Aim high: A strategy for changing times

It’s no secret that our economy is changing profoundly for millions of workers. But a December 30, 2011, New York Times article, "Factory Jobs Gain, but Wages Retreat," deserves special attention.

Reporter Louis Uchitelle writes, in part:

Manufacturers are hiring again in America, softening a long slide in factory employment. But for a new generation of blue-collar workers, even those protected by unions, the price of employment is likely to be lower wages stretching to retirement. 

That is particularly true of global manufacturers like General Electric. With labor costs moving down at its appliance factories here, the company is bringing home the production of water heaters as well as some refrigerators, and expanding its work force to do so.

The wages for the new hires, however, are $10 to $15 an hour less than the pay scale for hourly employees already on staff — with the additional concession that the newcomers will not catch up for the foreseeable future. Such union-endorsed contracts are also showing up in the auto industry, at steel and tire companies, and at manufacturers of farm implements and other heavy equipment, according to Gordon Pavy, president of the Labor and Employment Relations Association and, until recently, the A.F.L.-C.I.O.’s director of collective bargaining.

Uchitelle raises very timely questions by implication.

• Median income in the U.S. stands at $49,900, so these “top” wages place these manufacturing workers substantially below the median.
• While he doesn’t discuss the purchasing power of General Electric’s near-top wages of about $19 an hour, I suspect that the workers pay for health insurance, or at least a portion of it, and contribute to their retirement (most likely through a 401K account). That would mean workers are contributing to benefit payments that would substantially reduce the already low wage.
• The article referenced “lean” manufacturing techniques and increased productivity through such processes. I wonder whether the unions are thinking about the longer view; about how to create greater value and close the wide gap between profits and wages—a gap that has only grown wider with increased productivity.
• I would guess that $19 an hour, less benefits and taxes, probably leaves workers with about $25,000 a year in take-home pay. There is plenty of research to show that an annual salary of at least twice that is necessary for a single person to escape near-poverty and move up to just “vulnerable.” (The Census Bureau recently reported that even at four times the poverty level, or $97,000 for a family of four, people are considered “vulnerable,” when all living expenses are included

Can we begin a dialogue between employers, the government and unions to defeat this cycle? Time is short. We can only imagine what will happen with the next “bust” in the economic cycle. And at some point, unions will need to respond to growing worker demand for equity. (For additional perspective on these trends, see A Jobs Compact for America by MIT Professor Thomas A. Kochan.)

Time to act

As the executive director of the Coalition of Kaiser Permanente Unions and co-chair of the Labor Management Partnership at Kaiser Permanente, I, together with my Coalition colleagues from the nation's largest unions, am trying to help union members shape the changing world in which we live. It is not a crime to maintain a decent wage and good benefit package! Yet that is how workers and their unions are made to feel because of the economic crisis we are living through.

It is always important to remind ourselves that the economic crisis has been 40 years in the making, as employers, the government (and to some degree unions) have never tried to reach agreement on a national economic plan to improve, rather than  sit by and watch, the unbelievable slide in worker standard of living. The “blackmail” of holding a $19-an-hour job over the head of millions of workers who need good jobs cannot be seen as a strategy for success.

We in the Union Coalition talk all the time about increasing value, not just increasing productivity. We include “best place to work,” along with best quality, best service and greatest health plan affordability, in our Value Compass—a framework that guides the daily work of Kaiser Permanente and 95,000 unionized workers in the Coalition.  

We are proud to maintain the best-in-class wages and benefits in the health care industry through our strategic collaboration with Kaiser Permanente. We intend to continue this trend even though the demand to reduce health care costs is necessary and long overdue. Most health care workers do not face overseas competition as the primary downward pressure. In a way, our challenge is even greater: providers must develop strategies to reduce the unsustainable, rising cost of health care, especially as the movement for health reform seeks equitable and universal coverage in the U.S.

This is what places our Union Coalition and Kaiser Permanente in the forefront of what should be the debate in this country. A national economic plan (or better yet, hundreds, even thousands of regional or municipal plans) that must include “best place to work” as part of the value proposition for production and service job creation as the only means to rebuilding the economy.