Taking the "U" out of Labor (September 2, 2007 by James Montgomery Jackson)
On August 27, 1906 President Theodore Roosevelt sent a letter to the government printing office ordering them to utilize spellings for 300 words listed in the Simplified Spelling Board’s Circular No. 5. In his letter Roosevelt noted that if the changes met with public approval they would be kept and if they did not they would be rejected. L-a-b-o-u-r became L-a-b-o-r and the public still approves these one hundred and one years later. So now you know how we took the “U” out of labor and we can get to the social hour earlier than normal.
Or not. This is the twenty-first century; language is again under assault by popular demand and “u” in IM-speak (the language used in instant messaging) now refers not just to the letter banished from labour, but the familiar form of “thou.” This is the “You” now missing from labor and the fact it is missing is as much a spiritual issue as an economic one.
During the late 1970s and early 1980s, one of my clients was the Bricklayers and Allied Craft Workers of New York. Each year on Labor Day they would create a float and march in the Labor Day parade. At the time I carried two business cards: one printed by our normal corporate printer and a second card that carried the union “bug.” Anyone remember the jingle “Look for the Union Label?” The Union bug was the label on the business card that showed you used a union printer. Not using a card with the bug was a faux pas of almost criminal magnitude if you were dealing with union clients.
By the mid-nineties I had a single card; even unions didn’t seem to care about the union bug. How many of you have even heard of the union bug? (Show of hands) Anyone still look for the union label? (Show hands)
The generally perceived culprit for union demise is the gigantic corporations. From my perspective this handy culprit of the greedy corporation unfairly lets union employees themselves off the hook. Let me back up that assertion with some stories. The first comes from my consulting with the Bricklayers. As many of you know, I designed pension plans, post-retirement medical plans and during the time I am speaking of active employee medical plans as well. After designing the plans we also determined the proper funding levels. The Bricklayers’ health care was self-insured with stop-loss coverage, meaning with the exception of catastrophic claims, they paid their own way. Their medical plan covered not only active members but also those who had retired under the pension plan.
Negotiations with employers covered work rules and total hourly compensation. How the total hourly compensation was allocated between pay, health benefits, pension benefits, disability, life insurance, etc. was determined by the union with almost automatic approval by the employers.
Bricklayers are not 9-5, 40-hour a week workers. When there is work, there is lots of work and when there is a recession, they are hit hard. Consequently, to fund their plans correctly I needed to make assumptions about how many hours a year each bricklayer would work. In preparation for the next bargaining agreement, I did an experience analysis to understand what had happened during the last five years in order to make better predictions and discovered an inexplicable grouping of people’s hours at around the 1,400 level. (Now this is long ago, so it may have been 1,500 or some other number. Principles, not specific facts, are important here.)
I questioned my union contacts about what was happening. “Oh,” they said shaking their heads, “That’s the level you need to get medical coverage.” “Right,” I said, “and …” “And they work nonunion after that.” Since I had that deer in the headlight look they explained that many employers had two separate corporations, one unionized and one non-union. After their employees had worked the 1,400 hours to get their medical, they switched to the nonunion shop where there were no benefits, but they got a higher pay rate. The employer pocketed the difference. Now, still incredibly naïve, I asked “Is that legal?” Shrugged shoulders met my question. Translation: “No, but what can you do?”
Well, I found some ways to fix the problem. We introduced an extra layer of medical coverage at 1,800 hours. We modified the pension benefits to reflect total hours earned with no cap on the number of hours considered. In short we made it profitable for union bricklayers to continue to work union jobs. We used Adam Smith’s invisible hand of self-interest to get these guys (and at that point it was 99% males) to do the right thing. The year after we made the change, credited hours increased over 25% - far surpassing what the union leaders expected. They had no idea how many hours were being worked off the books. As a result, the pension fund and medical fund were healthier.
Okay, I hear you saying, “New Yorkers are a special breed and eat their young. Why should we expect them to look after their retirees by working union hours when they could make more working non-union?” Here’s a Midwest example dating from the eighties.
The client this time was PepsiCo. They owned bottling operations across the country, but concentrated in the Midwest. Most of them were unionized, primarily by the Teamsters. I don’t recall the details precisely, but three different teamster funds were involved depending on where the plant was located. The Central States Teamsters (of Hoffa fame) was one, the Western Conference was another and there was a third smaller Teamster group as well. If you were Teamster unionized you were included in the Teamster pension funds. These funds were not in good financial shape and so large portions of the contributions were going to pay past benefits and only small amounts purchased new benefits. Because of this underfunding PepsiCo would have to pay a penalty to the pension fund if they withdrew from the pension plan.
For what ever reason most of Pepsi’s drivers were young and after a study we determined Pepsi could offer the following deal to teamster employees: Decertify from the union, we’ll pay prevailing-union wages and increase your pension benefits X%. My work was to determine the percentage for each location, which depended on the group’s demographics and the size of the withdrawal penalty. Before I moved to another job we must have worked on twenty or more of these decertification offers. Any guesses what Pepsi’s win/loss record was? They lost only one and that was primarily because there was an ongoing work-grievance issue unrelated to pay or benefits.
Nineteen plus groups of teamsters mostly from the Midwest, many located in Michigan, decertified, grabbing the promise (not necessarily the reality) of increased pension benefits and heaving over the side of the boat the excess baggage of all those who had gone before them, all those who had suffered debilitating strikes to win pension and health and disability benefits. The decertification votes were not close.
In these examples union employees considered the benefits from their labor all devolved to them as individuals. It was all mine, mine mine. Any concern for the “you” had been lost.
