeds/afx/2005/05/10/afx2016620.html

General Motors Corp. may no longer be the world's biggest automaker, but it still operates the country's largest pension fund. The threat to its pension plans has always been an issue, but it took on a new urgency when GM disclosed April 7 that its plans were underfunded by more than $27 billion, with more than half of that being owed to U.S. workers and retirees Read more: http://www.time.com/time/business/article/0,8599,1981958,00.html#ixzz1IZBVPTeA

Federal Government assumed $3.7 billion in unfunded pensions from Bethelem Steel in 2003 (PI, 4/10/05)

Public Sector Problems Last year, the Pew Center on the States estimated that state and

local retiree plans had unfunded liabilities of $1 trillion, based on 2008 data

In response, dozens of states have already cut benefits for new employees while raising mandatory contributions to pay for expected future-liabilities. http://blogs.wsj.com/economics/2011/03/31/public-pension-holdings-continue-to-recover/?mod=google_news_blog

Defined Benefit Pensions

Advantage to Workers

Guaranteed pension for life promise workers a specific monthly benefit

Employer bears the investment risk In theory, even if employer goes out of business or

their pension plan runs out of assets Pension Benefit Guaranty Corporation (PBGC)

Why might employers like these plans?

Defined Benefits

Advantage employers

Retains workers…

Employees are hesitant to leave if will lose vesting

Employees want to stay at same place to get larger pension

Creates Loyalty

Defined Benefit Plans

Why might employers dislike these pensions?

Defined Benefit Plans

Why might employers dislike these pensions?

Employer Disadvantages

Guaranteed pension for life

Complex…must plan for future Contributions fluctuate according to the current & future

funding needs

Costs may increase substantially If plan investments produce lower returns than assumed Number of retirees keeps growing…firm’s profits may not and

taxes may not

1. One of the topics getting a lot of attention is that of pensions. How much money can the average government worker and teacher expect to get from their pension?

Polls show that the public would like to ditch pensions. What do they want to replace them with?

From Defined Benefit to Defined Contributions: Meet the 401 (K)

Pension Types

Recent years have seen emergence of a different type of pension

Defined Contribution (401 k; 403 b)?

Pension Types

Defined Contribution (401 k; 403 b)?

Employees contribute to a private account

Employer may or may not match it

Employee responsible for investment decisions

Shifts risk from employer to employee Accordingly, unions resist changes from DB to DC

Amount that is contributed and that accrues is what you get

Pensions

Why do employers like…?

Pensions: Defined Contribution

Why do employers like…?

Not providing any specified future benefit.

Not responsible for retirees

May be no cost Only employees contribute

If match, costs are fixed and predictable. Less complex…just fund them

4.. Briefly describe some of the reasons this article suggests that the counting on being provided for by the retirement plans that many American’s now have is as risky as a counting on a bet in a Las Vegas casino. Be sure to cite the text in your answer

Risk Shift combined with Inability or Unwillingness to Save for Retirment

Risk Shift “The problem is that even if you do everything right and save at a respectable

rate, you’re still relying on the market to push you to the finish line in the last decade before retirement.

But if you’re dealt a bad set of returns during an extended period of time just before you retire or shortly thereafter, your plan could be thrown wildly off track. Many baby boomers know the feeling all too well, given the stock market’s weak showing during the last decade.

“The way the math really works out is unbelievably dependent on the final few years,” Mr. Kitces said. “I just don’t think we’ve really acknowledged just what a leap the very last part really is” (Bernard 2011: 11)

Most Americans are woefully unprepared for retirement BLS Data

Pension Types: Defined Contribution

Plusses and Minuses for Employees?

Pension Types: Defined Contribution

Plusses and Minuses for Employees?

