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Bargaining 2000
On November 1, the BLE kicked off a new round of collective bargaining by serving Section 6 notices on the railroads covered by the national agreement.
This action was required by the Railway Labor Act, which states that "carriers and representatives of the employees shall give at least 30 days' written notice of an intended change in agreements affecting rates of pay, rules or working conditions."
BLE leadership intends to get the members the best deal possible, and has targeted Post '85 engineers, Railroad Retirement and Health and Welfare benefits for special attention.
The Railway Labor Act of 1926
Collective bargaining between rail labor and management is governed by the Railway Labor Act of 1926 ("RLA"). The RLA and its amendments spell out the process of bargaining that eventually leads to each new contract. Negotiations can take months or years because of the many steps available to both parties. This complicated process is explained further on the chart entitled the Railway Labor Act.
Since the BLE national strike in September 1982, Congress has blocked strikes by using a variety of tactics that are available under the RLA and its amendments, such as binding arbitration, last-best-offer ("baseball") arbitration, or imposing Presidential Emergency Board ("PEB") recommendations outright. The political process of the federal government makes this all possible.
The political force behind the process of collective bargaining is the
National Mediation Board ("NMB"). The NMB is made up of three members who are
appointed by the President and confirmed by the Senate. Therefore, the Board is
loath to allow any interruption in rail service that will make the elected
officials -- who appoint and confirm the members of the Board --
unpopular.
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Over the years, the courts have backed the NMB by ruling that preventing a section of the country from experiencing a service interruption is a primary goal of the Railway Labor Act. The NMB uses its power to control the timetable of the negotiating process once they are asked to step in to mediate. The NMB uses its influence to make sure that impasses, which can result in strikes, do not occur when Congress is in recess or around election time.
Thus, absent a relatively quick settlement, it is unrealistic to expect an impasse to be declared in the upcoming round of negotiations until Spring 2001. The Presidential and Congressional elections next year would cause the NMB to put off declaring an impasse until a new Congress is in place.
Because of the timing of impasses in the past, one of the crucial decisions for BLE leaders is how to push the carriers to get a deal done before the end of next summer. However, the carriers can impede the talks in order to serve their own agenda. BLE President Edward Dubroski has told the BLE National Wage Committee (see sidebar) and the National Carriers' Conference Committee ("NCCC") -- the industry's bargaining arm -- that he intends to "fast track" the talks.
History of Pattern Bargaining
Timing of the settlement is important because, for 30 years, wage settlements generally have followed a pattern set by the unions who reached agreements first. The NMB recognizes -- and PEBs typically impose -- patterns in order to maintain balance and stability in the railroad industry, according to BLE Director of Research Dennis Simmerman.
Carriers try to establish a pattern by bargaining first with unions who, in any given round, have less leverage at the table than the other unions. Patterns established in this manner usually result in lower settlements for the unions with greater leverage than they would obtain on their own. For example, the UTU Mediation Agreement of 1985 -- better known as the Halloween Agreement -- came at a time when that union was fighting off crew reduction demands by the carriers. Because of its lasting effects for Post '85 engineers, the Halloween Agreement had catastrophic consequences for BLE members when it was imposed on us by Arbitration Board No. 458 the following year.
Three major areas addressed in collective bargaining -- retirement, health and welfare benefits, and wages -- have been settled with common results for members represented by all rail unions on a given property for over 30 years.
Bargaining involving Railroad Retirement has taken the form of joint negotiations. This is necessary because, in order to change the Railroad Retirement Act, the carriers and the unions must go to Congress together to ask that legislation be enacted. Labor and management also must jointly go to the Railroad Retirement Board in order to change regulations governing the Act, which is what happened a couple of years ago to reform occupational disability standards.
The Health and Welfare package also has been jointly negotiated in years past, with all carriers and all unions, with the unions represented by a committee called the Cooperating Rail Labor Organizations ("CRLO"). However, this year, the unilateral deal struck between the UTU and certain Class I carriers to provide a "Blue Cross option" for its members has negative implications for all workers.
The deal appears to be an attempt by the carriers to force BLE members and
other railroad workers out of the traditional health insurance plans and into
"cheaper" alternatives. By refusing to bargain with CRLO on this issue, the
carriers plan to collect a substantial economic benefit and are trying to create
a Health and Welfare "pattern." Further, they have set the stage for another UTU
attempt to run around the other rail unions when negotiations begin on wages and
work rules. This could create serious problems for the bargaining agenda of the
BLE, and provides yet another reason for taking the "fast track" at the
table.
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The UTU's infamous 1985 Halloween Agreement continues to be the most divisive issue among the rank and file membership of both unions. This is true because the BLE's rejection of the Halloween Agreement pattern was overridden by Arbitration Board No. 458 in 1986, which imposed the same conditions on the unwilling BLE that were agreed to by the UTU.
