Minus Members’ Power, Unions Face Mounting Bargaining Woes
William Ehman got acquainted with the current direction of collective bargaining in his industry from the back of a squad car. The former president of Steelworkers Local 1537, Ehman led a group of nine retirees to a mid-September union meeting to discuss current negotiations with Latrobe Steel.
After the last contract six years ago, the local had stopped providing transcripts of negotiations with the Pennsylvania specialty steelmaker. But Ehman knew the company’s current offer included a two-tier wage structure and a shift from defined benefit pensions to a 401(k) plan. Meanwhile his checkbook issue, a retiree health care allowance whose value had tumbled over the past few years, wasn’t going anywhere in current talks.
The local had said retirees were excluded from the meeting, despite a provision in the bylaws that guaranteed them access. Union representatives told the retirees to leave, but Ehman stood his ground. Soon six police cars arrived, and Ehman was hauled away from his union hall in handcuffs, facing a criminal trespass complaint.
“It went beyond the pale,” he said. “When you start dividing your membership against itself, it’s just a recipe for disaster.”
Public sector unions, while escaping the steady erosion of density seen in the private sector, have not been immune to the squeeze at the bargaining table.
After accepting $63 million in concessions two years ago, Detroit teachers struck for more than two weeks last year rather than swallow another $88 million in givebacks. But 16 days on the picket lines wasn’t enough to fend off the tide, as their eventual settlement contained concessions on bonuses and sick time, and required veteran teachers to pay more than 10 percent of their health costs.
The 2006 showdown in Detroit’s public schools was a product of the city’s ongoing budget crisis. Since the beginning of the decade, state and local governments across the country have weathered their worst financial crisis since the Great Depression, in no small part due to the string of tax cuts implemented in the windfall years of the 1990s.
Public sector workers everywhere have faced layoffs and increased workloads. Retiree health care has come under pressure as state and local governments have been forced to change how they account for these benefits.
Public sector workers from more than a dozen states have also witnessed proposals to shift their retirement systems from defined benefit pensions—which cover approximately 90 percent of federal, state, and local government employees—to 401(k)-style plans. Such efforts have typically been met with stiff resistance. More than 20,000 public employees filled the streets of Trenton, New Jersey after lawmakers proposed changes to the state’s pension system. Legislators were forced to back away from sharp changes.
But with dwindling numbers of private sector firms still providing defined benefit pensions—only about 10 percent still do—pressure mounts on public sector workers to accept more meager wages and benefits. The challenge remains for this island of unionization in a sea of non-union private sector competitors.
A PATTERN OF A SORT
The situation of Local 1537's retirees is all too common. Indeed, if anything the story of widescale givebacks under the gun of employers, courts, and (yes, even) union officials has been told and retold throughout hundreds of workplaces in the private sector in recent years.
Two-tier agreements, double-digit wage cuts, health care cost shifts, work rule changes, and defined benefit pension and retiree health care roll-backs have occurred in one major contract settlement after another with dizzying speed in the past six years. In one industry alone, airlines, wage and pension concessions given back to employers since 2001 by union pilots, flight attendants, mechanics, gate agents, and other ground crew workers totaled over $15 billion.
Beyond the obvious freefall in bargaining outcomes lie nagging questions for labor activists. What trends drive these givebacks? What continues to shift the power balance away from workers at the bargaining table?
Behind the simple answer of declining union density, lies another more fundamental loss, the drop off of strikes, shopfloor organization, and other member-centered levers that were the heart of earlier union victories.
Though these setbacks have all been bitterly felt, they come at the end of a long trailing off of the once-strong pattern bargaining agreements that spurred economic gains for U.S. workers. Forged in the fights of the 1930s and 1940s, the pattern agreements—codified in master contracts—grew stronger in most industries decade after decade until the 1980s, when the first concession wave struck.
WHO’S THE MASTER?
Unfortunately master contracts continue to unravel in many industries. In their controversial 2007 contract with UPS, the Teamsters agreed to pull 44,000 UPS members out of their multi-employer Central States Pension Fund in exchange for organizing rights at the company’s non-union freight division. In addition to weakening a key institution of pattern bargaining—the multi-employer pension fund—new UPS Freight Teamsters with work under a contract substantially below National Master Freight Agreement standards.
Similar declines in master contracts have been seen in auto, grocery, and carhauling. The once-strong master contracts held by the United Food and Commercial Workers in Southern California provide a striking example. Health care givebacks were so steep in the wake of the 2003-2004 strike/lock-out that the number of workers with health care coverage fell from a pre-strike level of 94 percent to its current level of 54 percent.
Worse yet, was the break up of the UFCW Southern California master contract itself. In spring of 2007 the union abandoned joint bargaining, negotiating separate agreements between the three major chains and each of the seven UFCW grocery locals in the region.
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Other unions are moving in the opposite direction, attempting to reestablish national master agreements in spite of heavy odds.
The California Nurses Association has fought to forge a master contract from 13 separate agreements at hospitals in the Sutter health care chain. Importantly, they have flexed their workplace power, launching two-day strikes in mid-October and again in mid-December. In similar fashion UNITE HERE’s 2006 Hotel Workers Rising campaign was an important first step towards standardizing work at large hotel chains. The Service Employees International Union (SEIU) has also aggressively pursued industry-wide standards in healthcare and building services, among other sectors, although sometimes resorting to controversial means such as the nursing home ‘template agreements’ recently abandoned in California.