Plusses for Employee Potential for Growth

Portability: can take it with you if you leave I would not have lost my pension

Disadvantages for Employee Hard to put enough money away

Assume risk of investment Market decline before retirement…you’re in trouble

No guarantee for life

National Health Care in US

Proposed as Part of Social Security Act of 1935 Taken off the table as part of compromise with

American Medical Association and Business Community

Some unions Create Own Insurance Funds Pure and Simple Unionism…getting benefits for

“our” members

During WWII, when wages increases were controlled by government, some employers began to offer as way of retaining workers

President Truman Proposes National Health Care (11/19/45)

Called for the creation of a national health insurance fund, to be run by the federal government.

Fund would be open to all Americans, but would remain optional.

Participants would pay monthly fees into the plan, which would cover the cost of any and all medical expenses that arose in a time of need.

The government would pay for the cost of services rendered by any doctor who chose to join the program. http://www.trumanlibrary.org/anniversaries/healthprogram.htm

President Truman Address to Congress (11/19/45)

In my message to the Congress of September 6, 1945, there were enumerated in a proposed Economic Bill of Rights certain rights which ought to be assured to every American citizen.

One of them was: "The right to adequate medical care and the opportunity to achieve and enjoy good health." Another was the "right to adequate protection from the economic fears of . .. sickness ...."

I recommend solving the basic problem by distributing the costs through expansion of our existing compulsory social insurance system. This is not socialized medicine.

Everyone who carries fire insurance knows how the law of averages is made to work so as to spread the risk, and to benefit the insured who actually suffers the loss. If instead of the costs of sickness being paid only by those who get sick, all the people--sick and well--were required to pay premiums into an insurance fund, the pool of funds thus created would enable all who do fall sick to be adequately served without overburdening anyone. That is the principle upon which all forms of insurance are based. http://www.trumanlibrary.org/publicpapers/index.php?pid=483&st=&st1=

President Truman Proposes National Health Care (11/19/45)

AFL and CIO support

American Medical Association vehemently opposes Labeled as communist plan Called Truman White House staffers

"followers of the Moscow party line“ http://www.trumanlibrary.org/anniversaries/healthprogram.htm

Truman ultimately withdraws bill

Health Care Benefits

Absent national program, unions pursue subject at bargaining table

Mandatory Subject Most Expensive Benefit 11% of payroll and

rising

In 2007, 60% of employers offered…down from 69% in 2000

More common in union employers

Health Care Benefits

Both union and non-union employers are not happy about having to shoulder the rising cost of healthcare… Teachers Union to Widener Faculty…

Who Pays the Premium is Increasing Source of Conflict in Collective Bargaining

In New Jersey, a new playbook for union negotiations March 18, 2011|By Matt Katz, Inquirer Trenton Bureau

Currently, CWA members pay an average of 8.5 percent toward their premiums; the CWA says its new plan would have members paying the equivalent of 22 percent, including increased costs for doctor visits and prescriptions. There would be total savings of $240 million in the final year of the four-year contract, which is set to start in July.

Christie won't even consider the proposal, he said. He wants the Legislature to pass a law that would require all public workers in New Jersey, including teachers and police officers, to pay 30 percent of their health-care premiums, plus co-pays for doctor visits and prescriptions

“Sorry, it's a new game in town, and they're going to have to get used to it," Christie said Thursday

Legacy Costs: An issue for Auto, Airlines, Steel and others

Detroit's carmakers have been under siege from foreign competition, which have lower costs in their factories…U.S. Health-care costs have sapped $1,400 from the profit of any vehicle. (Business Week, 9/07)

Other Benefits…Union Advantage

Public Workers, Taxes and Benefits

Income Inequality Today

3. Briefly summarize what has been happening to police and firefighters across the state of NJ. One way to improve the situation of public safety workers was to raise taxes in NJ. As the articled notes: “Democrats will criticize the governor for refusing to raise taxes on those earning more than a million dollars while Republicans, led by Gov. Christie, will argue that Democrats are kowtowing to public employee unions and never met a tax they didn't like, Dworkin predicted.”

Who do you agree with? Why?

