EMPLOYER BARGAINING OBJECTIVES 2013 ///////////////////////////////////////////////////////////

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EMPLOYER

BARGAINING

OBJECTIVES 2013

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Employer Bargaining Objectives 2013

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Copyright 娀 2013

The Bureau of National Affairs, Inc.

1801 S Bell Street Arlington, VA 22202

ISBN 978-1-61746-831-5 ISSN 1097-9239

‘‘This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold with the understanding that the publisher is not engaged in rendering legal, accounting or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought.’’ − From a Declaration of Principles, jointly adopted by a Committee of the American Bar Association and a Committee of Publishers and Associations.

For inquiries about purchasing multiple copies of this report, please contact:

Matthew Sottong, Research Director ([email protected])

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Contents

List of Figures ... 5

Acknowledgements ... 7

About the Authors ... 8

Executive Summary and Highlights ... 9

Introduction ... 13

Organization of Report ... 14

Terms and Definitions ... 15

Survey Methodology ... 16

Section 1: Bargaining Outlook and General Plans ... 19

FMCS Expects 20,000 Contract Renewals in 2013 ... 19

Financial Outlook ... 20

Bargaining Confidence ... 21

Contract Length ... 22

Trade-Offs in Contract Negotiations ... 23

Pattern Settlements ... 24

Lockouts and Striker Replacements ... 24

Withdrawal of Recognition ... 26

Section 2: Wage Adjustments and Other Pay Provisions ... 27

Wage Adjustments and Pay Plans ... 27

Lump-Sum Payments ... 29

Signing or Ratification Bonuses ... 30

Cost-of-Living Adjustments ... 30

Two-Tiered Compensation Systems ... 31

Incentive Pay and Variable Pay Systems ... 31

Bargaining Outlook ... 32

Section 3: Health Care and Other Insurance Benefits ... 35

Health Benefits ... 36

Life and Disability Insurance ... 37

Multiemployer Health Insurance Plans ... 40

Health Care Cost-Sharing Provisions ... 40

CONTENTS

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Health Care Cost-Containment Provisions ... 42

Impact of Affordable Care Act ... 44

Section 4: Pension and Retirement Plans ... 47

Retirement Benefit Arrangements ... 48

Multiemployer Pension Plans... 50

Section 5: Paid Leave and Other Benefits ... 51

Paid Leave Provisions... 51

Other Services and Benefits ... 54

Section 6: Job Security ... 57

Job Security Provisions... 57

Section 7: Employer Perspectives on Bargaining ... 62

Smaller Wage Hikes Expected ... 62

Confident of Reaching Goals ... 62

Potential Effect of New Health Care Law ... 63

Pensions, Retiree Benefits ... 65

Job Security Not High on Employers’ Priorities ... 66

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COPYRIGHT姝2013 BY THE BUREAU OF NATIONAL AFFAIRS, INC.

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List of Figures

Figure 1– Bargaining Confidence ... 21 Figure 2– Expected Duration of 2013 Contracts ... 22 Figure 3– Areas Where Employers Expect to Make and Gain Con-

cessions ... 23 Figure 4– Likelihood of Lockout if Contract Settlement Not

Reached ... 24 Figure 5– Likelihood of Worker Replacement in the Event of a

Strike ... 25 Figure 6– Planned First-Year Wage Adjustments, 2013 ... 28 Figure 7– Compensation Provisions in Current Contracts ... 30 Figure 8– Incentive and Variable Pay Plans in Current Contracts ... 32 Figure 9– Bargaining Plans for Incentive or Variable Pay ... 32 Figure 10 – Insurance Benefits in Current Contracts ... 37 Figure 11 – Bargaining Plans for Insurance Benefits ... 38 Figure 12 – Bargaining Plans for Insurance Benefits by Contract

Status ... 39 Figure 13 – Current Health Care Cost-sharing and Cost-

containment Provisions ... 41 Figure 14 – Plans to Increase Employee Cost-sharing Payments ... 42 Figure 15 – Bargaining Plans for Health Care Cost-sharing and

Cost-containment Provisions ... 43 Figure 16 – Bargaining Plans for Cost-sharing and Cost-

containment Provisions by Contract Status ... 44 Figure 17 – Pension and Retirement Plans in Current Contracts ... 47 Figure 18 – Paid Leave Benefits in Current Contracts ... 52 Figure 19 – Bargaining Plans for Paid Leave and ‘‘Other’’ Services/

Benefits ... 53 Figure 20 – Other Services and Benefits in Current Contracts ... 54 Figure 21 – Job Security Provisions in Current Contracts ... 58

LIST OF FIGURES

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Figure 22 – Bargaining Plans for Job Security Provisions ... 60 Figure 23 – Bargaining Plans for Job Security Provisions by Con-

tract Status ... 61

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Acknowledgements

We wish to extend our heartfelt thanks to the many labor relations professionals who participated in the 2013 Employer Bargaining Objectives survey. This report would not have been possible without their willingness to complete the survey questionnaire and offer their insight and perspectives. We are most grateful for their participation.

