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8
ECONOMIC SUPPLEMENTS
UNDER COLLECTIVE
BARGAINING
SUMMARY
The expansion of benefits has increased dramatically over the past few decades, although a
recent plateau—probably a quite temporary one—seems to have been reached. Today the dollar costs
of these supplements is equivalent to about 30 percent of the payroll. This chapter emphasizes the
more widespread and costly programs.
Ninety-eight percent of unionized employers currently offer pension plans and finance the
entire cost of these in a bit less than half of all cases. In sheer dollar amounts, there has been a
dramatic growth of both such noncontributory plans and jointly financed ones in recent years. There
has also been a marked increase in “vesting allowances,” which permit workers who terminate
employment before retirement age, within certain limits, to take their pensions with them. The
implementation of funded pension plans, ensuring that the benefits are in fact guaranteed, forms
another current trend. The federal government, in response to past abuses, has intervened with
legislation that goes far to protect employee interests in both of these areas.
Paid vacations provisions appear in almost all of today’s agreements. The amount of time off
varies with length of service, with one week the normal minimum permitted almost every employee.
In the majority of contracts, management retains the authority to assign vacation times, but
True/False # 1
SUB plans have grown substantially for nonmanufacturing workers.
2.
payroll.
Economic supplements to the basic wage rate currently equal some 32 percent of the
3.
children.
About 20 percent of unionized workers now receive a day care benefit for their
4.
obligation to bargain over the issue of pension plans.
In 1949, the Supreme Court ruled that employers and unions were under no
6.
Almost half of all American unionists today have access to defined benefit pension
Under most pension plans, until 1979, the mandatory retirement age was 70.
8.
demands, labor organizations have increasingly emphasized early retirement.
In order to open up job opportunities in the face of automation and changing market
10.
Most pension plans that provide benefits to workers who have been permanently
disabled before normal retirement age require that such workers have a specific
About 9 out of 10 current pension plans are funded on a contributory basis.
12.
separately.
To ensure that the worker receives his or her benefits, it is best to fund pensions
13.
Guaranty Corporation.
14.
Ninety-two percent of all bargaining agreements currently provide for some kind of
15.
social security benefit program.
The Employment Retirement Income Security Act of 1974 attacked abuses of the
16.
The Employment Retirement Income Security Act of 1974 required all new pension
17.
In 1974, the federal government established the Pension Benefit Guaranty
Corporation, which in 2008 guaranteed pensions up to a maximum of $49,500 per
19.
About 50 percent of current contracts provide for 3 weeks’ paid vacation a year,
20.
Almost all employees today get at least a 2-week vacation after 5 years of seniority.
T
21.
or months prior to the vacation period in order to qualify for paid vacation.
T
Under most agreements, the employee must work a certain number of hours, days,
22.
given the regular wages they earn, plus an additional 2-day vacation.
F
In most labor agreements, employees who work during their scheduled vacation are
23.
worker seniority.
F
In a majority of contracts, the scheduling of vacations is strictly determined by
24.
Today, nearly 100 percent of all labor agreements incorporate some formula for paid
25.
In the United States, the median annual number of paid holidays granted in labor
26.
Under most agreements there are no obligations placed upon employees who desire
27.
About 3/4 of all labor agreements provide double time pay for work on holidays.
T
28.
health insurance plans.
F
There are currently no tax incentives for management in the area of expenses for
29.
attractiveness of private health insurance plans.
F
The proliferation of Social Security benefits has helped to diminish the
30.
health coverage.
T
Two aspects of the liberalization of health insurance plans in recent years are the
extension of benefits to retired workers and the broadening of dental and mental
31.
the employee.
T
The majority of health insurance plans today are jointly funded by the employer and
32.
F
As most of the other wage supplements discussed in this chapter, dismissal or
33.
retirement before the individual is entitled to a pension.
T
Dismissal pay provisions are normally limited to workers displaced by technological
change, plant merger, permanent curtailment of operations, permanent disability, or
34.
dismissal pay received.
F
The length of service of an employee has little or no bearing upon the amount of
35.
reporting pay provision for employees.
T
Over 80 percent of the collective bargaining contracts currently in force contain some
36.
when such pay must be forfeited by employees.
F
One issue that is not involved in the negotiation of reporting pay arrangements is
37.
Even when work is not available because of fire, flood, or power failure, most
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38.
