Academic journal article Public Personnel Management

Major Unions and Collectively Bargained Fringe Benefits

Academic journal article Public Personnel Management

Major Unions and Collectively Bargained Fringe Benefits

Article excerpt

Major Unions and Collectively Bargained Fringe Benefits

Fringe benefits are a growing part of the compensation package. Unions and employee associations have played a significant role in the development of fringe benefits. A survey of major unions and employee associations indicates of the new fringe benefits dental coverage, vision coverage, employee assistance programs, maternity leave, and alternative work schedules are the most prevalent in current contracts. Sabbatical leaves are most prevalent as a new benefit in current negotiations, and child care, eldercare, and legal coverage are the most likely new fringes to be negotiated in the future. The standard benefit areas of health and pensions are presently the fringe benefit issues most involved in retrieval brgaining. They are also perceived as both currently and over the next ten years as the most important fringe benefit issues in collective bargaining.

Fringe benefits have been a growing part of the compensation package. In 1930, benefits accounted for only three percent of total compensation. There was little change by 1942 when nonsalary compensation of state and local government employees was 4.3 percent of total compensation, compared to 3.9 percent in the private sector (U.S. Dept. of Commerce, 1948). By 1972 nonsalary compensation was on the rise representing 10.2 percent of total compensation for state and local government employees and 11.5 percent for private sector employees (U.S. Dept. of Commerce, 1973). By 1982, total employee benefits had risen to a substantial 36.7 percent of payroll with wide variations across employers, ranging from 18 percent to 65 percent (Chamber of Commerce, 1982).

Unions and employee associations have played a significant role in fringe benefits, directly through collective bargaining and indirectly by organizations seeking to create attractive work situations to prevent unionization. On the average, unionized firms pay a higher proportion of fringe benefits within total compensation than nonunionized firms. One study indicated that union impact is 17 percent greater on fringes than monetary pay (Freeman, 1981). Another study indicated that the union to nonunion hourly wage differential is between 10 percent and 20 percent while the union to nonunion fringe benefit differential is between 20 percent and 30 percent (Freeman and Medoff, 1980). Work on the effect of unions on pensions and health insurance has found the average union effect to be an increase of 24 percent for pension expenditure and 46 percent for insurance expenditure (Solnik, 1978).

In recent years retrieval bargaining, involving removing through negotiations wages and/or benefits, has been occurring in more negotiations. Some employee groups have succesfully defeated organizational attempts to rescind benefits. For example, the Chicago Teachers Union defeated an attempt by the school board to reduce medical and dental benefits by $17.2 million. There is a negative environment for many negotiations as a result of organizations facing budgetary reductions or increasing costs of some benefits such as health insurance. However, at the same time negotiations may be getting tougher, there is a steady movement to expand the range of fringe benefits. To the list of standard fringe benefits such as pensions, life insurance, and health insurance there are rapidly expanding benefits such as dental coverage and vision coverage. In addition, other benefits being sought are hearing coverage; legal coverage; financial counseling or planning; employee assistance programs; wellness programs; sabbatical leaves; alternative work schedules including flexitime, compressed work weeks, job sharing, and part time positions; maternity and paternity leaves; child care and elder care; and commuting assistance including van pools and transit fare reductions.

While statistics are collected on the presence of the more standard fringe benefits in collective bargaining agreements, information is lacking about many of the newer benefits. …

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