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0 Our Challenge John August, Executive Director Union Delegate Conference, March 24, 2012 0.

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1 0 Our Challenge John August, Executive Director Union Delegate Conference, March 24,

2 Since the Great Recession “ended,” June 2009: Inflation-adjusted median household income fell 6.7%, to $49,909 Average time out of work for those who lost jobs: 40.5 weeks Average earnings of those returning to work fell by 17.5% compared to their previous job

3 Since the Great Recession “ended,” June 2009: The top 5% of households obtained 82% of total wealth gains in U.S. from The bottom 60% of households had less wealth in 2009 than in 1983

4 Since the Great Recession “ended,” June 2009: The poverty rate is now at 15.1%, or 46.2 million people. One-third are children. The average cost of family health care coverage is more than $15,000/year.

5 Digging deeper into the data “ All told 100 million people – one in three Americans – either live in poverty or in the fretful zone just above it.” -New York Times, November 19, 2011

6 Somewhere between destitute and vulnerable More and more people – between one-third and one-half the population – are somewhere between destitute and vulnerable. It’s worse when we take into account: Huge personal debt Lack of savings or assets Loss of trillions of dollars in home equity Record unemployment Loss of retirement savings in stock market and early withdrawals made to survive

7 Percentage change in median net worth by age of householder, Source: Pew Research Center

8 Share of householders with no net worth or negative net worth, 1984, 2005 and 2009 Source: Pew Research Center

9 Retirement confidence hits new low The percentage of workers “not at all confident” about having enough money for retirement grew from 22% in 2010, to 27% in 2011 Highest level measured in the 23 years of the survey. The percentage “very confident” shrank to 13%. - Employee Benefit Research Institute, 2011

10 Vulnerability in old age Single women of the baby-boomer generation are particularly vulnerable to having inadequate retirement income – and things look even worse for post-baby-boomer generations. “For single females that are early boomers, 47 percent will run short (on retirement savings) within 10 years. So if you retire at 65, by the time you turn 75 … you have nothing left other than Social Security” or proceeds from a defined benefit plan.” - Jack VanDerhei, Employee Benefit Research Institute

11 How are workers at KP doing? Two-thirds of Union Coalition workers at KP make less than $60,000 a year.

12 Forty-three percent of Union Coalition workers at KP make less than $50,000 a year. How are workers at KP doing?

13 The median income of US households is $49,455. The median income of Coalition members is $50,988.

14 Many families depend on our incomes More that three-quarters (76%) of active Coalition employees have at least one dependent. Thirty-one percent – or 22,000 – of Union Coalition members who have dependents are single, with an average of 1.75 dependents. 39,500 Coalition members are single, and most of them – 31,000 – are women. Single women had gross incomes, on average, of under $54,000 in 2011.

15 Depending on our incomes More than three-quarters of us have dependents; a third of us are single parents, mostly women with relatively lower salaries. The median income of Coalition Union members is $50,998. In Oakland, a parent and one child need at least $43,697 to survive. A parent and two children need $53,338. Here in Los Angeles, a parent with two children needs $53,897. In Orange County, two parents with three children need $91,082. In Denver, a parent with two children needs $51,583. In the NW, one parent with two children needs $47,095. Two parents with three children need $70,461. In Atlanta, a parent with two children needs $64,817. In the DC area, a parent with two children needs $69,311. Two parents with two children need $74,163. In Cleveland, a parent with three children needs $68,761; two parents with three children need $74,221.

16 How are we doing on retirement? How secure are Coalition Union members in retirement? The average lump sum pension payout for a Coalition retiree is $181,480.* *

17 How are we doing on retirement? For Coalition retirees who do take the annuity option, the average annual annuity payment is $13,777* per year. That average annuity works out to about $1,148 a month. A February, 2012 report found that the average Social Security benefit for a retired person is $1,231 per month. That’s a monthly income of $2,379. *

18 Mary Joyce, RN, Ohio Mary was widowed at a young age, and she has carried a big load. She raised four children, and put them all through college. “All my children have student loans, and I have loans to pay off, too – car mortgage, taxes.” "We work together and we improve numbers. I’m so proud of us. My value compass is around my neck at all times, with the patient or the member at the center.“ “The reason we have a stable workforce is because of our wages and benefits.“ With her high seniority, Mary makes about $70,000. It takes a salary of $ $68,761 for a single parent to raise three children in Cleveland – and Mary has raised four.

19 Brij Prasad, Cook II Sunnyside Medical Center, SEIU Local 49 With 22 years of service, Brij is the longest-serving employee in the Sunnyside cafeteria. He and his wife, a housekeeper at a retirement home, have raised two children. They put their daughter, now a teacher, through Warner Pacific College. “I paid a lot of money for that,” he says proudly. They recently adopted their grandson, now 8. “My wife has asthma,” says Brij, “and without KP she’d probably be dead now.” “I want to retire. I would have retired at 62, I’m almost 64. We lost a lot of money after 9/11. I have to stick around for full retirement – a couple more years.” Brij has worked many years to pay off his bills. “My wife will retire soon, I try to tell her to get out but she won’t.” Brij has just one bill remaining to pay off – for the air conditioning he bought so his wife can be more comfortable in the summer heat.

