Unions and the Emerging Bargaining Climate (Nov. 8, 2001)
Created by: Administrator,Last modification on 08 Nov 2001 [06:00 UTC]
By Greg Tarpinian
The U.S. labor movement is facing the toughest bargaining climate since the 1980s. The recession that was evolving before September 11 has hit with hurricane-like force. All sectors of the economy, all regions of the country, and nearly all occupational and skill categories have been affected.
The economy lost 415,000 jobs in October, the largest reduction since 1980, and nearly twice more than the worst month of the early 1990s recession. While close to half of the October cuts can be attributed to the events of Sept. 11, the combination of the already brewing recession and terrorist economic fallout are now indistinguishable. A general reduction in economic activity has taken hold. Since April, the U.S. economy has lost nearly 900,000 jobs and the unemployment rate has surged to a five-year high of 5.4%. We expect the unemployment rate to surpass 6% by early next year.
Unions entering negotiations in the course of the next year will do so with an army of unemployed at their backs. Many of them will also face private- and public-sector employers awash in red ink, a dramatic rise in health care costs and a fall in the value of pension-plan assets ‹ each working to reduce the potential for real wage and benefit gains. In short, the overall bargaining equation has not been this bad since the concession bargaining of the 1980s and early 1990s.
Unions have been under the gun in the manufacturing sector for some time now. The manufacturing sector has lost more than a million jobs since August 2000 ‹ and the general economic decline in the US and the worldwide reduction in growth is certain to take a further toll. Recent economic developments will extend the poor bargaining climate from basic manufacturing to the public, air transport, health care, hospitality, entertainment and other sectors.
Now is not the time for unions to hang separately. The upcoming AFL-CIO Convention offers an opportunity for union leaders around the country to exchange ideas about best practices and strategic approaches to bargaining in the current climate. It also offers an opportunity for the labor movement as a whole to enunciate a clear position in defense of American workers. After the incredible wealth creation of the 1990s, American workers should not bear the entire burden of the developing crisis.
The last thing the American labor movement needs today is a new round of concession bargaining. Although concessions in specific situations are often unavoidable, it is important that the general economic decline and uncertainty do not generate a rush to concessions because of a lack of coordination and solidarity. While it has never played this role before, we believe that it is time for the AFL-CIO to develop an overall set of strategic guidelines for unions entering negotiations in this period of crisis, and to move into action as the center for solidarity to help unions in tough bargaining spots.
While most sectors will experience difficulty due to the general economic decline, we expect the 400,000 building trades workers whose contracts expire in the next year to hold their own. These unions will benefit from expanded public works projects ‹ particularly in the Northeast ‹ and lower interest rates.
The war economy should also put defense industry workers in a stronger position ‹ particularly the 10,000 workers at Lockheed-Martin whose contracts expire next year.
We expect the 200,000 Teamsters at UPS to hold their own as well in negotiations for a new contract that expires at the end of July. UPS — which will continue to dominate the small parcel and package business --is an incredibly wealthy company that will benefit both from the overall decline of business air travel and troubles at the postal service. Moreover, UPS has been one of the few companies that is relatively recession-proof. This is good news for the rest of the labor movement, since the UPS contract is the largest private-sector contract to be negotiated next year.
Areas of union bargaining can be used to bolster workers in other sectors of the economy in this period of crisis. As the Minnesota public-sector workers strike showed, workers can fight back effectively and not be forced to take steps backwards.
Unions representing more than 500,000 public-sector workers will be negotiating contracts in the next year. The outlook, however, is dimmed by a broad-based state and municipal fiscal crisis appears to be upon us.
The erosion of state and local finances began in the summer, but has accelerated in the aftermath of September 11. "Even before accounting for the fiscal devastation caused by the September 11 attacks, state governments were facing the deepest budget shortfalls in at least a decade," according to a survey released on Nov. 2 by the National Conference of State Legislators.
"The National Conference of State Legislators found that state revenue growth had slowed substantially, with 44 states reporting that collections had dropped below forecasts made only four months ago. Nineteen states were spending more than they had budgeted, with Medicaid the primary expense, and seven other states predicted that overspending was likely. At least 28 states are imposing or considering budget cuts, and many are turning to reserve funds that were fattened during the economic expansion.2 (New York Times, 11/02/01)
In the Northeast, where the effect of September 11 has been felt most dramatically, government budgets are under greater pressure than at any time since the fiscal crises of the 1970s, particularly in New York and New Jersey. According to the New York State Division of the Budget, "the State fiscal year 2001-02 receipt shortfall is estimated at $3 billion and State fiscal year 2002-03 revenue losses may reach $6 billion2 as a result of September 11. New York City faces a $4-$6 billion budget deficit at a time when a large percentage of City workers ‹ from teachers to police to firemen ‹ are still working without contracts after more than two years. Once those contracts are settled, the City will immediately be in a new round of bargaining for contracts covering nearly 300,000 workers.