Supplementary Unemployment Benefit (SUB) plans primarily seek to supplement
state unemployment payments and provide income to the unemployed after state aid
39.
Most SUB plans do not require a certain length of service before the employee can
40.
Virtually all SUB plans require the unemployed worker to be willing and able to
41.
Workers who are out of work because of discipline, strikes, or “acts of God” cannot
42.
A worker who loses his or her job because of government regulation or public control
43.
Benefit formulas under most current layoff plans set a normal level of payment at 90
44.
The amount of an employee’s SUB payment normally depends on the amount
45.
One problem with a liberalized SUB plan could be employees preferring a layoff
46.
Most SUB plans, which are almost exclusively financed by the employer, require the
47.
The growth in number of SUB plans since the middle 1950s has been very
48.
One important advantage of SUB plans is that they are designed to deal with
49.
One problem with the liberalization of economic supplements is that many of them
51.
In general, once an economic supplement is adopted it becomes a permanent feature
of the contract, with further negotiation focusing on the timing and degrees of
True/False # 2
2.
Resort hotels in Hawaii grant free use of their golf courses to their Longshoremen’s
5.
By 2008, about 20 percent of all unionized workers were entitled to some form of day
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7.
It appears unlikely that legal plans will become increasingly common as a fringe
8.
One factor that has served to limit the growth of pension plans in recent years is the
9.
There has been a growing managerial awareness that there is an organizational
12.
National legislation banning mandatory retirement before age 70 went into effect in
14.
A “noncontributory” pension plan is one in which the employer does not contribute to
17.
Unfunded pension plans rely solely on employer ability and willingness to comply
18.
Vesting refers to the right of an employee to take credited pension entitlements with
19.
Vesting regulations created by the Employee Retirement Income Security Act were
in part a response to the practice of some employers of discharging employees just
20.
The creation of the Benefit Security Corporation, and subsequent legislation
21.
Prior to World War II, most employees enjoyed at least some annual vacation with
22.
World War II wage control legislation was influential in the growth of vacation with
pay as part of labor agreements because fringe benefits were not covered by the
23.
The “sabbatical” (a period of up to fifteen weeks of vacation with pay, occurring
every five years) for employees with fifteen or more years of service is becoming a
24.
If employees work during scheduled vacations, most labor agreements stipulate that
25.
Very few labor agreements permit management to schedule vacations during plant
26.
Members of the Electrical Workers Union at a Newport, Tennessee plant take off
27.
The idea of “personal” holidays has been largely unsuccessful and will probably not
28.
In order to qualify for holiday pay, most labor agreements require that employees
29.
Health plans have now overtaken pensions as the most expensive single employee
31.
Attempts by management to contain runaway medical costs by encouraging union
representatives to accept the use of HMOs and other managed-care options have
32.
Very few labor contracts today sanction deductibles, copayments, and premium
33.
Only about 39 percent of labor agreements contain provisions for dismissal or
35.
If an employee is rehired by an employer after receiving dismissal pay, a great
majority of labor agreements stipulate that the employee is not required to return
36.
Because dismissal pay is meant to cushion effects of termination of employment due
to technological change, merger, and cessation of business, it seems likely that this
37.
Payment to employees who are scheduled to work and who do not have instructions
38.
When a labor agreement has a reporting pay provision, the employer cannot be
39.
A vast majority of labor agreements including reporting pay provisions require that
40.
When employees are called back to work outside of regularly scheduled hours, they
41.
In most labor agreements providing for reporting pay, the employer is relieved of the
obligation to guarantee work or to make cash payments when the employer notifies
42.
SUB plans are essentially a compromise between the “guaranteed annual wage”
demands of many unions in the late 1940s and early 50s and continuing
43.
Half of all manufacturing workers in the United States now have some kind of SUB
44.
Most SUB plans have set a maximum of 26 weeks that employees may receive
45.
Almost universally, most SUB plans stipulate that employees can receive no benefits
46.
The amount of benefits received under SUB plans is unrelated to the amount
47.
When employers have contributed the maximum amount of liability for SUB plans,
48.
There is little question that one benefit of SUB plans during the recession periods of
the last three decades is that they maintained a good deal of consumer purchasing
49.
Improvements in the benefit portfolio automatically present potentially troublesome
50.
