Daily Blog

"Heros" But Don't Pay Them Right

    One of the most annoying and hypocritical spectacles during the Rudy Giuliani mayoral era was listening to him pontificate about the heros of the fire and police departments--yet when it came to paying them decent wages, he was the usual Republican prick (yes, this is the proper word the use). This came back to me this morning when I read in today's NYTimes that the NYC firefighters reached a tentative deal for a contract:

The Bloomberg administration and the city’s largest fire union have reached a tentative two-year contract that gives union members raises totaling 8.16 percent and increases pay for starting firefighters by nearly $10,000.

....The agreement, reached with the Uniformed Firefighters Association, which represents some 8,900 members, calls for raises of 4 percent on the first day of the contract and 4 percent on the first day of the contract’s second year.

It would also raise the base salary after five years on the job to $68,475, from the current $63,309. There would be additional longevity increases beyond that.

One of the highlights of the agreement is the increase in pay for starting firefighters to $35,000 from $25,100. That brings rookie firefighters nearly to the $36,878 they were paid before the last contract was reached in October 2005. That contract, which expired July 31, called for a reduction of nearly $12,000 as part of a package of concessions in exchange for raises.

    Starting pay for a firefighter is $35,000? Damn, that seems pretty low to go out and risk your life every day. The rest of the story also reports on the on-going impasse between the city and the police union.

The latest round of negotiations between the city and the police union reached a stalemate last year after the union rejected a deal that would have increased pay for rookie police officers by about $10,000 from the current $25,100. The offer also would have raised the maximum base pay after five years of service to about $63,000 from $59,588.

    And cops are getting $25,100 to get shot at? This is the urban version of the "chicken hawks"--the rah-rah politicians who love the military but never served...remember, Cheney had "other priorities" when he was called--Republicans who will drape themselves all over every police officer or firefighter when it comes to a photo-op but refuse to pay them a decent living wage.

A Workers' Comp Deal in NY

    New York has had one of the worst workers' compensation systems in the country. For the past 15 years, New York’s maximum weekly benefit stood at $400—lower than every state except Mississippi and Arizona, not to mention the minimum benefit: $40 a week. Regionally, New York ranks last among nine states (from a high of $1,124 in New Hampshire down to New Jersey’s benefit of $691). The value of that $400 benefit is less than $288 in 1992 dollars. Most of New York’s injured workers receive a benefit that puts them below the federal poverty line for a family of four.

    And most businesses take a powder when it comes to paying workers' comp: Fully 20-30 percent of New York State businesses evade worker’s compensation, according to two recent comprehensive studies (one study by the Fiscal Policy Institute (FPI), which found that 20 percent of businesses evaded the system; a second study by Risk Metrics Corp. pegged the number as high as 30 percent). That adds up to a lot of dollars lost: at least $1 billion (fully 15-20 percent of the premiums that should be paid).

    That's why the deal forged yesterday may change the system for the better--though there is a big "if" in all that. The deal struck between government, business and labor would raise the maximum benefit to $500 by next year, $600 in 2009 and $650 in 2010 and, then, the max would reach two-thirds of the average weekly earnings in the state and stay indexed at that level after 2012. The minimum benefit would go from $40 to $100.

    One problem, I see, is that large numbers of workers in the state will never receive the maximum benefit because they simply don't earn enough money.

    The biggest issue is that the deal also caps the number of weeks that a worker, who is partially or permanently disabled, can receive workers' comp. Here's how it was explained in today's story in The New York Times:

In recent years, business groups have pressed to revamp one provision in particular, which allows some workers with partial disabilities, like a back injury, to receive weekly benefits until retirement age. Insisting that these “permanent” benefits inflate costs and insurance premiums, the groups urged Mr. Pataki and then Mr. Spitzer to copy other states that have capped the number of years that workers can receive such benefits.

In yesterday’s proposed overhaul, such caps would be installed. Workers classified as permanent partially disabled would be limited to 225 weeks to 525 weeks of weekly benefits depending on the severity of their injuries. The Business Council estimated that the average permanent, partial claimant would receive 344 weeks of benefits. They would continue to receive lifelong medical benefits, however.