Outline

Grievance Procedures Impasse Economic vs. Non-Economic Strikes

Tyson and the UFCW Teamsters, Motts

Lockouts ILWU and PMA

I’ll be changing the readings for next week so RQ and Readings will not be posted until later today or tonight

Wisconsin union debate reaches court election race A Wisconsin Supreme Court election that turned into a

referendum on Republican Gov. Scott Walker's polarizing proposal restricting union rights remained too close to call Wednesday as a little known prosecutor tapped into voter unrest to mount a serious challenge to the incumbent tied to Walker.

Unofficial results showed challenger JoAnne Kloppenburg ahead by a scant 311 votes over incumbent Justice David Prosser, a former Republican speaker of the Assembly who served with Walker. The results were based on 99 percent of precincts reporting, with just five precincts outstanding

Public Workers, Taxes and Benefits

Income Inequality Today 3. Briefly summarize what has been

happening to police and firefighters across the state of NJ. One way to improve the situation of public safety workers was to raise taxes in NJ. As the articled notes: “Democrats will criticize the governor for refusing to raise taxes on those earning more than a million dollars while Republicans, led by Gov. Christie, will argue that Democrats are kowtowing to public employee unions and never met a tax they didn't like, Dworkin predicted.”

My Hometown and the Angry Cops

Who do you agree with? Why?

Selling Labor at market…

Labor market leads to yet more questions…How should day to day relations in a firm be governed? rules, discipline, contract interpretation

Employers want a free hand to manage their organization Pursue Goals & Maximize profits

Employees want to be protected from the arbitrary whims of management Maintain standard of living and plan for the future Work with dignity

Governing the Workplace

Non-union Management free to do what it wants within

boundaries of law Civil Rights, Sexual Harassment, Fair-Labor Standards

Act, etc.

Union Contract Sets new Boundaries: “Workplace Rule of Law”

But getting a contract is just the start…governance of the workplace becomes an ongoing, daily phenomenon

Contract Administration

Disagreements between Union & Management will inevitably arise

Impossible to foresee all circumstances when crafting a contract

Language may be unclear about certain issues

Situation may be unclear…does the contract address?

Examples

Diamond Shamrock employees work 3pm to 11pm… Received a shift differential (higher pay) for these

hours…unusual schedule rewarded with higher pay

Management changed hours to 11 am to 7 pm, and said no shift differential Union said workers should get it for hours 3 to 7…

Should the wage differential be based on per hour or per shift?

Disagreements…Will Arise

Sanford Rivers, NFL Referee 12 years service; 1 Superbowl Fired by NFL because of weight Union filed grieavnce

Why? Unions says it is about money:

NFL wanted “slimmer, more attractive officiating force…that would be more pleasing for the television audience.”

or NFL says it’s a safety Issue

Must be in good shape to prevent health problems

Disagreements will arise…

Borgata will begin firing or suspending cocktail servers who gain more than 7 percent of their body weight.

Union says this violates the contract…files grievance…

So what’s a grievance?

Grievances & Grievance Procedures…

GrievanceAny perceived violation of the contract

Grievance procedure?

Grievances & Grievance Procedures…

GrievanceAny perceived violation of the contract

Grievance procedure Formal process for settling conflict spelled out in

contract

Specified series of steps that aggrieved parties must follow when complaint arises 1930, <10% of CB call for GP Today, 98% of CB call for GP culminating in binding

arbitration 14% of non-union workers report grievance procedure

So how does this work…

Eimer’s Blanket Inc.

Employee reports to work smelling of alcohol

Assistant Foreman recommends discharge

Next day employee shows up at work is paid and given walking papers Management reason: Can’t permit people to be

intoxicated at work Employee: Sick and taking cough medicine

Termination of Employment…

In US, approximately 60% of US labor force is employed at will

Can be discharged for Good cause, Bad cause, No Cause…

Alcohol on breath, your fired Remember Bread and Roses

Termination

Almost all union contracts have rules & procedures to govern termination…need “just cause”

Collectively Bargained Contract lists Specific Grounds for Discharge Break rules, incompetence, absenteeism, intoxication,

fighting…

When rules broken, contract calls for distinct process Often require warnings Grievance procedures

Grievance Procedure

Eimer’s Blanket Inc.