This loss of the U in labor is not universal. A few years ago I reviewed the proposed contract between the union and Cleveland Cliffs for one of my lake neighbors. He had some questions about benefits. In the contract the union specifically gave up current wages to ensure enhanced funding of benefits for those already retired. There were some worrisome loopholes apparent to someone like me who has spent a lifetime sniffing out loopholes – either to create them or plug them depending on who was paying the bill. Hopefully in the next bargaining cycle the union will get the language tightened a bit and ensure the company’s purported intent is converted to real progress.
So all is not lost in the world of labor unions and in fact I am not picking on them. But since tomorrow is Labor Day I thought I would start with organized labor. Those 88% of workers who are not currently unionized have the same, if not worse, mentality I have been describing.
I spent thirty years in the retirement consulting business. The first ten plus years most of my work was at improving benefits: helping companies develop pension plans that automatically reflected pay increases, increasing retiree benefits to reflect cost-of-living changes, increasing the types of benefits covered under medical plans, introducing disability plans where there were none. The middle ten years I spent mostly tweaking plans to make them as cost-efficient as possible and helping align them with company/government/union long-term objectives. The last decade I dismantled group plans as employees chose to focus on their perceived individual economic status rather than considering society’s greater needs.
The example most of you can relate to was the movement to 401(k) and 403(b) plans with individual accounts and the ability to individually “manage” your money. It’s portable; I always know how much I have; and it’s mine, mine, mine. The YOU is gone from our conception of labor.
How did we go from “We the People … in Order create a more perfect Union” to “I, the only economic unit worth worrying about?” I do not know.
What I do know is we have a spiritual crisis in these United States.
We have a society crumbling around us. We are the richest country in the world and yet our life expectancy lags behind Canada and much of Europe. Our infant mortality rate is twice Japan’s and closer to that of Eastern Europe than of Western Europe. Our per capita prison population is highest in the world. We have lost the concept of Social Insurance and depending on our political perspective consider it either an entitlement or an anathema to the true national spirit.
Let me use the current discussion about “privatizing” Social Security as my example of how this plays out. The Social Security Administration administers two major systems OASDI and Medicare. Medicare provides the various forms of medical insurance for those over 65. Let’s consider the OASDI portion. It is an acronym for Old Age, Survivorship and Disability Insurance: three components. You and your employer pay equal amounts into the program. If you are self-employed you pay as employee and employer. The knock is the program is not fair and by fair the youless thought is that if some workers could take their contributions and invest them they would end up with more money at retirement. These workers are cheated by the system and if only we privatized it, everything would be hunky-dory.
The graphs and charts prove it. Take your historical contributions, invest them in the stock market and voila you would have been better off when you retired at age 65. Except – and this is the part you hear nothing about – Except
Ø If you became disabled (the whole DI portion of the program)
Ø If you died with dependent children (the Survivorship portion of the program)
Ø If you happen to live to a ripe old age, beyond your life expectancy.
Ø If you happen to retire during one of those periodic swoons in the stock market.
I was not disabled during my working career and so for me all the contributions I made to the DI portion of Social Security were wasted. Right? Same thing for my house insurance, by the way. Knock wood, I’ve never had a claim there either. What a rip off! I want MY money back.
In my opinion Americans are most underinsured for disability. It’s economically worse than premature death. Often it has more medical bills attached and the person survives and continues to cost money for housing, food, medicine – i.e. for living. Fortunately, I have never collected from either disability insurance or my home insurance but just because I lost that lottery doesn’t mean I have not won by contributing to both systems. Before Social Security Disability Insurance if someone could no longer work, they were either taken in by family, forced to beg or steal, or thrown onto welfare.
Social Insurance is insuring our society, not each individual. It is a we thing, not an I thing.
After disability, the most underinsured event is death by a parent with young children. Who has young children? Generally young parents. Would young parents have built up large nest eggs in their private account? Of course not: they haven’t contributed for many years and the power of compound interest hasn’t had a sufficiently long time to operate. No Social Insurance and we are back to family, welfare or crime.
When the comparison of what your contributions would have earned compared to what benefits you are entitled to at old-age retirement are made, they ignore the fact that you have been a beneficiary of disability and survivor insurance for thirty-five or forty or more years.
Okay then how about this Old age portion. It is so unfair because lower-paid workers get a higher percentage of their pay in benefits than do higher paid workers.
When did we lose our spiritual base that we think fair means equal?
It is true that those of us who earned more money will proportionately receive less from OASDI and I say that is more than fair.
Is it not better for both our fellow laborers and for me for everyone to earn a wage they can live on today and a pension they can live on after they retire? And if I have more than that and they have less is it not my spiritual duty to help minister to their needs? If not what do we mean in our first and second Unitarian Universalist principles when we covenant to affirm and promote the inherent worth and dignity of every person, let alone justice, equity, and compassion in human relations?
Our faith calls on us to reintroduce the “y-o-u” into labor. Adam Smith’s invisible hand was not per se incorrect, but with our faith we must recognize that what is in our individual best economic interest is that which also fairly weighs society’s interests, which looks past today to the effects of tomorrow and next year and next generation.
Our society has a “me/now” sickness. We can use our faith as the basis for ministering to our own symptoms and over time I am confident we can change our country to an us/forever society.
The mineworkers had it right:
Changing ourselves and society is a long march. It takes an active decision to make each and every step required of us. And we must do it in company. Singly none; singly none.
(Note: the closing hymn sung immediately after the homily was #157 "Step by Step the Longest March" based on the preamble to the United Mine Workers' Constitution.)