Business lobbyists say capping the duration of benefits will give injured workers greater incentive to pursue rehabilitation and retraining and to return to work. But some experts on workers’ compensation fear that many badly injured workers would not be able to find a job once their benefits end, and would grow desperate, perhaps turning to welfare.

“The part that concerns me is that the people who have very long duration disabilities are the ones who really need workers’ compensation the most,” said Les Boden, an economist at Boston University School of Public Health who has studied workers’ compensation benefits.

    A part of the deal seems to soften that threat:

At the behest of the A.F.L.-C.I.O, the deal aims to protect permanent, partial claimants through several measures. These claimants, for example, would be allowed to apply for extra weeks of benefits if they could not find a job and faced economic distress. Furthermore, the deal proposes to make it easier for permanent, partially disabled workers to be classified as totally disabled.

    Kudos to Denis Hughes, the state federation president, for making sure that that is part of the deal. But, I think we should be uneasy about giving into the idea that injured workers should be penalized for the sake of the old mantra that it's the only way to make business more "competitive." The fact is that it’s the fraud and profiteering in the insurance industry that adds unnecessary costs to the cost of fair benefits for injured workers. In the past decade, the insurance industry has averaged profits of 9 percent per year (excluding 2001)—while premiums have declined at a rate of 3 percent per year.

A quick look inside the executive suites of three of the largest players in the insurance industry in New York paints a stunning picture.
•    AFLAC CEO Daniel Amos took home $12.8 million in pay and other compensation in 2005. It would take a worker being paid the maximum benefit of workers’ compensation 666 years to equal that amount.
•    CEO Martin Sullivan of AIG raked in $13.7 million in pay and other compensation in 2005. If a worker received the full workers’ comp benefit, she or he would have to live a robust 718 years to equal Sullivan’s 2005 check.
•    And the pauper of the group, Chubb CEO John D. Finnegan earned a paltry $6 million—giving any regular worker living on workers’ comp a huge break: she or he would only have to work 316 years to match Finnegan’s take-home pay.

    Why should a deal be made to take away money that is pennies compared to the vast riches being showered on the very executives who are creating much of the problem?

Baseball Disses Marvin Miller Again

    I know this doesn't rise to the level of war and peace...but the National Baseball Hall of Fame and Museum’s Committee for Baseball Veterans announced balloting results Tuesday for its 2007 election of players, managers, executives and umpires. And Marvin Miller did not make the cut. As a life-long baseball fan (and, to be upfront, a Yankees' season ticket holder...), it is just an outrage that Miller isn't in the Hall.

   For the casual reader, Miller revolutionized the sport. He was elected to head the Major League Baseball Players Association (MLBPA) in 1966. Without question, he turned the MLBPA into one of the strongest unions in America. He managed to pull together a group of players who, by their nature, saw their success tied to their own individual ability--and he convinced them that only a strong union, where the success of each of them would be tied to collective action, would protect their livelihoods.

    Miller came to the union with a long history in organized labor. HE served as a labor economist for the Machinists' Union and my union, the United Auto Workers. He, then, went on to work for United Steelworkers union and quickly, I would say, rose to be one of the union's best negotiators. His only flaw: he was a huge fan of the N.Y. Giants (just kidding...). By 1968, in just two years, Miller succeeded in raising baseball's minimum salary from $6,000 to $10,000 (the first such raise in over two decades), a precedent that cleared the way for baseball salaries to become the envy of all professional athletes. The cool-headed union chief soon gained a reputation throughout the league as a hard, but well respected, negotiator and player advocate.

    In just two years, Miller was able to move players' salaries from a minimum of $6,000 to $10,000--a huge jump in those days. Management hated him with a passion. Of course, his greatest achievements remain winning the right, in 1973, for players to be able to actually have arbitration for grievances and, then, establishing the right to free agency.

    Miller fell just 10 votes shy of garnering the necessary number to be inducted. At 90 years old, I'm worried that he may not make it to the next election for executives (i.e., non-players), which won't be held next until 2011.

    It's obvious why Miller didn't get there: among the voters on the panel are executives in baseball who still despise Miller because he actually empowered players to stand up against the owners. They won't vote for him out of spite.