Contract lists specific grounds for discharge Break rules, incompetence, absenteeism,

intoxication, fighting…

Contract outlines procedure to Determine “just cause” Step by step grievance procedure

Typical Process

Step 1 Employee brings grievance to Shop Steward

On the job union rep who carries out responsibility of union

Steward weighs merit Filter out lame grievances Build certain cases for next bargaining session

This Case: Steward decides dismissal violates contract…should be pursued

Typical Process

Step 2 Written Grievance Form filled out w/in set time Facts, contract violation

Shop Steward, Employee & Dept. Foreman Meet & try to settle

Foreman has 48 hrs to review. Most grievances settled here

This Case: Foreman supports action of Assistant Foreman…Union can appeal to step 3

Typical Process

Step 3 Higher Level Management

Appeal complaint to Superintendent of Department Usually within a week

Shop Steward/Local Leader meets with Superintendent Try to reach an agreement Most other grievances settled here

This Case: Super denies re-instatement. Union can appeal to next step 4

Typical Process

Step 4 Higher Level Union & Management

Plant/Organization wide Union Grievance Committee

Plant or Department Head and/or Director of Personnel review Meet to resolve… Discussion & Management reinstates worker…but 3

day suspension Why? Good record, had been out day before

What if this level fails…step 5

Typical Process

Step 5 Binding Arbitration (98% of contracts) Must be requested w/in 60 days of step 4 decision

Labor Lawyer & Management Lawyer go before an Independent Arbitrator Impartial Judge, Umpire Hears case, reviews evidence Very Formal Process

Shop stewards often go back to law school

Contract will typically specify that decision can only be appealed under specific circumstances

Arbitrator award exceeds authority; Decision not based on essence of labor agreement; Collusion

Arbitration: A long way from Exit as a Solution to the Labor Problem

• Opening statement– lays groundwork for testimony of witnesses– should clearly identify the issue, indicate what is to be proved,

and specify the relief sought

• Rules of evidence– arbitrator determines how evidence will be presented

• Assessing credibility of witnesses– arbitrator is both judge and jury

• Presenting documents– sections of collective bargaining agreement that pertain to the

grievance

• Examination of witnesses– both direct- and cross-examination of witnesses

A long way from Adam Smith…• Summation

– both sides given equal time for closing statements

– each side emphasizes relevant facts and issues

• Binding Decision made

Grievance Procedure & Arbitration

Rational & fair process or bureaucratic, expensive hell…

Union people will tell you that “Management acts, the union grieves.” And grieves, and grieves, and grieves… Union changes from rank and file mobilizer to legal

department

Arbitration is Expensive Employer has advantage over union

“The clients (union) can’t afford to have me prepare. And the company, of course, is totally prepared. They just cream us.”-Thomas Geoghegan, Labor Lawyer (Which Side are you On?)

Jimmy Hoffa, Past president of the Teamsters Union

“Even if it takes one or two hours or longer [for the management and the union] to work out a [grievance] settlement among ourselves we are better off, knowing the business as we do from both sides, than to submit a grievance to some third party who attempts to please both sides and who actually pleases nobody. In my opinion, the best method for settling grievances is to leave open the end for final settlement and, if we cannot mutually agree, either for the employer to lock out the union, or for the union to strike the employer. If we don’t come out with a completely satisfactory settlement we come out with a settlement both sides can live with and one which doesn’t change the terms of the agreement.”

Remember the Quickie strikes we read about…

What do you think? Grievance procedure or strike? Why?

Grievances Arise

In a union setting, an individual problem becomes subject to collective action

Traditional Union Actions in protest of unjust dismissal? Slowdowns Strike Wildcat strikes-(unauthorized by union)

All are disruptive of industrial relations But all require solidaristic action

Grievance Procedure

So how did Sanford Rivers (NFL Referee) make out 12 years service; 1 Superbowl Fired by NFL because of weight

Rivers Went to Referee’s Union & Filed Grievance… was reinstated w/1 yr suspension…then

must meet wt. requirements

Next Politics…

Strikes and Politics