It is important to be aware that unity among public-sector unions is severely tested in times of fiscal crisis. But paradoxically, that is also when maximum coordination between public-employee unions and the building of strong labor-community budget coalitions are most important..
The biggest contracts in health care are in New York City ‹ where 1199 SEIU is preparing to negotiate contracts that will cover nearly 150,000 hospital and nursing home workers early next year.
1199's contracts were originally set to expire in October. But the union and employers agreed to a contract extension in light of the September 11 attacks. As a result of the attacks, New York City hospitals lost several hundred million dollars. With the best contracts in the industry, 1199 will be challenged in its effort to continue to set the pace for health care workers throughout the nation.
Hotel workers have been among the hardest hit in the aftermath of September 11, with tens of thousands losing their jobs. HERE faces a tough set of negotiations in Las Vegas for about 20,000 workers, and in Chicago for another 10,000 workers.
The airline travel and airplane manufacturing sectors are facing the most devastating crisis in their histories as economic losses mount and thousands of workers are laid off. Smelling blood, airline industry employers are calling for painful worker concessions from unions. Meanwhile, significant labor negotiations are already under way or will begin next year in the context of a renewed drumbeat for airline labor concessions.
American Airlines pilots are still working under an old contract. Northwest Airlines pilots will face a contract expiration in September, and the TWA pilots contract expires in October. The Machinists are still in negotiations with United Airlines, and its contracts with US airways and Southwest Airlines expire next year. At Southwest Airlines (TWU), Sun Country (IBT), American Eagle (AFA), and other airlines, flight attendants in various unions are in negotiations or will be soon.
The Wall Street Journal reports that "the nine major US airlines have blown through most of Washington's $5 billion cash bailout, and their bleeding continues... Airlines will have to address long-standing and now worsening problems with labor costs" (11/6/01, emphasis added). The airlines and the Air Transport Association are putting the finger squarely on labor costs as the prime cost problem in the airline industry today. With more extensive consolidation on the horizon and with the government's growing role as the lender of last resort, a full court press against airline labor is in the offing.
The Wall Street Journal says: "The biggest hurdle for airlines is labor costs, which now amount to more than 35% of the expenses at hub-and-spoke airlines. In recent years, unions have enjoyed a run of huge contract victories, exerting pressure with work slowdowns, sick-outs, overtime-refusal campaigns and an occasional strike" (11/6/01). As the AFL-CIO's Rick Bank points out, however, "This is not the kind of atmosphere in which companies can expect workers to react kindly to concessions. Airlines spared no effort to get money for themselves, but didn't do anything about pushing legislation for labor, a huge betrayal."
The Machinists and the independent Engineers Union face off with Boeing next fall on contracts covering more than 50,000 workers at a time when Boeing has announced it will lay off between 20-30,000 employees in the face of a dramatic decline in aircraft orders.
Greg Tarpinian is Executive Director of the Labor Research Association.
The U.S. labor movement is facing the toughest bargaining climate since the 1980s. The recession that was evolving before September 11 has hit with hurricane-like force. All sectors of the economy, all regions of the country, and nearly all occupational and skill categories have been affected.
The economy lost 415,000 jobs in October, the largest reduction since 1980, and nearly twice more than the worst month of the early 1990s recession. While close to half of the October cuts can be attributed to the events of Sept. 11, the combination of the already brewing recession and terrorist economic fallout are now indistinguishable. A general reduction in economic activity has taken hold. Since April, the U.S. economy has lost nearly 900,000 jobs and the unemployment rate has surged to a five-year high of 5.4%. We expect the unemployment rate to surpass 6% by early next year.
Unions entering negotiations in the course of the next year will do so with an army of unemployed at their backs. Many of them will also face private- and public-sector employers awash in red ink, a dramatic rise in health care costs and a fall in the value of pension-plan assets ‹ each working to reduce the potential for real wage and benefit gains. In short, the overall bargaining equation has not been this bad since the concession bargaining of the 1980s and early 1990s.
Unions have been under the gun in the manufacturing sector for some time now. The manufacturing sector has lost more than a million jobs since August 2000 ‹ and the general economic decline in the US and the worldwide reduction in growth is certain to take a further toll. Recent economic developments will extend the poor bargaining climate from basic manufacturing to the public, air transport, health care, hospitality, entertainment and other sectors.