    But, frankly, as long as Miller remains outside the Hall of Fame, the rest of the inductees are tarnished. Because the Hall is supposed to celebrate those people--players and non-players--who have had a lasting impact on the game. It's hard to think of any single person outside the lines who changed the game of baseball more than Marvin Miller.

    Shame on the Hall for keeping Miller outside its walls.

Hedge Fund Workers Sue

    Most of the attention on hedge funds has focused on the enormous amount of money the funds control--outside any regulation. But, turns out hedge funds are no different than other employers when it comes to treating their workers. Today's Wall Street Journal has a story that describes a number of employment lawsuits (surprise, hedge funds are not unionized):

Hedge-Fund Traders' New Battle: the Boss
As Assets Soar, So Do Employment Lawsuits, Just Like Widget Firms
By ANITA RAGHAVAN and PETER LATTMAN

Hedge-fund managers are known for their rough-and-tumble trading style. They're also getting feisty about fighting employment disputes.

That's what Harry Cohen found out when he sued hedge fund NorOdin Investment Management LP in a Connecticut federal court in July. The portfolio manager alleged that he was unfairly fired and denied part of his bonus for two years.

NorOdin fired back, claiming in an answer to the lawsuit that Mr. Cohen was sacked because of "egregious misuse" of a company laptop computer. The fund said it found data on the computer regarding Mr. Cohen's former hedge-fund employer, including scanned personal documents of its employees such as passports, credit cards and work permits. (Read NorOdin's answer to the complaint.)

    To be clear, the lawsuits described in the story were not brought by the janitor or the secretary but by well-compensated members of the hedge fund. But, it's kind of interesting that employment-at-will doctrines are being tested even in this secretive industry.

Employee Free Choice Act

    Just thought I'd put up an open thread here to see what people think: will the Employee Free Choice Act become law anytime soon? So far, according to the AFL-CIO website, 232 House member have signed on as co-sponsors (by the way, the AFL-CIO section on this is very comprehensible and readable). What's your reading on where YOUR member of Congress stands, particularly your Senators (because I think the House will likely pass EFCA but it will find a very uphill battle in the Senate).

More on The HealthCare Alliance

    I tried to listen in on the webcast of the press conference unveiling the new labor-business health care coalition but it was impossible. So, here's what I know from written materials: The founding members of  the "Better Health Care Together" campaign include AT&T, the Howard H. Baker, Jr. Center for Public Policy, the Center for American Progress, the Committee for Economic Development, the Communications Workers of America, Intel, Kelly Services, the Service Employees International Union (SEIU) and Wal-Mart.

    These founding members have committed to recruiting additional players who would gather at a summit in May.    Personally, I am solidly in the camp that believes that single-payer in the only rationale way to change the health care system in America. But, I think it's useful that business and labor are at the table. With caveats to follow.

    First, in the official release that I just got here's some overview:    

The principles document that each founding member signed begins:    

America’s health care system is broken.  The traditional employer-based model of coverage in its current form is endangered without substantial reform to our health care system.  It is being crushed by out of control costs, the pressures of the global economy, and the large and growing number of uninsured.  Soaring health costs threaten workers’ livelihoods and companies’ competitiveness, and undermine the security that individuals of a prosperous nation should enjoy.  We can only solve these problems – and deliver health care that is high quality, affordable, accessible and secure – if business, government, labor, the health care delivery system and the nonprofit sector work together.    

Specifically, the four principles are:       

1.      We believe every person in America must have quality, affordable health insurance coverage;

2.      We believe individuals have a responsibility to maintain and protect their health;       

3.      We believe that America must dramatically improve the value it receives for every health care dollar; and,

4.      We believe that businesses, governments, and individuals all should contribute to managing and financing a new American health care system.  

    There are not details here beyond broad statements. I am a little concerned about a few things. I am curious what others think. Number one: the statements from the business leaders don't reflect very much of a new approach, as far as I can tell. Example:     "The U.S. healthcare system delivers results below international norms at high cost, and consumers and industry suffer the consequences," said Craig Barrett, Intel Chairman.  "The simple principles and the diverse champions announced today will create a framework to develop workable approaches to the problems.  In particular the ideas on consumer empowerment to drive system efficiency are completely in line with the Dossia personal health record effort that many of today’s participants have helped kickoff."

