Tuesday, July 08, 2008

 

Tiers

I had a conversation this week with a colleague at whose college, as at so many others, the level of benefit an employee gets is based on her hire date. The farther back you were hired, the better your benefits. This isn't just a matter of, say, compounding interest; it applies to things like health insurance and retirement account contributions. Newer hires pay larger percentages of salary for retirement, and have larger payroll deductions for health insurance, than do their coworkers the next office down.

Interestingly, nobody ever calls this age discrimination, which is what it is. (It clearly has a 'disparate impact' on younger workers. How many credentialed professionals currently under 40 were working there fifteen years ago? I thought not.)

These tiers were the result of collective bargaining. They were a way to cut future costs without hurting present employees. Of course, time has a way of passing, and now some of those unnamed (and unrepresented) third party folk are actually on staff.

Or, increasingly, not. It seems that new employee retention has mysteriously nosedived since, well, the latest round of tiers went into effect. It's most pronounced among staff, as opposed to faculty, probably because staff aren't eligible for tenure, which is a lure of its own.

Apparently, the college can't compensate for the higher deductions by offering higher salaries, for fear of triggering complaints of 'salary compression.' If you look only at salary, and not at take-home pay, the objection holds some water. But x minus five is more than (x plus two) minus ten, so in terms of take-home pay, it's misplaced.

Worse, the disparity becomes progressively harder to 'fix' over time, even if one were so inclined. Any move to raise the effective compensation of the disfavored group would immediately bring calls for retroactivity, which is a headache beyond words. And as the gap grows, the cost of filling the gap grows with it. Right now, that cost is simply passed along to newer hires, who swallow it in the form of lower take-home pay.

Judging by the turnover of younger staff, the combined pincers of 'tiered benefits' and 'no salary compression' have pushed take-home pay to below market-clearing levels. This is not good.

Although some might read this as an anti-union post, I don't think it is. My preferred solutions are either to go with national single-payer health care for everybody and be done with it, or, failing that, for the union to adopt the Rutgers faculty union model of actually having incumbents make some level of sacrifice for the sake of their future colleagues. Either way, the goal should be precisely to get away from invidious distinctions among employees based on age. Tiers aren't solidarity; they're sellouts. They defeat the purpose of unions, and make administrators' jobs harder, too. No, thanks.

Instead of my preferred solutions, though, I foresee the tiers getting steeper, and colleges compensating with an unsatisfying combination of efficiency drives, reorganizations, and lower quality. Yuck, yuck, yuck.

I honestly hope I'm wrong on this one.

Comments:
Re. that you aren't attacking unions: this isn't a union issue - or limited to health insurance - in my state, which is distinctly unfriendly to unions. A few years ago, when the state employees' retirement fund, once flush, faced severe financial liabilities (the state had underfunded the pension plan during the go-go 90's), the fund's board decided to "fix" the problem by preserving benefits for those already enrolled and cutting them for future employees. I agree that this is age-ism, but I also wonder if it isn't akin to the generational selfishness that seems to drive the federal budget - I refer to the huge costs of the Iraq war and the Medicare drug benefit, combined with Bush's tax cuts, which have resulted in enormous deficits for which our children and their children will have to pay. Maybe the leap is too big, but I am increasingly struck by our society's willingness to sell out the future.
 
This is not an "anti-union" argument, but it certainly implicates the leadership of unions, which frequently represent the interests of the most senior members at the expense of members-yet-to-come. It's really hard for a yet to be hired union member to have their interests seen on level with a 20 year vet when it comes to making tough choices about increasingly costly benefits.

The irony is that when it comes to preserving retirement benefits, particularly health care for retirees, eventually it will be these yet to be hired members making decisions while the retirees have no say. Be careful what you do to preserve your own benefits - you won't be there forever, and it will be up to the next generation to preserve them for you.
 
It really is a frustrating attempt at a compromise. I don’t know if I’d call it age discrimination, though. Because a new hire entering the system today at age 25 and another one starting today at 38 would get offered the same pay and benefits, no? If feels more like the loss of opportunity to easily buy a house compared to what people of my parents’ generation were likely to encounter. In both cases, the time you are in, not your own age at that point, is the independent factor. I’d say it’s more like era discrimination.
 
