Rail Labor Document

jonathan flanders jon_flanders at compuserve.com
Wed Apr 11 10:54:15 MDT 2001

An interesting document coming out of the current rail labor negotiations.

Jon Flanders

Statement of BMWE President Mac A. Fleming in Response to Rail Labor
Attacks on Tentative Agreement
Circular No. 674

April 5, 2001

Dear Sirs and Brothers:

The BMWE tentative agreement with the railroads is under attack from the
other crafts. Although some of what is being said exaggerates the admitted
deficiencies of the agreement, much of what is being said is accurate. I,
too, am not pleased with the agreement, however, the alternative would
almost certainly be worse. And, those who are attempting to convince our
membership to reject the agreement offer no plan, or even hope, of
obtaining a better agreement utilizing the normal process.

Last year, we were alone in our battle, when BMWE negotiated hard to an
impasse and pushed for a Clinton-appointed Presidential Emergency Board.
Even though we advised the other crafts in early February 2000 (over one
year before we reached agreement) that a Bush victory would be devastating
to any possibility of obtaining a fair agreement, none of the other crafts
made serious efforts to reach agreement last year. We offered to give an
oath of blood, which is a pledge that no union signs an agreement until all
are ready to sign. They said no. We offered the same on the health care
issue. They said no.

All of Rail Labor understood the consequences of a Bush victory. Although
the railroads are responsible for their current, merger-caused economic
plight, their presentation before a Bush-appointed Presidential Emergency
Board can clearly and unequivocally demonstrate an inability to pay. With
respect to health care, there is no question that the plan's costs have
risen over 30% in the past two years and projections for the future
indicate increases of about 13%. These two arguments alone, almost
certainly ensure that we would receive recommendations of minimal wage
increases and substantial cost sharing from a Bush-appointed PEB - which is
what we agreed to. But, much worse, we would almost certainly have seen our
work rules destroyed. In this agreement, all of our work rules remain
untouched. Congress either imposes those recommendations or creates a
binding arbitration process which ends up with binding, similar
recommendations in the event either party rejects the recommendations of a

As far as wages are concerned, we had a choice between a settlement within
the range agreed to by UTU - 2.5% on July 1, 2001, 3%, 2.5%, and 3% each
year thereafter, minus whatever health care ended up costing, or the full
COLA range we agreed to minus whatever health care ended up costing. If we
had received straight full COLA increases since 1978, instead of the
increases we received, our members would be earning $2.23 per hour more
than they are earning now. Over the past year the Consumer Price Index has
risen 3.4%, instead of the 2.6% it had been averaging. Recently, OPEC
reduced production by 4% meaning that oil costs will rise. And, with the
debacle that has resulted from privatizing energy costs in California with
predictions of significant increases in energy costs nationwide, we decided
to base our wage increases on the CPI-W to ensure that at least the base
wage rate rises with increases in the cost of living.

As our health benefits were completely restructured just 10 years ago with
significant monitoring to control costs, our choices are simple. We either
reduce benefits and/or the quality of the benefits we receive or see the
premiums escalate. PEB 219 included a health care cost sharing component
which fortunately did not have to be used significantly over the past
decade because the restructuring of the health care plan and the creation
of a "reserve fund" cushioned us against most of the impacts of the
undeniable increases in health care costs. However, the inclusion of a cost
sharing component meant that if there were significant increases in health
care costs, there was either going to be significant cost sharing
contributions by employees or a decline in the level and/or quality of
benefits. Reducing benefits and/or the quality of benefits would not
necessarily mean there would be little or no cost sharing, just that the
increased cost of health care would be passed on to the sick.

Facing the facts that health care costs and cost sharing are rising
throughout the country, we made a decision that it is critical to our
members (more than two thirds of whom are over the age of 40) to keep
quality benefits. We made this decision based upon what we thought a Bush-
appointed PEB would recommend AND because in addition to meager wage
increases and substantial cost sharing that we believe a Bush-appointed PEB
would recommend, our work rules would be further savaged - the same work
rules that provide our members with some quality of life benefits and
significant economic relief from the cost of away-from-home expenses.
Our choice was not to risk savaging our work rules, and still receive wage
increases and cost sharing. While the extreme risk of an anti-worker
Bush-appointed PEB was the primary reason for our decision, other important
factors played a part as well. We function in an environment where Rail
Labor has proven to be incapable of developing a bargaining plan to which
all subscribe. Had Rail Labor been successful in agreeing on a plan, BMWE
would have stuck with it, as we proposed in the beginning.

