September 18, 2019, 5:00
AM CDT Updated on September
18, 2019, 12:57 PM CDT
If General Motors Co.’s negotiations with the United Auto
Workers are any indication, Detroit’s automakers may not have a prayer in their
effort to rein in rising health-care costs.
As GM was
nearing the expiration of its labor contract with the union last week, the
carmaker sought to have hourly workers pay 15% of their health-care costs,
according to people familiar with the talks. But by the time the company
presented the UAW with a deadline offer, GM walked back the proposal and called
for keeping contributions steady at about 4%, said the people, who asked not to
be identified discussing private discussions.
The quick
cave on health costs still wasn’t enough to ward off a walkout by 46,000 GM
employees. The episode is a bad omen for Fiat Chrysler Automobiles NV and Ford Motor Co., since the UAW typically tries to
pattern contracts reached with Detroit carmakers after one another. Ford is
expecting the insurance bill covering its 56,000 hourly workers to exceed $1
billion for the first time next year, Bloomberg News reported in March.
“Asking
for 15% more toward the health care without handling the other issues the UAW
wanted was an unusual tactic that didn’t work,” said Arthur Wheaton, director
of the Worker Institute at Cornell University.
“It may have actually encouraged the membership to say: ‘You know what, if they
don’t want to be serious, we’ll go out on strike.’”
|
Issue
|
GM’s Wants
|
UAW’s Wants
|
|
Pay
|
2% raises in two years of the contract, and 2% lump-sum payments
in the other two years
|
A step up from the 3% raises and 4% lump sums GM agreed to under
its 2015 union contract
|
|
Health care
|
Initially pushed for union members to pay 15% of their
health-care costs
|
Maintain the roughly 4% share of costs that members currently
pay
|
|
Temps
|
About 7% of factory jobs are filled by temps; the carmaker would
like to be able to increase this
|
Less use of temps and clearer path for these workers to be made
permanent full-timers
|
|
Entry workers
|
Maintain hourly wages for new hires and allow them to reach
top-scale pay in eight years
|
Expedite the time it takes for entry workers to reach top-scale
pay to four years
|
|
Investment
|
Over $7 billion into eight facilities, including to make EV
batteries at Ohio factory
|
Seeking a vehicle for the plant in Lordstown, Ohio, to build
|
Health
care has long been considered the third rail of automotive contract talks, with
workers zealously clinging to their plans. They see them as hard-won benefits
that help make up for the wage concessions and jobs given up over a decade ago
when GM and Chrysler went bankrupt and Ford went through wrenching
restructuring.
The three
companies’ hourly employees contribute between 3% and 4% to their coverage,
compared with 29% for the average American worker, according to a October 2018 study by the Kaiser Family Foundation.
In an
unusually detailed description of what it offered shortly before
the strike began, GM said its workers will “retain
nationally-leading health care benefits.” Union and management negotiators
bargained until the early evening Tuesday before calling it quits, then
reconvened early Wednesday morning.
GM shares
fell as much as 0.7% to $38.01 on Wednesday. The stock is up 14% this year.
Coverage Cut-Off
The
preoccupation of the UAW’s chief GM negotiator with health care in the first
two days of the union’s first national strike against the automaker in 12 years
underscores just how significant medical benefits are for both sides.
The
company confirmed to the UAW on Tuesday that it cut off coverage for its striking workers, Terry
Dittes, the vice president of the union’s GM department, wrote in a letter
obtained by Bloomberg. UAW attorneys are looking into whether the company is
allowed to suspend coverage immediately, or if it was supposed to keep footing
bills for members until the end of the month.
“GM’s
failed attempt to hurt our members and force us into a bad agreement was cold,
heartless, and immoral,” Brian
Rothenberg, a spokesman for the union, said in a statement
Wednesday. “We will not allow our members and their families to experience the
added burden of worrying about their health coverage while on strike.”
The
Detroit carmakers contend the packages they’ve been providing put them at a
disadvantage against rivals with non-unionized factories. Without changes in
coverage, the growth in health-care costs over the life of the next contract
would be the equivalent of a $3 hourly wage increase.
Sanders Versus Biden
The generous
plans negotiated by unions also are making their way into Democratic
presidential candidates’ arguments over the future of U.S. health care policy.
Front-runner Joe Biden argued during the latest debate that Sen. Bernie
Sanders’ Medicare for All Plan wrongly assumes that if the government were to
nationalize insurance, employers would boost their employees’ pay rather than
pocket the savings.
“For a
socialist, you’ve got a lot more confidence in corporate America than I do,”
Biden said last week.
Nationwide,
health expenditures are projected to grow by 5.5% annually from 2018 to 2027,
more than twice the rate of inflation, according to a study by the Centers for Medicare and Medicaid Services.
Bargainers
at Ford and Fiat Chrysler are now watching for what comes next and hoping GM
might have an alternate proposal for reining-in medical expenses. If the
company doesn’t, they’ll have to get creative.
“GM may
punt on this issue, and Ford may have to come up with something more
innovative,” Wheaton said. “If the UAW comes back on this issue, it will only
be done in exchange for something big.”
(Updates
with UAW spokesman’s comment in 11th paragraph)
No comments:
Post a Comment