Unified Approach Needed
Now is not the time for unions to hang separately. The upcoming AFL-CIO Convention offers an opportunity for union leaders around the country to exchange ideas about best practices and strategic approaches to bargaining in the current climate. It also offers an opportunity for the labor movement as a whole to enunciate a clear position in defense of American workers. After the incredible wealth creation of the 1990s, American workers should not bear the entire burden of the developing crisis.
The last thing the American labor movement needs today is a new round of concession bargaining. Although concessions in specific situations are often unavoidable, it is important that the general economic decline and uncertainty do not generate a rush to concessions because of a lack of coordination and solidarity. While it has never played this role before, we believe that it is time for the AFL-CIO to develop an overall set of strategic guidelines for unions entering negotiations in this period of crisis, and to move into action as the center for solidarity to help unions in tough bargaining spots.
Bargaining Round Up
Bright Spots
While most sectors will experience difficulty due to the general economic decline, we expect the 400,000 building trades workers whose contracts expire in the next year to hold their own. These unions will benefit from expanded public works projects ‹ particularly in the Northeast ‹ and lower interest rates.
The war economy should also put defense industry workers in a stronger position ‹ particularly the 10,000 workers at Lockheed-Martin whose contracts expire next year.
We expect the 200,000 Teamsters at UPS to hold their own as well in negotiations for a new contract that expires at the end of July. UPS — which will continue to dominate the small parcel and package business --is an incredibly wealthy company that will benefit both from the overall decline of business air travel and troubles at the postal service. Moreover, UPS has been one of the few companies that is relatively recession-proof. This is good news for the rest of the labor movement, since the UPS contract is the largest private-sector contract to be negotiated next year.
Areas of union bargaining can be used to bolster workers in other sectors of the economy in this period of crisis. As the Minnesota public-sector workers strike showed, workers can fight back effectively and not be forced to take steps backwards.
Public Sector and Health Care
Unions representing more than 500,000 public-sector workers will be negotiating contracts in the next year. The outlook, however, is dimmed by a broad-based state and municipal fiscal crisis appears to be upon us.
The erosion of state and local finances began in the summer, but has accelerated in the aftermath of September 11. "Even before accounting for the fiscal devastation caused by the September 11 attacks, state governments were facing the deepest budget shortfalls in at least a decade," according to a survey released on Nov. 2 by the National Conference of State Legislators.
"The National Conference of State Legislators found that state revenue growth had slowed substantially, with 44 states reporting that collections had dropped below forecasts made only four months ago. Nineteen states were spending more than they had budgeted, with Medicaid the primary expense, and seven other states predicted that overspending was likely. At least 28 states are imposing or considering budget cuts, and many are turning to reserve funds that were fattened during the economic expansion.2 (New York Times, 11/02/01)
In the Northeast, where the effect of September 11 has been felt most dramatically, government budgets are under greater pressure than at any time since the fiscal crises of the 1970s, particularly in New York and New Jersey. According to the New York State Division of the Budget, "the State fiscal year 2001-02 receipt shortfall is estimated at $3 billion and State fiscal year 2002-03 revenue losses may reach $6 billion2 as a result of September 11. New York City faces a $4-$6 billion budget deficit at a time when a large percentage of City workers ‹ from teachers to police to firemen ‹ are still working without contracts after more than two years. Once those contracts are settled, the City will immediately be in a new round of bargaining for contracts covering nearly 300,000 workers.
It is important to be aware that unity among public-sector unions is severely tested in times of fiscal crisis. But paradoxically, that is also when maximum coordination between public-employee unions and the building of strong labor-community budget coalitions are most important..
Health Care
The biggest contracts in health care are in New York City ‹ where 1199 SEIU is preparing to negotiate contracts that will cover nearly 150,000 hospital and nursing home workers early next year.
1199's contracts were originally set to expire in October. But the union and employers agreed to a contract extension in light of the September 11 attacks. As a result of the attacks, New York City hospitals lost several hundred million dollars. With the best contracts in the industry, 1199 will be challenged in its effort to continue to set the pace for health care workers throughout the nation.
Hospitality and Travel
Hotel workers have been among the hardest hit in the aftermath of September 11, with tens of thousands losing their jobs. HERE faces a tough set of negotiations in Las Vegas for about 20,000 workers, and in Chicago for another 10,000 workers.
The airline travel and airplane manufacturing sectors are facing the most devastating crisis in their histories as economic losses mount and thousands of workers are laid off. Smelling blood, airline industry employers are calling for painful worker concessions from unions. Meanwhile, significant labor negotiations are already under way or will begin next year in the context of a renewed drumbeat for airline labor concessions.