As always, we would like to thank Carla Wheeler, Fonda Jarrett, and Mike Wright of Bloomberg BNA for their diligent, conscientious and professional work in designing, laying out, and publishing this report.

ACKNOWLEDGEMENTS 7

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About the Authors

The following individuals contributed to the study design, data collection, analysis, and writing of this report.

Matthew Sottong

Research Director and Managing Editor

Hanna Pillion Research Analyst

Susan J. Sala Consulting editor

J. Michael Reidy Consulting editor

Genevieve Douglas Reporter

Cordelia D. Gaffney

Manager, Bloomberg BNA Graphics Unit

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Executive Summary and Highlights

The 28^th annual Employer Bargaining Objectives report features results of a comprehensive Bloomberg BNA survey examining employers’ goals and expectations for their 2013 collective bargaining negotiations with the labor unions that represent their employees.

The findings cover a wide array of bargaining topics and detail the bargaining objectives and expectations of a group of employers with contracts expiring in 2013. The survey assesses employers’ confidence about achieving their bargaining goals overall and examines specific goals in the areas of wages and other compensation, health care, life insurance, retirement and pension benefits, paid leave, miscellaneous benefits, and job security provisions. The findings are based on the survey responses of 110 participating employers representing a wide range of organizations and industries throughout the United States.

As is usually the case, surveyed employers are quite confident of achieving their goals during this round of collective bargaining. Heading into 2013 contract talks, more than nine out of 10 respondents said they are either ‘‘very confident’’

or ‘‘fairly confident’’ of meeting the bargaining goals they have set for this year.

Collective bargaining in 2013 takes place amid an economy that has been improving, but with job creation yet to reach levels that would convince most Americans that bad times are in the past. The U.S. economy entered 2013 on a path of slow, steady improvement in terms of job growth and unemployment, an upward trend not yet robust enough to portend a great positive impact on bargaining.

Employers remain a bit skittish about the future, while a variety of factors have made it difficult for unions to negotiate strong contracts. Tough international competition, growing domestic nonunion competition, and declining membership have all hampered labor’s ability to push for a larger share of the pie. Public sector unions, particularly, have been affected by state efforts to limit or do away with bargaining by state and local employees. Unions, feeling pressure from members who are weary of management claims of poverty and demands for concessions, would like to get away from the modest contract settlements of recent years. Employers, however, are reluctant to return the era of generous labor contracts.

Economic bright spots for employees, however, include a drop in the number of announcements of job cuts planned by employers during 2012. Challenger, Gray and Christmas, a Chicago-based outplacement firm that tracks company announcements of company job cut plans, reported in January that 2012 marked the

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lowest 12-month job cut total in 15 years. Challenger reported that, due largely to the slow pace of downsizing in the third quarter, annual job cuts for 2012 totaled 523,362, the lowest year-end total announced since 1997, when 434,350 cuts were announced. The 2012 total was 14 percent lower than the 606,082 job cuts announced in 2011, according to Challenger.

And despite the difficulties faced by labor unions, the Labor Department’s Bureau of Labor Statistics reported Jan. 31 that wage growth for union- represented workers in the private sector improved in 2012 to 2.2 percent from 1.8 percent the prior year, while wage gains held steady for nonunion workers at 1.7 percent. The same report noted that private sector workers overall had slightly better pay raises than in the year before, with wages and salaries up 1.7 percent over the year, up from 1.6 percent in 2011. Growth in the cost of employer- provided benefits slowed sharply in 2012 over the prior year, rising 2.2 percent, down from 3.6 percent, BLS said.

Yet in interviews for the Bloomberg BNA annual Labor Outlook published Jan. 28, labor observers were not optimistic that labor unions would be able to make substantial economic gains at the bargaining table any time soon. Bob Bruno, professor of labor relations at the University of Illinois, said he does not see ‘‘anything on the near-term horizon to suggest . . . a rebalance of power in which labor is able to gain a larger share of the wealth through bargaining.’’

Bruno predicted further erosion of union contracts through two-tier wage pack- ages, increased employee health care cost-sharing, and frozen defined benefit pension plans, as well as shrinking numbers of union-represented workers in 2013.

