Some 38,000 UTU members covered under the national rail contract will see a $2 reduction in their monthly health care contribution effective July 1 and continuing through June 30, 2016.
Health care insurance savings, in part made possible by the 2011 ratified national rail agreement, permitted the UTU and other rail labor organizations to seek the monthly reduction in the member contribution.
The national rail contract, ratified overwhelmingly by members last summer, included a negotiated cap on member contributions, putting that cap at $200 monthly, while carriers pay more than $1,401 on behalf of each employee covered under the national rail contract. Without the negotiated cap on member contributions, the monthly cost to members for health care insurance could escalate to $355 by the end of the agreement period.
The carriers’ health care savings, expected to be realized as a result of the 2011 national rail contract, permitted the $200 cap to be reduced to $198 effective July 1, and that lower $198 monthly cap will continue in force through June 30, 2016.
That $198 cap, and its length of time in force, is significant, as federal workers, for example, already pay more than $430 monthly for their family health care plan, and that cost is expected to rise in future years as health care costs generally continue a march upward.
The 2011 national rail contract also caps the family deductible at $400 annually, and the annual out-of-pocket maximum at $2,000, compared with a $700 maximum family deductible for federal workers and a $5,000 annual out-of-pocket maximum for federal workers.
Many in the private sector face even higher health care costs, while more than 40 million Americans have no health care insurance.
WASHINGTON — In the face of bipartisan get-tough-with-labor legislation introduced in the House and Senate, two of the remaining unions without national rail contracts agreed to a tentative settlement Dec. 1, and a third reached agreement with the carriers Dec. 1 to extend a cooling-off period into February.
With these agreements, the threat of a national railroad strike has been averted for now.
Previously, the Transportation Communications Union, the Brotherhood of Railroad Signalmen and the various shopcrafts, including the Sheet Metal Workers International Association, reached tentative six-year agreements with the National Carriers Conference Committee (NCCC). The NCCC represents BNSF, CSX, Kansas City Southern, Norfolk Southern, Soo Line, Union Pacific and numerous smaller railroads in national handling.
UTU members earlier ratified a five-year national rail contract.
The Brotherhood of Locomotive Engineers and Trainmen and the American Train Dispatchers Association agreed Dec. 1 to a tentative six-year agreement as recommended last month by Presidential Emergency Board No. 243. References to the UTU’s ratified national rail contract are extensive in the PEB recommendations.
While the BLET is in national handling for health care, it previously reached ratified wage agreements with BNSF, CSX and Norfolk Southern for lower wage increases than the UTU and other organizations, and continues separate talks on wages with Union Pacific.
Also, the Brotherhood of Maintenance of Way Employes reached agreement with the NCCC to extend into February a cooling-off period that was to expire Dec. 5.
The BLET and train dispatchers’ tentative agreements, and the cooling-off period extension agreed to by the BMWE Dec. 1, came in the face of separate House and Senate resolutions.
The House resolution, H.J. 91 and introduced by House Transportation & Infrastructure Chairman John Mica (R-Fla.), would have imposed as a final agreement on the BLET, the train dispatchers and the BMWE the PEB recommendations.
Separately, Senate Majority Leader Harry Reid (D-Nev.) was set to introduce for immediate Senate vote an identical resolution (S.J. 31). After the BLET, train dispatchers’ and BMWE agreements were announced late Dec. 1, Sen. Reid said:
“I applaud all the stakeholders who worked to avert a work stoppage that would have hurt our nation’s economy just as the holiday season gets underway. It is Congress’ constitutional duty to ensure the unfettered flow of interstate commerce, and to protect the nation’s economic well-being. I am pleased with this outcome and congratulate all sides, including the White House and Transportation Secretary Ray LaHood, for their effort to find common ground that protects our economy and keeps it on-track.”
WASHINGTON – Senior House Republicans Nov. 29 said they would act to head off a railroad work stoppage if rail unions that so far have not settled with the carriers do not have a voluntary settlement in place by the end of a final 30-day cooling off period that expires Dec. 6.
The UTU has a ratified national rail agreement in place, while the Transportation Communications Union, the Brotherhood of Railroad Signalmen and the various shopcrafts have reached tentative agreements. The Brotherhood of Locomotive Engineers and Trainmen, the Brotherhood of Maintenance of Way Employes and the American Train Dispatchers Association have not reached a tentative agreement following recommendations for settlement by a Presidential Emergency Board.
(The BLET has ratified wage agreements in place with BNSF, CSX and Norfolk Southern — and is in separate wage negotiations with Union Pacific — but is in national handling for health care. The BMWE and the ATDA are in national handling for wage and health care agreements. Carriers in national handling include BNSF, CSX, Kansas City Southern, Norfolk Southern, Soo Line, Union Pacific and many smaller railroads. The carriers are represented by the National Carriers Conference Committee.)