20 Esther Cervantes, Pharmacy Call Center, UFCW “Customer service – that’s what’s important,” says Esther. “It is stressful work, but if you are a people person, then it’s fun.” She makes $23 an hour - $47,849 a year. Esther has dependents and family to care for: two children with asthma, one with kidney problems. Her husband is a landscaper and his work is dependent on the weather. She’s applied to the union for holiday gift cards. Cost for two parents and three children to survive: $79,879. Her extended family has been hit hard. “My sister’s benefits got cut. My mom and dad lost their jobs at the cannery. My dad stayed out of work for two years and then retired. He got into a depression. He didn’t have insurance. It took my mom three years to find a new job. She is now a home health aide with no benefits. I know people who don’t go to the doctor because they don’t have the $20 copay. Esther feels good that so far she’s been able to “give my kids a decent life. When you hear about the other stuff, you feel so sad and appreciate what you really have. And any time I need support from the union, they are there.”

21 Machelle Bailey, RN, Riverside, UNAC/AFSCME Machelle is the union UBT co-lead for Riverside’s internal medicine department. She helps adult patients manage chronic illnesses such as diabetes, gives insulin and flu shots, and delivers patient education. She’s been with KP for 21 years, is married and has put three children through college. Her oldest is a 29-year-old fighter pilot; the middle child is 24 and an aircraft mechanic, her youngest, a daughter, 21, is a freshman at UCLA studying pre-med. Machelle earns $120,000 a year, and received her BSN in 2008 with the help of KP’s tuition reimbursement program. A breast cancer survivor, she often thinks about what it would be like if she did not have health insurance and feels that KP and her union have given her and her family opportunities that others lack. “I worry about whether my daughter or my grandchildren will be able to live the American dream. A lot of people today don’t have that opportunity.”

22 Rosa Contreras, EVS, Santa Rosa, SEIU-UHW Rosa has been an EVS worker at KP for 10 years. She is known by her co-workers as someone who really interacts well with the patients and uses “the right words at the right time.” Rosa and her husband’s dependents have included three children. Two of them are in college, and one is in high school. Of the two in college, one has found work but the other has been unable to. The family has lived in Windsor for 20 years. Rosa makes about $45,000 a year. She has a mortgage and makes payments on two vehicles. She and her husband also support their daughter as well as the son who can’t find a job. “I live paycheck to paycheck, and sometimes have to hold onto bills and pay them late when I get my next paycheck.” She hasn’t started thinking about her retirement yet, but she’s concerned about issues like co-pays for medical visits or medications because she is “just getting by” right now.

23 “I’ve always liked the customer care part of it,” Rodney says about his five years at KP. “We clean operating rooms, the ER, do floor care. I have the opportunity to go to different departments and see how different parts of the hospital work.” He’s on the green committee, using less toxic chemicals, being more environmental, and saving money. Rodney makes about $35,360 a year. “Everything is very expensive,” he says – like his rent which is $1200/month. He has car payments, though he sometimes takes the subway because gas is so expensive. Rodney’s wife has been working at a non-union grocery store for 5 years, and she only makes $10-$11 an hour. They have a 4-year-old son, and two older sons who are working. Cost to support two parents and three children in LA: $82,599. “The economy keeps going up, but a lot of people aren’t moving. It is hard out there right now. I have a friend who works for Macy’s. He can only get three days a week. It takes him an hour and a half to drive to work. He is struggling. Down the street, there are two families sharing one house because they don’t have work.” Rodney Trammell, EVS, LA Medical Center, SEIU-UHW

24 Best Place to Work Kaiser Permanente has been the best place to work since the 1940s. Best place to work – and best compensated workforce – is not an invention of Partnership. Its always been the reality of an organization with a highly unionized workforce. What the Partnership brought was a commitment and methodology for high performance. But … what does “best place to work” mean when overall standards are so dismal?

25 Our challenge Much like our nation at large, we possess within our system vast wealth and resources. Can we show the country how it is possible to provide health care for the common good, with the best outcomes – without increasing the vulnerability of our already- vulnerable workforce? We can, and we must – it is the ONLY way we can succeed. We can take the high road. There is still time, and we still possess the resources, to do the right thing.

26 It boils down to one word – one moral imperative: Affordability Our challenge

27 Our stark choice The choice is stark: chop or improve. “If we permit chopping, I assure you that the chopping block will get very full – first with cuts to the most voiceless and poorest of us, but, soon after, to more and more of us. Fewer health insurance benefits, declining access, more out-of-pocket burdens, and growing delays. If we don’t improve, the cynics win.” - Don Berwick, past administrator, Centers for Medicare and Medicaid Services

28 Chop or improve? We know from documented experience that the best way to create value is through an engaged workforce and continuous improvement. Taking the waste, cost, errors, and inefficiencies out of the system can only be done at the front line, by a respected and secure workforce.

29 . Our response 1.Improve quality, service, safety and efficiency while preserving best place to work 2.Grow KP to protect our model of care, our unions and our jobs 3.Improve the health of our workforce 4.Improve the health of our communities

30 How UBTs impact culture Level 5 Level 1 and 2 UBTs with higher Path to Performance scores also have higher scores on the 12 People Pulse items related to performance. Source: People Pulse 2011 Survey; UBT Tracker

31 Our Value Compass

32 Will we become cynical and retreat to traditional behaviors? Or Will we step up and face our challenges? Our challenge

33 Three historic crises 1945: Kaiser shipyards close, KP health plan in jeopardy. Harry Bridges and the unions step up. 1980s - ’90s: Market upheaval, labor conflict, near collapse of Kaiser Permanente. LMP forms to find better solutions. 1950s: Charges that KP practices “socialized medicine.” Unions defend KP physicians.

34 ILWU brochure for worksite health assessment program, 1951 We Know How to Do This Longshoremen lining up for health assessment

35 We Know How to Do This!


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