There exists substantial proof that fringe benefits have had a significant positive
Multiple Choice # 1
1. Employee supplementary economic benefits are now commonly equivalent to
2. The growth in pension plans in labor relations can be attributed to
3. Negotiated pension plans are today
4. Which of the following is not a feature of the typical pension plan?
5. Vesting allowances for workers covered by pension plans
6. The Employee Retirement Income Security Act of 1974 provided that
7. At present, vacations with pay are a standard practice
8. The growth of paid vacations can be attributed to
9. Paid vacations have undergone a steady liberalization as a worker benefit. As a result
10. Congress enacted a Monday Holidays Law in
11. Under most labor agreements, paid vacations are
12. Paid holidays from work
13. Under most paid holiday arrangements
14. The employee who is asked to work a paid holiday
15. Health insurance plans
17. Recent labor disputes that have stemmed mainly from employer efforts to shift health care
costs partially to the work force have involved
18. Dismissal pay is
19. Employees who have been scheduled to work, and have not been instructed not to report to
20. The employer is not often obligated to provide reporting pay when
21. Supplementary unemployment benefits are
22. Payments made to workers under SUB plans
23. The financing of most SUB plans is
24. In general, SUB plans have:
25. The liberalization of economic supplement benefits
26. A problem with the trend toward liberalizing economic supplements is that
Multiple Choice # 2
1. Employee supplementary economic benefits have stabilized in their expense to employers
2. Fringe benefits currently cost employers annually about
3. Which of the following is not a relatively recent addition to fringe benefit packages?
4. Defined benefit pension plans are
5. Mandatory retirement is
6. Voluntary early retirement provisions in labor agreements are
7. Which of the following is not an argument in favor of noncontributory pension plans?
8. The basic difference between funded and unfunded pension plans is that
9. By the 1970s, vesting was in _____________ percent of total private pension plans.
10. The Employee Retirement Income Security Act was passed as a response to
11. The concept of a sabbatical for workers is
12. When employees work during their vacation periods, they are most often
14. To qualify for holiday pay, labor agreements often require that employees
15. The cost to employers of health insurance plans is
16. As in the case of pensions, vacations, and holidays, there is a trend toward liberalization of
health benefits. The latest trends in recent years include
17. In which of the following situations would a dismissed employee not normally receive
dismissal pay (assuming that such a provision exists in the labor agreement)?
18. Issues involved in the negotiation of reporting pay arrangements include
19. Most contracts stipulate that reporting pay will be calculated
20. Which of the following is not a goal of supplemental unemployment benefit plans?
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21. __________ percent of manufacturing employees have some kind of SUB plan?
22. To obtain SUB benefits, nearly all contracts stipulate that employees
23. Most SUB plans have a negotiated maximum amount of time in which unemployed workers
may receive SUB pay. That maximum is usually
24. The continual liberalization of economic supplements
25. Economic supplements are likely to remain a standard part of collective bargaining
agreements because they
Essay Questions
1. “Unionized workers receive far more in the area of economic supplements than do nonunion
employees.” Discuss with specifics.
2. The continual liberalization of economic supplements appears to be advantageous, at least on
the surface. What are some of the problems and/or issues with this liberalization trend?
3. Discuss in detail the private pension plan as an economic supplement. What are the features
typical of such a program? What have been some of the problems associated with private
pension plans?
4. Discuss in detail the philosophy and provisions of the typical Supplementary Unemployment
Benefit plan. Have these plans succeeded? What are some of the problems?
5. Explain the function of the Employee Retirement Income Security Act. Why was it passed?
What are the major stipulations in it? Has it succeeded in its purpose?
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6. Discuss the major factors that have led to increasing varieties of economic supplements in
recent years.
7. Health insurance plans are almost always included in labor agreements. Discuss recent
developments of this benefit in terms of what is covered, what it costs, and who pays. Include
in your answer the most recent attempts at controlling the skyrocketing cost of health
insurance. What are union attitudes toward these attempts?
8. Discuss the major features of dismissal and reporting pay.
Term Paper Topics
1. Research the Supplementary Unemployment Benefit plans of the auto and steel industries.
You should discuss the major features of the plans, including their advantages,
disadvantages, successes, failures, and the major criticisms of the plans.
2. Choose one of the economic supplements discussed in this chapter. Research the
development of the benefit in collective bargaining contracts since World War II. Be sure to
address yourself to the major advantages of the supplement, and its future development.
3. Is the increasing liberalization of benefits a good thing? The book cites six problem areas for
the future. Expand upon these six in answering the question, and bring to light any other
problems you may discover.