If a national agreement between the BLET, the BMWE, the ATDA and the carriers is not reached by Dec. 6, the Railway Labor Act has run its course and the parties not yet in accord will be free to engage in self-help – a strike by labor or lockout by railroads.
House Speaker John Boehner (R-Ohio), House Majority Leader Eric Cantor (R-Va.) and House Majority Whip Kevin McCarthy (R-Calif.) said if tentative agreements involving the BLET, the BMWE and the ATDA are not reached by Dec. 6, they would act to prevent a work stoppage.
Typically, Congress intervenes with a back-to-work order almost immediately following a work stoppage, but there is nothing to prevent Congress from acting in advance to head off a strike by, for example, legislating the PEB recommendations or even its own settlement terms.
The three senior House Republicans told The Hill newspaper Nov. 29, “We are following with concern the situation involving our nation’s railways, and we are troubled by the possibility of a national railway strike that would jeopardize American jobs and cost our nation’s economy an estimated $2 billion per day.
“While our hope is that the parties involved will find common ground and resolve the situation without congressional involvement, the House is prepared to take legislative action in the days ahead to avert a job-destroying shutdown of our nation’s railroads, in the event such legislation proves necessary,” Boehner, Cantor and McCarthy said.
“A shutdown of our nation’s railways, which would harm our economy and endanger many American jobs, is unacceptable,” they said. “We are confident President Obama and the leaders of the Senate agree.”
The National Carriers Conference Committee earlier agreed to extend the cooling off period until at least February if all three of the remaining unions that have not yet settled agreed to the extension. The BLET declined Nov. 29 to agree to an extension of the cooling off period.
The nation’s largest shipper organization, the National Industrial Transportation League, as well as the Retail Federation of America and numerous other shippers have made pleas to Congress to head off a railroad work stoppage.
“For retailers, a strike during the busy holiday shopping season could be devastating,” the National Retail Federation said in a letter to Congress. “It is imperative that Congress recognize the severe economic harm threatened by the failure to reach agreement with the remaining rail unions and move quickly to prevent a rail strike that would prove devastating to both businesses and consumers.”
The UTU International is receiving questions from members regarding recommendations of Presidential Emergency Board 243, which was created under provisions of the Railway Labor Act after talks between other rail unions and the National Carriers’ Conference Committee (NCCC) broke down.
In the wake of that PEB 243’s recommendations, the Brotherhood Railroad Signalmen, the International Brotherhood of Electrical Workers, the International Association of Boilermakers & Blacksmiths,the International Association of Machinists, the National Conference of Firemen & Oilers, the Sheet Metal Workers International Association, and the Transportation Communications Union, including its Carmen Division have reached a tentative agreement with the NCCC, which are said to “mirror exactly” the PEB’s recommendations.
The other rail unions have resumed negotiations with the NCCC to consider the PEB recommendations, as required by the Railway Labor Act.
References to the UTU’s ratified agreement are extensive in the PEB recommendations. Out of respect to the other organizations, an analysis of those findings will be provided our membership after the other organizations complete the negotiation process.
The UTU’s ratified national rail contract – locking in for six years a $200 monthly health care insurance premium — is looking even more attractive following a Kaiser Family Foundation study showing health care costs and health care premiums are rocketing into space.
Nationally, the average monthly premium for family health care insurance through an employer reached $1,256 in 2011, according to the study– and even higher monthly premiums are forecast in the years ahead.
Although employers generally pay a significant portion of those premiums, the employee share for private sector and federal workers is anywhere from almost double to more than double what is paid by rail workers under the recently ratified UTU national rail contract.
It is expected that most private-sector and government employees will be paying considerably more in health care insurance premiums in the years ahead, while those covered by the UTU national rail contract pay not a penny more for coverage through mid-2016. Moreover, the UTU national rail contract includes improvements in a health care plan already considered one of the most comprehensive in America.
The Kaiser Family Foundation study found that health care insurance premiums have doubled over the past 10 years, outstripping, for most Americans, the growth in wages.
A new national rail contract, delivering a 17 percent wage increase over 60 months (18.24 percent when compounded), a 78-month cap on health care insurance contributions, plus improvements in health care benefits, has been ratified by solid margins by UTU members in each of the six crafts eligible to vote.
The new contract also provides certification pay, a faster process for new hires to reach full pay rates, provides for no work-rules givebacks and has no prior cost-of-living adjustment offsets.
Health care plan design changes deliver expanded and improved health care benefits, such as personalized medicine and access to centers of excellence. Personalized medicine assures access to the most up-to-date health care products available, while centers of excellence provide access for members and their families to the most advanced treatment centers in America when serious illness strikes.
Retroactive to Jan. 1, 2010, the ratified contract covers some 38,000 UTU members employed by BNSF, CSX, Kansas City Southern, Norfolk Southern, Soo Line, Union Pacific and numerous smaller carriers – all represented in national handling by the rail industry’s National Carriers’ Conference Committee.