The counter-trend can also be found in “old economy” workplaces. The Steelworkers achieved a national deal with International Paper in August, pulling 14 separate, staggered contracts into a uniform pact with a common expiration date. But the unity came at a cost: the national agreement includes a no-strike clause, and introduces a lower wage tier for new employees.
THE REAL LEGACY?
In recent years many employers have made it a top priority to shed their so-called “legacy costs”—the pension and retiree health care obligations of long-unionized firms. Whether at the bargaining table or in bankruptcy court, employers have waged a bruising battle to sidestep these decades-old commitments.
Pensions have been hard hit. Since 2001 corporations have dumped liabilities for almost a million workers onto the Pension Benefit Guarantee Corporation, the government agency responsible for insuring the nation’s defined benefit pension plans. In other cases, corporations have transferred some or all of these costs onto unions through the formation of Voluntary Employees Beneficiary Associations (VEBA), a key feature in the latest contracts between the UAW and Big 3 automakers.
Often neglected are the substantial legacy costs associated with the buy-now, pay-later management strategies of the last 20 years. In the airline industry, the mergers and acquisitions boom of the late 1980s added $2 billion a year to the industry’s debt service burden—and fed into the airlines crisis of the early 1990s.
After recovering ground later in the decade, carriers repeated the credit binge, scrambling to expand routes and add capacity. A similar buying spree took place in the California grocery industry during the 1990s, as national chains like Kroger, Albertsons, and Safeway gobbled up smaller regional outlets. Both industries suffered in the 2001 recession.
While their creditors rarely felt any pain, debt-strapped companies took a hard line with their unionized employees. The UFCW’s four-and-a-half-month strike in 2004-2005 brought two-tier wages and widespread health care cost shifting into Southern California’s grocery industry. This pattern will cut deeper, as auto-parts manufacturers, steelmakers, and others cry “me too” and seek to use the moment to cast off obligations to workers.
A SUBSTITUTE FOR POWER
Caught between a declining membership and tough-minded employers, many union leaders have turned to labor-management partnerships as a solution to their current difficulties. The UAW—among the first to bat its eyes at management—has staked its future on keeping the Big 3 automakers healthy and competitive. As UAW President Ron Gettelfinger said last summer, “We have no interest in tearing down employers. Just the opposite—we want employers to succeed so that workers have a chance to share in that success.”
Despite tough talk during this fall’s auto negotiations, the union lived up to Gettelfinger’s words, accepting a less-than-fully-funded VEBA together with a two-tier wage system that sinks union earnings beneath the non-union manufacturing standard, as part of a package of givebacks designed to keep the Big 3 afloat.
But even when unions aren’t faced with shrinking numbers or non-union competition, the promise of partnership has proven seductive. And no one champions dropping “confrontational” approaches to employers more than SEIU President Andy Stern.
Stern explained to the Los Angeles Times on December 7 the kinds of partnerships he seeks. “I’m talking about appreciating that [members’] employers live in a competitive environment and unions can’t be an albatross around their competitive neck. We understand we need to organize whole industries or whole markets or whole sectors to not put union employers at a disadvantage.”
BUCKING THE TREND
Despite the positive rhetoric, partnership has not paved the way to high-wage jobs for unions like SEIU that organize in the low-wage non-union service sector. Nor has it preserved good jobs for industrial unions like the UAW. Other unions, however, have chosen a different path.
Through a two-year fight that included strikes, lock-outs, and an aggressive boycott, UNITE HERE Local 2 in San Francisco beat back concessions and gained new organizing rights. Hotel owners fought to impose pension cuts and exclude new hires from the health care plan for their first five years. Instead, the union won a 64 percent increase in health and welfare fund contributions and a 69 percent increase in pension contributions, alongside solid wage increases.
Equally important, the local won a neutrality agreement from all of the owners in the city’s unionized hotels, enabling the union to organize without interference at all hotels acquired or built by those owners in the Bay Area.
New York's Teamsters Local 804 also successfully bucked the national trends of partnership and concession. During recent contract negotiations with United Parcel Service, Local 804 voted three-to-one against the national UPS contract and the local supplement. Although the national contract was ratified despite important concessions, Local 804 members voted down the supplement in part because it eliminated the 25-year-and-out pension benefit for new hires. Local 804 members won this benefit almost three decades ago through a 13-week strike.
Company officials and national union negotiators put strong pressure on Local 804 members, warning that their pensions—cut 30 percent earlier this year—would be locked in place if they rejected the local supplement. But after negotiators returned from a second round of bargaining, the new proposal preserved 25-and-out for new hires and restored their pension benefits, along with several other key gains.
While there is no magic bullet for winning stronger contracts in tough times, today’s success stories stand out. Union activists and leaders who have been able to buck concessionary trends have fought to do it. They have also rejected the quick-fix of partnership, recognizing that employers’ loyalties lie first and foremost with the bottom line.
Militant strikes and other job actions, while abandoned by many unions in recent years, have proven successful when part of a larger plan. But in most cases, members remain the lynchpin. Where unions are making strides, members are at the center of the process—helping formulate strategy, getting themselves and their co-workers prepared, and making their power felt at work and in their communities.