By agreeing to different deadhead rules, the elimination of certain duplicate time payments and ineligibility for reduced crew productivity pay for Post '85 train service workers (and firemen, hostlers and hostler helpers), the UTU created a permanent two-tier compensation system that has divided our ranks. Because somewhere between one-third and one-half of all operating employees working today were hired after November 1, 1985, the carriers are reaping an economic bonanza off the backs of our most junior members.
According to BLE Research Director Simmerman, Post '85 engineers feel like unwanted "step-children" because of their inferior earning power. As these Post '85 engineers comprise a larger segment of the work force, it becomes more expensive and more difficult to achieve parity at the bargaining table.
However, BLE President Dubroski rejects the carriers' unwillingness to address the situation because it saves them money. He has made the Post '85 issue "the BLE's top bargaining priority this round," and has vowed that the National Wage Committee will do its best to bring about a resolution of this thorny issue. "I've told the carriers that Post '85 must be addressed this round and I won't take 'No' for an answer," says Dubroski.
The Issues: Railroad Retirement
In order to improve retirement benefits, the unions and the carriers must work together and go to Congress to get the Railroad Retirement Act amended. The BLE would like to see several changes made, and the financial solvency of the fund makes some of these changes possible.
The Railroad Retirement tax is made up of two components -- Tier I and Tier II. For the Tier I component, which is equivalent to the Social Security tax, the employer and the employee each pay 7.65 percent. The Tier I tax is broken down into a 6.2% retirement tax on the first $76,200 of earnings (a figure that is indexed annually) and a 1.45% Medicare tax on all earnings. The Tier II tax rate is 16.1% on employers and 4.9% on employees, on the first $56,700 in earnings (this figure also is indexed).
The important thing to remember is that all Railroad Retirement Tier II taxes represent deferred compensation for railroad workers. In fact, when the industry goes before Congress, a PEB or the press and talks about compensation levels of railroad workers -- and when the parties are "costing" potential wage settlement packages -- Railroad Retirement taxes for both employees and employers are included in the figures.
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In other words, this Railroad Retirement tax money is your money, deferred from wages, to provide you with retirement security in the future. This is important to remember when considering possible improvements in the Railroad Retirement system.
The Social Security system faces potential solvency problems in the future because of the demographic changes as the "Baby Boomer" generation reaches retirement age, which will cause the ratio of active workers to retirees to shrink dramatically. Railroad Retirement does not face this problem, because retirement ages and tax rates were raised in 1983 to build up the Tier II fund reserve.
The Railroad Retirement Board's actuary predicts that if current tax rates remain unchanged, the Tier II fund could have a surplus of over $13 billion by the year 2040, which could balloon to over $3 trillion by the year 2075. As a result, says BLE International President Ed Dubroski, "We have an opportunity to improve benefits in the short-term and make tax rate adjustments in the long-term."
A top priority of the BLE leadership is to change the Railroad Retirement Act to reduce the age at which a full annuity becomes payable, and to provide increased benefits for widows and widowers. All of rail labor supports this goal. The BLE and the Brotherhood of Maintenance of Way Employes are funding an independent actuarial study to see if retirement at age 55 with 30 years of service (55/30) is economically feasible.
A reduction below 60/30 may require additional funding at the present time. This will have an impact on the national talks. "We expect our study to show that there is likely to be a short term cost increase in order to get all the way to 55/30 and keep the fund stable, and the question is how much, if any, compensation would railroad workers be willing to defer to fund an earlier retirement age," Dubroski says.
The other issue involving Railroad Retirement is improving benefits for
surviving spouses. Currently, spouses of retired workers receive approximately
50% of the retiree's Tier I benefit and 45% of the retiree's Tier II benefit.
But, after a retiree's death, the surviving spouse receives 100 % of the Tier I
benefits but only 50% of the Tier II benefits. This is roughly half of the
household earnings from when the spouse was alive, and this reduction leaves
many widows and widowers near the poverty line. The BLE, along with the rest of
Rail Labor, is fighting to provide a surviving spouse with 100 % of the
retiree's Tier I and Tier II benefits.
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The BLE "wants to decrease the limitations of the program," says Dubroski.
The CRLO Section 6 Notice seeks to improve the health care package by making it more user-friendly. The BLE hopes to lower or eliminate deductibles, eliminate the primary care or "gatekeeper" physician requirement in the managed care option, and eliminate co-payments.
CRLO also wants to improve fringe benefits of the health and welfare package. Some of these facets are:
CRLO also wants to improve the conversion of benefits from active service to retirement. The cost of providing medical coverage to early retirees will have an impact on the BLE-BWME study into the feasibility of reduced retirement age.