Some of the crafts are contending that their members should not have to
suffer increases in health care costs to pay for our work rules. That is a
mischaracterization of reality. As a result of the political nature of the
PEB process, when a Republican president appoints a PEB, everything is up
for grabs. For most of the crafts, this means wages and benefits are up for
grabs. Work rules are not as critical to them for the most part. The UTU
settlement, but more importantly, the railroads' pay arguments, meant
relatively minimal wage increases will probably be recommended by a
Bush-appointed PEB. This has virtually been set in stone.

An increase in health care cost is nearly a given. This is the reason the
UTU settlement included a standby on health and welfare and why most of the
other crafts made little progress on reaching an agreement. Everyone who
was involved in the health care discussions with the railroads knew the
railroads had a strong argument for cost sharing if we kept the existing
benefits and quality of benefits. In our agreement we made some modest
improvements to those benefits.

Even now, the only plan suggested by those who have publicly criticized our
agreement is that they will not do what we did. They have not agreed to an
oath of blood at this point. They frittered away critical time last year
when we had a shot at obtaining a fair agreement, and now use bravado to
explain what they intend to do. We have been in that position before, in a
somewhat analogous circumstance - the PEB 219 bargaining round - also
before a President Bush. As you may recall, the health care issue was
initially the most critical issue. In fact, the railroads did not bargain
over wages and rules until the health care issue was resolved.

The railroads also had a strong argument that they were unable to pay
significant wage increases. As the Board was political and not a fair
Board, it restructured health benefits to include cost sharing and
recommended minuscule wage increases. This was bad enough for all of Rail
Labor. But, for BMWE and UTU, PEB 219 also savaged work rules. For the UTU
that meant crew consist (even though most of those crew consist rules were
not even on the national table), and every member knows what savaging our
work rules meant for the BMWE. This had nothing to do with the other crafts
paying for our work rules, but had everything to do with their dealing with
the political nature of a Bush-appointed PEB.

BMWE learned a harsh lesson and does not want to go there again, so we made
an agreement which we believe is very similar to what PEB recommendations
on wages and health and welfare will be anyway but were able to protect our
work rules. We feel badly the other crafts are so angry with us, but we all
must live with decisions we made last year, when BMWE continuously informed
the other crafts that the agreement should be resolved while Clinton was
President and we must all work together to see that it happens. Once
Clinton left office, especially with no oath of blood in place, we wanted
to make an agreement which protects as much as we could protect.
If our work rules are going to risk being savaged, we want the membership
to make that choice by rejecting the agreement. However, as union
representatives, we believe a clear choice exists - to take a bad economic
package with significant cost sharing, but with our work rules intact, or
risk what we believe would be a bad economic package with significant cost
sharing and with the strong probability of significant work rules

The choice is now up to the BMWE members and BMWE leadership will abide by
whatever decision they make. We are asking that they remember PEB 219, and
how much more could be lost if they choose that route - even if the other
crafts will like us better by doing so. As you can see, the other crafts
are full of criticism and articulate some bravado, however, they have no
plan other than to go before a Bush-appointed PEB, arbitrate or get the
railroads to take less. That's nice, but it doesn't get results and it
doesn't pay your away-from-home expenses.

One final point. At the most recent meeting of the Transportation Trades
Department of the AFL-CIO,  BMWE directly raised the issue of whether BMWE
could expect the support of all of the member unions in the event we chose
to reject a concessionary agreement and strike against a back to work order
by Congress or a Court. BMWE made it clear we were not talking about
letters from the unions and the AFL-CIO, but that all unions would stop
working and ignore back to work orders until the dispute is resolved. The
Transportation Trades Department includes all transportation unions in the
United States. Representatives of all of the rail unions were present,
except for the BLE. Not one union leader at the meeting offered such
support. A couple of the rail chiefs came up to me after the meeting to
make fun of the proposal and even criticizd AFL-CIO Secretary-Treasurer
Rich Trumka for simply not dismissing the idea out of hand. As you all
know, if we are unable to get such support within Rail Labor, we would be
committing suicide by taking such action.

It  is under these circumstances that we made an agreement which we believe
is similar to what a Bush-appointed PEB would recommend, or an arbitrator
would impose, or the other crafts are capable of negotiating, EXCEPT that
we retain all of the work rule benefits obtained in prior rounds of
In solidarity,

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