FWIW, I work at a completely un-unionized university in the NE, and we have a very steep tier system. Older hires get: 100% tuition at Snooty U for their kids, a much shorter time to pay into the pension program before being vested, better educational benefits for themselves, and a better pension. I think at this point, I am Tier 4, and I've been here nearly 10 years now. I don't know if there is a Tier 5 beneath me, but I expect there will be soon.
 
How is this not seen as differential compensation? If two people are doing the same job for significantly different compensation packages how has this not yet led to lawsuits?

Though I'd argue that we also have inequity built into the system when my married colleagues with children are given tuition breaks for their kids, which is a benefit I, as a single, childless person, can never access. I'm not attacking families, but saying that there is inequity when I and a colleague who is a parent each get different financial benefits for doing the same job.
 
We have another kind of inequity -- those being hired in now are given more credit for their prior experience than their collegues who have been here for 7-12 years. This happened because they started calculating starting salaries differently AND a prior contract did not include step raises -- so, the people working outside get retroactive credit for all of that teachinig, but if you'd been AT my college, you don't get the year steps you were working for.

Of course, the union leadership is (and has been) maxed out on the salary scale for some time, so they don't think it is a problem -- tell that to the worn out CC faculty who knows the newbie down the hall makes $15,000/year more....
 
Lesson: Unions should never negotiate two-tier wage/benefit structures. Members should never ratify contracts with two-tier wage/benefit structures.

If faculty members have learned these hard lessons because grey-beard union leaders have been feathering their own nests, then elect new union leadership, or decertify the old union and get a new one.

Unions aren't bad, but that doesn't mean there are no bad unions.

--Philip
 
It ain't just staff benefits.

At my institution, more senior faculty (and professional staff) have a TIAA-CREF contribution (entirely the university's) of 15%. Current hires--10%.

We don't have the health care differentials, though.
 
I also don't see this as an anti-union argument but rather an illustration of how important it is for people, especially newer employees, to take active roles in their unions. People who complain about how awful unions are have often not bothered to attend even a general membership meeting. Our union is responsible to our employees precisely because EVERYONE participates. We have even voted to make sacrifices so that the new people and part timers don't get the shaft, and newer employees have had significant effects on these decisions.
 
A key word was missing. It does take two to tango.

That choice was a way for the COLLEGE to cut future costs without hurting the members of the group they were bargaining with.

I would say that the COLLEGE chose the easiest option for them. You didn't say if the proposal came from the faculty or the administration in that particular case, which would be an interesting thing to know. It does have a big advantage for the college's lawyers in that it doesn't change a promise made when the existing faculty were hired.

The reason it is not age discrimination is because it treats all ages equally. A new hire at age 50 agrees to that contract over the other ones to choose from (probably zero to choose from) while a 20 year veteran at age 50 has a much better deal from a time when benefits had to be higher to attract the same caliber instructor.

It would appear that admin has suffered the most, because of staff turnover among those who have employment options. Admin would suffer more if there was not a surfeit of supply of faculty.

By the way, it can work the other way. In my state, contributions to a 403(b) retirement alternative are much bigger now than in the past (corrected for inflation) because the retirement system had to make up for being underfunded. Employees who left got less than they should have.
 
That's immensely short-sighted of the unions; a union's power comes essentially exclusively from its solidarity. If gradations of membership are created, one gets gradations of interest in supporting the collective bargainers.
 
The grocery store workers in SoCal had that big strike a couple years ago over precisely this problem: health care caps and a two-tier wage system for employees. (Unfortunately, the stores were able to break the strike by flying in baggers and drivers in from across the country.) My checkers told me that there was a big wave of hiring as soon as the new contract was accepted, and old-timers at the higher levels were pushed out by offering them only bad hours and orders to transfer to far away, undesirable store locations.

Accepting tiers is partly about short-sightedness on the part of the unions, but it also works because this tactic effectively splits the union rather than all members wanting exactly the same thing --- it preys on members' fears of being out on strike too long and their "well I'll have my benefits at least" mentality. It is, therefore, a more subtle and delayed form of union-busting --- or union-weakening as the case may be.
 
fyi, disparate impact actually isn't always enough for legal proof of discrimination. Technically. Not to rain on your parade.
 
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