Finally, the BLE has targeted one key area of benefit improvement -- increasing the coverage provided to engineers who are injured in an off-track vehicle accident. Far too often, deadheading crews are injured in accidents caused by negligent third parties who lack sufficient insurance, which can create a financial catastrophe.
This will be the toughest round of Health and Welfare bargaining since 1989. Increased costs will be a bigger factor in the division of the economic pie than at any time in the past 10 years.
Preliminary figures indicate that the premiums paid by the carriers could increase by over one-third next year in order to offset an extremely high number of claims in the fourth quarter of 1998 and to replenish the plan's reserve fund.
Another factor contributing to an increase in premiums is the high cost of prescription drugs. Since the last round of collective bargaining, the percentage of premium dollars going to prescription drugs has doubled. This is because of the high cost of researching and developing new "wonder drugs." In addition, the price of most prescription drugs is higher in the U.S. than anywhere in the industrial world, where pharmaceutical pricing is regulated.
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The National Health and Welfare Plan that covers most BLE members is self-insured. This means that railroads and railroad workers are the only ones who pay into the plan, and premiums alone are what pays for the cost of the plan.
Unlike most plans, however, administration costs are not a significant part of the problem. Administration amounts to less than 10 percent of the cost of this plan, while the costs of others in the industry range from 12 to 20 percent, according to the National Center for Policy Analysis. By contrast, the ratio of administrative expenses to benefit payments for Medicare has generally fallen within the range of 1 to 3 percent, according to the Health Care Finance Administration.
When negotiations commence, there will be greater pressure on negotiators to rearrange the economic package in order to stabilize the benefits. This, in effect, puts downward pressure on the wage package, in order to maintain the current level of benefits.
The Plan
The last round of collective bargaining produced the first BLE-negotiated national agreement since 1978. Every agreement in the subsequent 18 years was imposed on the BLE by Congress or by an arbitrator. The 1996 agreement also was the first in BLE history approved by the rank and file, because contract ratification was not required by the BLE Constitution in 1978.
BLE President Dubroski says that ratification is what must drive the process of obtaining the best possible agreement. "The right of contract ratification imposes duties on both BLE leaders and BLE members. Negotiators have the duty to inform themselves on what issues are important to the membership and to bargain for the most important items the members identify. They also have a duty to provide the membership with timely and detailed information concerning the process and the options, so that the rank and file may make an informed decision. And the members have the duty to keep themselves informed in order to make a sound choice."
The key to conducting bargaining that addresses the wants and needs of the BLE membership is the data produced by the survey conducted several months ago, which served as the basis for formulating this round's Section 6 Notices. "The original survey was somewhat flawed because the people who put it together did not address early retirement," said Dubroski, "but I've heard loud and clear that this is an important issue for many members, and we plan to do some follow-up polling on it."
To carry out the BLE's plan to aggressively pursue its goals in this round of bargaining, the I.D. will again attempt to offer the "dual track" option that proved successful in 1996. This type of bargaining is similar to that used in the auto and steel industries, where wage rates are maintained through national bargaining, while settlement of local issues is a requirement in order for the company to obtain the wage settlement.
Dubroski supports "dual track" bargaining because "maintaining national wage rates keeps them from being caught up in the competition between carriers, while at the same time, each General Committee has the freedom to deal with issues specific to its property."
The Key to Success
If the BLE has learned anything over the past 20 years, it is that Congress simply will not let rail labor exercise its economic muscle to win fair contracts. This is even more true today, with only a handful of mega-carriers comprising the Class I railroad industry.
Not being able to use traditional picket lines to drive our message home means that we have to come up with an alternative that puts pressure on the carriers to bargain in good faith. That's where membership mobilization enters the picture.
"We won't succeed by bargaining for the members... we must bargain with the members," says Dubroski. "The carriers always say two things at the table. They say, 'You don't know what the members want.' But our surveys disprove that claim.
"The carriers also say that we are not in a position to compel them to make a better deal. This round presents us with a challenge to show them they're wrong about that question as well," says the BLE chief.
Dubroski points to recent mobilization activities against BNSF's Availability Policy as an example of what we can accomplish with a well-executed plan. "In less than a week's time, the Fort Worth family rally and an avalanche of e-mails and telephone calls to the FRA stopped BNSF dead in its tracks," notes Dubroski. "I expect that we will need to repeat these tactics from coast to coast if we are to succeed in keeping the carriers moving at the table and the NMB moving the process."
"The membership deserves the best contract we can bring back," says Dubroski,
"but the BLE will only go as far as our leaders and our members are willing to
go together."
