Outline

1
Outline

• Bargaining Subjects
• Pensions
• Healthcare
• Grievance Procedures
• Againmore things that youll 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

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 systemwas
  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

4
(No Transcript)
5
All Societies Must Grapple with the Questions?

• What happens when workers are too old to sell
  their labor power?
• When youre too young to die but too old to
  work.
• Victor Reuther, in movie we saw earlier this
  semester
• Pensions Providebut who should provide pension?
• In Americawhere do we get the money that keeps
  alive when were too young to die, but too old to
  work?

6
Old Age in America

• Pensions Providebut who should provide pension?
• Govt. Provides a pension via1935, Social Security
  
• Federal Insurance Income Contribution Act (FICA
• Born after 1960Full 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 graphmost 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 Plan s

• Government Provides Social Security but it isnt
  enough for workers to maintain standard of living
• Post War Unions Push for Supplemental Pensions
• Inland Steel v. NLRBBecomes 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
  plansanyone?

13
Pension Types Defined Benefit

• Defined Benefit Plans
• Union 78 vs. Non Union 19
• 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 jobneeded 7 yearsI only worked 3so 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 Topicbut not mandatory
• So retirees sometimes get jammed
• Formula becomes important
• Christie wants to change the formula in NJlots
  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
• Even if employer goes out of business or their
  pension plan runs out of assets pensions are
  provided by Federal Governments Pension Benefit
  Guaranty Corporation (PBGC)
• But worker may take a big hitnote 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.
  http//www.forbes.com/feeds/afx/2005/05/10/afx2016
  620.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/0,8599,1
  981958,00.htmlixzz1IZBVPTeA
• 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-re
  cover/?modgoogle_news_blog

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
• Complexmust 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 growingfirms 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 complexjust 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
  Americans 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, youre
  still relying on the market to push you to the
  finish line in the last decade before retirement.
  
• But if youre 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 markets
  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 dont think weve really
  acknowledged just what a leap the very last part
  really is (Bernard 2011 11)
• Most Americans are woefully unprepared for
  retirement
• 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 retirementyoure in
  trouble
• No guarantee for life

33
(No Transcript)
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 Unionismgetting 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. http//www.trumanlibrary.org/anniversarie
  s/healthprogram.htm

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.
  http//www.trumanlibrary.org/publicpapers/index.ph
  p?pid483stst1

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 http//www.trumanlibrary.or
  g/anniversaries/healthprogram.htm
• 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 offereddown 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, 2011By 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 factoriesU.S. Health-care costs have
  sapped 1,400 from the profit of any vehicle.
  (Business Week, 9/07)

43
Other BenefitsUnion Advantage
44
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?

45
Outline

• Grievance Procedures
• Impasse
• Economic vs. Non-Economic Strikes
• Tyson and the UFCW
• Teamsters, Motts
• Lockouts
• ILWU and PMA
• Ill 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 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
• 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?

48
Selling Labor at market

• Labor market leads to yet more questionsHow
  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
  startgovernance 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 uncleardoes the contract
  address?

51
Examples

• Diamond Shamrock employees work 3pm to 11pm
• Received a shift differential (higher pay) for
  these hoursunusual 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
DisagreementsWill 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
  forcethat would be more pleasing for the
  television audience.
• or
• NFL says its 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 contractfiles
  grievance
• So whats 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, lt10 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

• Eimers 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 Cant 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 terminationneed 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

• Eimers 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
  contractshould 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
  ForemanUnion 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 workerbut 3
  day suspension
• Why? Good record, had been out day before
• What if this level failsstep 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) cant 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 dont come out with a
  completely satisfactory settlement we come out
  with a settlement both sides can live with and
  one which doesnt 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 Referees Union Filed Grievance
• was reinstated w/1 yr suspensionthen must meet
  wt. requirements

71
Next Politics

• Strikes and Politics