    In other words, Barrett is pushing the "consumer empowerment" rhetoric that is just a fancy way of saying "we want to wash our hands of the problem and it's up to the consumer to sink or swim in the swamp."

    Number two: the two labor leaders involved, Andy Stern and Larry Cohen, are two of the best, deepest thinkers in labor. Here is what they have to say:    

"What unites us here today is our belief that it will be a far greater America when we finally get health care for every man, woman and child," said Andy Stern, President of SEIU.  "We can’t keep tinkering, hoping that incremental change will fix our broken health care system.  We need fundamental change, and it is going to take new thinking, leadership, new partnerships, some risk taking, and compromising to make it happen.  But that is what we all owe our country."

    And:    

CWA President Larry Cohen said, "Our current system puts a huge strain on employers that provide quality benefits for employees – both current and retired – and their families.  It forces many U.S. businesses to compete not on the quality of their products, services and performance, but instead on the cost of health care benefits.  It is long past time to move health care – a public good – from the corporate balance sheet to the public balance sheet."

    I don't disagree with the general principles they articulate. But, I think we should ask how we truly bridge the gap between a group--business--that is not willing to get solidly behind a full-scale government role in providing health care for every American and the rest of us, who, based on painful experience, know that as long as the insurance and drug companies control the framework of the health care system, we are screwed (that's a technical term).

    I wrote long ago that a single-payer health care system was a matter of economic survival for business. But, it's not yet clear that the business world is ready to give up on the rhetoric of the "free market" as the solution to every social ill.

   

What do you think?

A Provocative Alliance

    This is happening today. I don't know more than what is in this release but will report when more becomes known.

WAL-MART, SEIU, CENTER FOR AMERICAN PROGRESS, HOWARD H. BAKER JR. CENTER, KELLY SERVICES, CWA, AT&T, INTEL, AND COMMITTEE FOR ECONOMIC DEVELOPMENT TO ANNOUNCE MAJOR HEALTH CARE CAMPAIGN

Wal-Mart, the Service Employees International Union, the Center for American Progress, the Howard H. Baker, Jr. Center for Public Policy, Kelly Services, the Communications Workers of America, AT&T, Intel and the Committee for Economic Development will announce a major new campaign with a focus on health care on Wednesday, February 7th at 11 am. 

Participants include:
·        Lee Scott, President and CEO of Wal-Mart Stores, Inc.;
·        Andrew Stern, President of the Service Employees International Union (SEIU);
·        John Podesta, President of the Center for American Progress and former Chief of Staff to President Bill Clinton;
·        Howard Baker, founder of the Howard H. Baker, Jr. Center for Public Policy at the University of Tennessee and former Senate Majority Leader and Chief of Staff to President Ronald Reagan;
·        Carl Camden, President and CEO of Kelly Services Inc.;
·        Larry Cohen, President of the Communications Workers of America;
·        James Cicconi, Senior Executive Vice President-External & Legislative Affairs, AT&T;
·        Colin Evans, Director Policy and Standards Digital Health Group, Intel; and,
·        Charles Kolb, President of the Committee for Economic Development.

The Workman's Comp Sham

    The Fiscal Policy Institute has a report out today that shows how employers are killing the worker's compensation system in New York. According to the report, "Between 500,000 and a million New York workers who should have workers' compensation coverage do not, and the system's revenues are $500 million to $1 billion lower than they should be. Fragmented responsibility for enforcement has allowed employers to provide unemployment insurance but not workers' compensation coverage to some workers; in other cases employers misclassify employees as consultants to keep them out of both systems."

    Steve Greenhouse writes about this report today. But, the big piece that's missing is the drive to change the system in New York--a drive supported by Gov. Eliot Spitzer--which will harm workers eve more. Right now, the worker's comp system says that you will get up to $400 per week as long as you are injured; by the way, that amount is a piddling amount, putting New York only above Mississippi, not a great place to be, in terms of worker's comp benefits.

    But, business, using the tired-rhetoric of better "efficiency" and "competitiveness," is pushing to cap the benefits at a certain number of weeks. So, if you are severely injured, you are out of luck if you pass the time limit. Maybe if businesses paid their fair share of worker's comp, then, the costs would be spread among more employers.

