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Outline  Bargaining Subjects  Pensions  Healthcare  Grievance Procedures  Again…more things that you’ll need to know even if you never think about.

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Presentation on theme: "Outline  Bargaining Subjects  Pensions  Healthcare  Grievance Procedures  Again…more things that you’ll need to know even if you never think about."— Presentation transcript:

1 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

2 News of our Class  April 4, 2011 Unions Rally, Linking Their Cause to Dr. King April 4, 2011 Unions Rally, Linking Their Cause to Dr. King

3 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


5 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?

6 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

7 Social Security & Poverty

8 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

9 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

10 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???

11 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?

12 Collective Bargaining & Pension Plans  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?

13 Pension Types: Defined Benefit  Defined Benefit Plans  Union 78% vs. Non Union 19%  the employee gets a specific or monthly retirement typically for the rest of his/her life (Cutler, 2005)  the employee gets a specific guaranteed or “defined” monthly retirement benefit, typically for the rest of his/her life (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

14 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

15 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

16 Defined Benefits  Why do workers like these pensions best?

17 Defined Benefits  Advantage to Workers  Guaranteed pension for life  Promise workers a specific monthly benefit  Employer bears the investment risk  E ven 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

18 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.  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:,8599,1981958,00.html#ixzz1IZBVPTeA,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.

19 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?

20 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

21 Defined Benefit Plans  Why might employers dislike these pensions?

22 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

23  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?

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

25 Pension Types  Recent years have seen emergence of a different type of pension  Defined Contribution (401 k; 403 b)?

26 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

27 Pensions  Why do employers like…?

28 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

29  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

30 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 BLS Data

31 Pension Types: Defined Contribution  Plusses and Minuses for Employees?

32 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


34 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

35 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.

36 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.

37 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“  Truman ultimately withdraws bill

38 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

39 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…

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

41 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

42 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)

43 Other Benefits…Union Advantage

44 Public Workers, Taxes and Benefits  Income Inequality Today 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?

45 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

46 Wisconsin union debate reaches court election racedebate 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

47 Public Workers, Taxes and Benefits  Income Inequality Today 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 My Hometown and the Angry Cops  Who do you agree with? Why?

48 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

49 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

50 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?

51 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?

52 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

53 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?

54 Grievances & Grievance Procedures…  Grievance Any perceived violation of the contract  Grievance procedure?

55 Grievances & Grievance Procedures…  Grievance Any 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

56 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

57 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

58 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

59 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

60 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

61 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

62 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

63 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

64 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

65 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

66 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

67 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?)

68 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?

69 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

70 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

71 Next Politics…  Strikes and Politics

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