Similarly, Harry Katz, professor of collective bargaining and dean of the In- dustrial and Labor Relations School at Cornell University, said in the Jan. 18 outlook report that if the economy accelerates and performs a lot better, workers would see more solid labor settlements, fewer two-tier wage structures, and less movement away from defined benefit pension plans. Katz added that although people tend to ‘‘write existing unions off too quickly . . . the trend is not a pretty picture.’’ While noting that unions are holding their own domestically in some places, ‘‘there are very few signs of expansion. It is appropriately gloomy.’’

With concerns over the economy and jobs as a backdrop for negotiations, confident management representatives surveyed by Bloomberg BNA have a long

‘‘wish list’’ for their 2013 contract talks.

Key findings from this year’s survey are summarized below:

• On the whole, employers’ financial prospects for 2013 appear a bit rosier than in the past several years. About four out of 10 responding labor relations professionals (39 percent) forecast a favorable fiscal outlook for their or-

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ganizations in 2013, up from 27 percent last year and 25 percent in 2011. Just three years ago, more than half of surveyed management negotiators (53 percent) predicted a bad financial year for their firms.

• Management’s confidence about achieving their bargaining objectives remains high.The vast majority of surveyed management negotiators ex- pressed great (28 percent) or moderate (64 percent) confidence about forthcoming contract talks, largely in line with results of previous surveys.

• Wages and health care will continue to be key battlegrounds in collective bargaining talks. Improvements in the economy and business environ- ment might prompt a little more generosity on the wage front, but unions still cannot expect magnanimous pay proposals from employers. Moreover, management efforts to reduce (and pass along) health care costs show no signs of flag- ging. Nearly six in 10 surveyed employers (58 percent) will seek concessions on insurance and health care benefits during 2013 contract talks, while only 37 percent are open to making any concessions in those areas.

• New or expanded health care cost-sharing provisions will be pro- posed by nearly half of the organizations negotiating new agreements this year. Almost none will consider dropping or relaxing any contractual require- ments on copayments, deductibles, or premium contributions.

• Annual wage hikes of more than 3 percent are now the exception in union contracts.While nearly two-thirds of surveyed labor relations professionals (64 percent) reported some willingness to make concessions on wages, only one in five anticipated first-year wage adjustments of 3 percent of more. And while that figure is up from 2012 (11 percent) and 2011 (7 percent), it is still a far cry from the percentage of employers that expected first-year increases of at least 3 percent in 2008 (50 percent) and 2007 (54 percent).

• Paid time off for vacations, holidays, illness, bereavement, and jury duty are still the rule in union contracts, despite some erosion in those leave benefits over the past decade.The prevalence of several forms of paid leave in bargaining agreements appear to have settled at a new, lower level. For example, the percentage of expiring contracts with annual leave provisions (74 percent) in 2013 is little changed from the past two surveys (77 percent in 2012 and 2011), but down substantially from around the turn of the millennium when 93 percent of 2001 contracts contained annual leave. The Bloomberg BNA survey found similar patterns for paid holidays, bereavement leave, and paid time off for jury duty.

• Unions seeking better pensions will find little support across the bargaining table,as just 12 percent of surveyed employers said they would con-

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sider boosting pension benefits in their next agreement. Employers’ willingness to improve pension benefits has been headed downhill for a number of years. In 2003, for instance, nearly a third of respondents were open to raising pension benefit levels, and that figure was down from almost half of employers surveyed in the previous two years.

• Job security provisions remain a cornerstone of most collective bargaining agreements, but employers appear uninterested in establishing or ex- panding job protections for workers. Less than one-tenth of surveyed management negotiators (7 percent) expect their new bargaining agreements to include new job security provisions, and only 13 percent anticipate some expansion in current stipulations on job protection. Moreover, 15 percent will bargain to scale back or eliminate employment security language in 2013.

• While lockouts remain unlikely at the vast majority of responding establishments, less than half of surveyed management representatives (47 percent) said they have completely ruled out the option.A year ago, 61 percent of those surveyed reported that they ‘‘would not consider’’ a lockout if a new settlement could not be reached. Still, just 15 percent of respondents for 2013 said their organizations are ‘‘very likely’’ or ‘‘somewhat likely’’ to institute a lockout in the event of an impasse.

• Striker replacements appear to be a more viable option, as more than one-third of respondents (35 percent) reported that union workers are very or somewhat likely to be replaced if they walk off the job.

• ‘‘Pattern’’ settlements continue to gain traction among employers with new contracts to settle. About four in 10 management negotiators (39 percent) expect to set or follow a pattern in 2013 contract negotiations, compared with 19 percent in 2007.

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