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Title: 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

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 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

(No Transcript)
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
  • Victor Reuther, in movie we saw earlier this
  • 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

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

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
  • 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

  • If state pensions are not enough, then unions
    will pursue via the employer through collective
  • 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
  • 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 isnt
    enough for workers to maintain standard of living
  • Post War Unions Push for Supplemental Pensions
  • Inland Steel v. NLRBBecomes mandatory subject of
  • 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

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

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

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

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 Governments Pension Benefit
    Guaranty Corporation (PBGC)
  • But worker may take a big hitnote 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.
  • 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
  • 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

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
  • 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
  • Complexmust plan for future
  • Contributions fluctuate according to the current
    future funding needs
  • Costs may increase substantially
  • If plan investments produce lower returns than
  • Number of retirees keeps growingfirms 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

  • 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 complexjust 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
    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

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
  • 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 retirementyoure in
  • No guarantee for life

(No Transcript)
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
  • 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

President Truman Proposes National Health Care
  • Called for the creation of a national health
    insurance fund, to be run by the federal
  • 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

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.

President Truman Proposes National Health Care
  • 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
  • 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 offereddown 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
  • 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, 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

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)

Other BenefitsUnion 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?

  • 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

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

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 questionsHow
    should day to day relations in a firm be
  • rules, discipline, contract interpretation
  • Employers want a free hand to manage their
  • Pursue Goals Maximize profits
  • Employees want to be protected from the arbitrary
    whims of management
  • Maintain standard of living and plan for the
  • 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
    startgovernance 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 uncleardoes the contract

  • Diamond Shamrock employees work 3pm to 11pm
  • Received a shift differential (higher pay) for
    these hoursunusual schedule rewarded with higher
  • Management changed hours to 11 am to 7 pm, and
    said no shift differential
  • Union said workers should get it for hours 3 to
  • Should the wage differential be based on per hour
    or per shift?

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

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
  • So whats a grievance?

Grievances Grievance Procedures
  • Grievance
  • Any perceived violation of the contract
  • Grievance procedure?

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

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

Termination of Employment
  • In US, approximately 60 of US labor force is
    employed at will
  • Can be discharged for Good cause, Bad cause, No
  • Alcohol on breath, your fired
  • Remember Bread and Roses

  • Almost all union contracts have rules
    procedures to govern terminationneed just
  • Collectively Bargained Contract lists Specific
    Grounds for Discharge
  • Break rules, incompetence, absenteeism,
    intoxication, fighting
  • When rules broken, contract calls for distinct
  • Often require warnings
  • Grievance procedures

Grievance Procedure
  • Eimers Blanket Inc.
  • Contract lists specific grounds for discharge
  • Break rules, incompetence, absenteeism,
    intoxication, fighting
  • Contract outlines procedure to Determine just
  • 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
    contractshould 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
    ForemanUnion 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
  • 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 workerbut 3
    day suspension
  • Why? Good record, had been out day before
  • What if this level failsstep 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
  • 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
  • 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) 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?)

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
  • Remember the Quickie strikes we read about
  • What do you think? Grievance procedure or strike?

Grievances Arise
  • In a union setting, an individual problem becomes
    subject to collective action
  • Traditional Union Actions in protest of unjust
  • 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 Referees Union Filed Grievance
  • was reinstated w/1 yr suspensionthen must meet
    wt. requirements

Next Politics
  • Strikes and Politics
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