American Airlines pilots are still working under an old contract. Northwest Airlines pilots will face a contract expiration in September, and the TWA pilots contract expires in October. The Machinists are still in negotiations with United Airlines, and its contracts with US airways and Southwest Airlines expire next year. At Southwest Airlines (TWU), Sun Country (IBT), American Eagle (AFA), and other airlines, flight attendants in various unions are in negotiations or will be soon.
The Wall Street Journal reports that "the nine major US airlines have blown through most of Washington's $5 billion cash bailout, and their bleeding continues... Airlines will have to address long-standing and now worsening problems with labor costs" (11/6/01, emphasis added). The airlines and the Air Transport Association are putting the finger squarely on labor costs as the prime cost problem in the airline industry today. With more extensive consolidation on the horizon and with the government's growing role as the lender of last resort, a full court press against airline labor is in the offing.
The Wall Street Journal says: "The biggest hurdle for airlines is labor costs, which now amount to more than 35% of the expenses at hub-and-spoke airlines. In recent years, unions have enjoyed a run of huge contract victories, exerting pressure with work slowdowns, sick-outs, overtime-refusal campaigns and an occasional strike" (11/6/01). As the AFL-CIO's Rick Bank points out, however, "This is not the kind of atmosphere in which companies can expect workers to react kindly to concessions. Airlines spared no effort to get money for themselves, but didn't do anything about pushing legislation for labor, a huge betrayal."
The Machinists and the independent Engineers Union face off with Boeing next fall on contracts covering more than 50,000 workers at a time when Boeing has announced it will lay off between 20-30,000 employees in the face of a dramatic decline in aircraft orders.
| !!Major Upcoming Contract Negotiations in 2002 | ||||
| !Unions | !Location | !Employers | !#Wrks | !Exp. Date |
| Teamsters | National | UPS | 200,000 | 7/31/02 |
| SEIU | NYC | Vol. Hosps./Nursing Homes | 150,000 | 3/31/02 |
| AFSCME | NYC | City of New York | 125,000 | 7/31/02 |
| CWA/IBEW | National | AT&T | 68,000 | 3/31/02 |
| Machinists/SPEEA | National | Boeing | 55,000 | Sept/Dec 02 |
| Mineworkers | National | Coal Operators | 55,000 | 12/31/02 |
| TWU | NYC | Metro Transit Authority | 33,000 | 12/31/02 |
| AFT | Fla. | Dade County Schools | 32,600 | 6/31/02 |
| SEIU | NYC | Commercial Bldg. Owners | 30,000 | 12/31/01 |
| Teamsters | Missouri | Contractors | 28,000 | 4/31/02 |
| Laborers | No. Cal. | Contractors | 21,000 | 6/31/02 |
| PBA | Fla. | State of Florida | 20,450 | 6/31/02 |
| HERE | Las Vegas locals | Various Hotels | 20,000 | Spring/Summer/02 |
| Glass, Molders | National | Glass Manufacturers | 20,000 | March/April/02 |
| Musicians | NYC | Recording Industry | 20,000 | 1/31/02 |
| Multi union | Ma. | State of Mass. | 20,000 | 12/31/02 |
| Bricklayers | Missouri | Contractors | 19,500 | 4/31/02 |
| CWA/IBEW | Cal./Fla. | Verizon | 18,000 | March/Aug/02 |
| UFCW | NYC | Edwards Supermarkets | 16,000 | 6/31/02 |
| Carpenters | So. Cal. | Contractors | 16,000 | 6/31/02 |
| Carpenters | New Jersey | Contractors | 15,000 | 4/31/02 |
| IBEW | No. Cal. | PG&E | 14,600 | 12/31/02 |
| AFSCME | Fla. | Florida State University | 13,250 | 6/31/02 |
| HERE | Chicago | Area Hotels | 13,000 | 8/31/02 |
| UFCW | NYC | Waldbaums | 12,000 | 10/31/02 |
| Directors Guild | National | Motion Picture/TV | 11,750 | 6/31/02 |
| AFSCME | NY | Nassau County | 11,300 | 12/31/02 |
| ILWU | Cal. | Ports | 11,200 | 7/31/02 |
| UFCW | Dallas | Kroger Food Stores | 11,000 | 12/31/02 |
| SEIU | So. Cal. | Kaiser Permanente | 10,200 | 10/31/02 |
| UFCW | Tennessee | Kroger Food Stores | 10,000 | 5/31/02 |
| NEA | Cal. | Orange County Schools | 10,000 | 6/31/02 |
| Carpenters | New York | Cement Contractors | 10,000 | 6/31/02 |
| IBEW | So. Cal. | Contractors | 10,000 | 11/31/02 |
| Source: Bureau of National Affairs | ||||
Greg Tarpinian is Executive Director of the Labor Research Association.
© Labor Research Association 2001