    This is an outrage. And people should be up in arms.

UAW Taking Over Auto Healthcare?

    This is a big deal. The UAW (my union) and the major car companies are talking about a deal that would shift the responsibility for retiree health care from the auto companies to the union. I think "Egads" and "hmmm" at the same time. Here's what the Wall Street Journal reports today:

Detroit's auto makers and the United Auto Workers are examining a potentially revolutionary plan that would shift to the union responsibility for tens of billions of dollars in retiree health-care liabilities, according to people familiar with the matter.

A deal is far from certain, especially with formal national-contract talks months away. A big question is where General Motors Corp. and Ford Motor Co. -- both saddled with speculative, or "junk," credit ratings -- would get the cash required to fund a handover of future retiree health-care obligations to a union-managed fund. Another uncertainty is whether the UAW would want the role of bad guy if the time came to cut future benefits.

The preliminary discussions highlight the determination of the UAW and the Detroit auto giants to find a way to restructure the U.S. auto industry without resorting to bankruptcy-court protection, as many unionized steelmakers and airlines did.

UAW leaders and Detroit auto executives agree on this much: Detroit's status quo is unsustainable. UAW leaders and company executives have tried to argue that without health-care overhaul, thousands more U.S. manufacturing jobs will be at risk. The UAW's official position is the federal government should step in. Top executives of the Detroit auto makers have been more cautious but have advocated proposals for the government to shoulder the burden of "catastrophic" health costs.

    This is where you want to scream: SINGLE-PAYER. I've made this point here and other places for sometime--if we had single-payer health care, it would save billions of dollars for companies and make them a whole lot more competitive. GM alone is projected to owe about $55 billion for current and future retiree health care benefits, Ford's number is about $22 billion. Look at this:

But the burden of paying for UAW health-care benefits still adds roughly $1,500 a car to the cost of U.S.-made Big Three vehicles -- a cost penalty the Detroit auto makers can't offset by raising prices.

    There is some precedent to what the folks in Detroit are considering:

The Detroit auto makers and the UAW are looking at an agreement this month between Goodyear Tire & Rubber Co. and its largest union, the United Steelworkers. Under the deal, which settled a strike, Goodyear agreed to transfer its $1.2 billion health-care liability to a fund managed by the steelworkers union. Goodyear, in turn, would put in $1 billion in cash and equity into the fund.

GM Chief Financial Officer Fritz Henderson told auto analysts this month that "it would be fair to say that we have more than a passing interest in the Goodyear agreement." GM, according to people familiar with the matter, has hired advisers that worked with Goodyear on their contract talks.

    These discussions are more a reflection of the deep crisis that we find ourselves in, rather than a good option. The auto makers will try to buy themselves out of the health care liabilities for something like 70 cents on the dollar, which will help their balance sheets in the short-term. The problem is cost projections: if they off-load the liabilities for a discount and health care costs go soaring beyond the projections, it's the UAW that will have to figure out where the extra money comes from--or impose benefit cuts. Is that where the union wants to be?

    Single-payer. Single-payer. Single-payer.

Illegal Firings of Union Organizers

    There's another contribution to the analysis of why it's so hard to form a union. The folks at the Center for Economic and Policy Research have produced a paper analyzing data from the National Labor Relations Board. None of this should be a surprise and it reaffirms the overall atmosphere depicted in Kate Bronfenbrenner's work at Cornell. But, still worth reading, Here's the synopsis of the report--Dropping the Ax: Illegal Firings During Union Election Campaigns--the full text of which you can find here:

This report finds a steep rise in illegal firings of pro-union workers in the 2000s relative to the last half of the 1990s. It uses published data from the National Labor Relations Board (NLRB) to update an index of the probability that a pro-union worker will be fired in the course of a union election campaign.

By 2005, pro-union workers involved in union election campaigns faced about a 1.8 percent chance of being illegally fired during the course of the campaign. If we assume that employers target union organizers and activists, and that union organizers and activists make up about 10 percent of pro-union workers, our estimates suggest that almost one-in-five union organizers or activists can expect to be fired as a result of their activities in a union election campaign.