Lump-sum payments of the retroactive portion of the wage increases will be paid by the carriers – 2.0 percent covering the period July 1, 2010, through June 30, 2011, and an additional 2.5 percent from July 1, 2011. (See table, below, for each of the wage hikes under the ratified contract.)
“The 17 percent wage increase over the life of this agreement is significantly higher than the rate of price inflation – providing a greater boost in purchasing power than any other national contract in the past 40 years,” said UTU International President Mike Futhey, who led the UTU negotiating team.
“The $200 monthly cap on health care insurance contributions, through July 1, 2016, is less than half what federal workers currently are paying, and is more than $140 less than the average currently paid by private-sector workers,” Futhey said. “With health care costs continuing to rise, this cap will be even more extraordinary in each successive year of this contract.”
Overall, the contract was ratified by a 60 percent to 40 percent margin. The craft-autonomy provisions of the UTU Constitution require that each craft ratify the agreement – and each of the six crafts did so by solid margins (see the table, below, for results by each craft).
Telephone voting – following town hall meetings across the country to discuss the contract — took place over a 21-day period beginning Aug. 12, with each voting-eligible member mailed a package of materials explaining the agreement. The UTU News and UTU website also provided extensive explanatory materials, with the website offering an opportunity for members to request answers to specific questions.
Votes were tabulated by BallotPoint Election Services, an employee-owned and union-represented firm. Members voted in the craft in which they worked the day prior to the mailing of ballots.
In addition to UTU lead negotiator President Futhey, UTU officers on the negotiating team included Assistant President Arty Martin; National Legislative Director James Stem; UTU International Vice Presidents Robert Kerley and Delbert Strunk; and General Chairpersons John Lesniewski (CSX, GO 049), Pate King (NS, GO 680) and Doyle Turner (CSX, GO 347).
Agreement Wage Hikes
July 1, 2010
July 1, 2011
July 1, 2012
July 1, 2013
July 1, 2014
Jan. 1, 2015
Ratification Vote by Craft
Following is how each UTU craft voted in ratifying the national agreement with most major railroads. The votes were certified by BallotPoint.
The deadline for voting on the National Rail Contract is 4 p.m., Eastern time, Friday, Sept. 2. Votes may be cast by telephone around the clock.
Voting packages, with information on the tentative agreement and voting instructions, including a telephone access code, were mailed Aug. 12 to members eligible to vote.
Members eligible to vote are those employed by railroads represented by the National Carriers Conference Committee – BNSF, CSX, Kansas City Southern, Norfolk Southern, Soo Line, Union Pacific and many smaller railroads.
Members who believe they are eligible to vote but have not received the voting package should immediately contact the UTU International.
Call (216) 228-9400 and ask to speak with Karen Cashin (extension 3012) or Cara McGinty (extension 3014). They will verify your identity, dues status and voting eligibility and provide a telephone access code so you may vote prior to the voting deadline.
Voting is by craft under the craft-autonomy provisions of the UTU Constitution. Crafts voting are brakeman, conductor, engineer, fireman, yardman and yardmaster. Members vote in the craft in which they worked the day prior to the mailing of ballots. Results will be based on valid ballots cast.
Votes will be tabulated by BallotPoint, which will report the results to the International. Results will be posted at www.utu.org/ when received by BallotPoint, which is expected the evening of Sept. 2.
To stay current on news relating to the National Rail Contract, visit www.utu.org/ and click on the “National Rail Contract” link at the bottom right corner of the home page.
Vivian Porretto, spouse of UTU member John Porretto (Local 597, Des Planes, Ill.), sent the following unsolicited comment to the International after reviewing with her husband the voting materials on the National Rail Contract, and making comparisons with other private- and public-sector workers whose paychecks are being frozen or reduced and whose health care insurance contributions and co-insurance are being increased significantly:
Wrote Vivian Porretto:
“To read the UTU website and thinking how people are questioning the health care package in this contract was just it for me.
“This is an amazing contract and everyone should be thanking you guys for working so hard to get it.
“To be able to pay only $200 a month for some of the best health care money can buy for years to come — that is unheard of. My son pays over $4,000 a year for family coverage for an HMO!
“Anyone who doesn’t think this contract is a great deal should ask a teacher in Wisconsin what happens when collective bargaining is prohibited and insurance contributions are increased.
The International has received questions regarding the health care provisions contained in the National Rail Contract.
The health care insurance plan provided by the National Rail Contract already provides one of the best benefits packages available – and the new contract provides enhancements in addition to the deductible and co-insurance changes.
Some members have focused on what they consider to be the “cons” of the new provisions. No collectively bargained contract delivers everything each side would like. In fact, the “pros” regarding health care in the National Rail Contract vastly outnumber and outweigh the “cons.”
* Employee health care contribution frozen at $200 per month through July 1, 2016.
* Reduction in co-pay for use of urgent care centers to $20.
* Reduction in co-pay for use of convenient care clinics to $10.
* Enhanced benefit for using “Centers of Excellence” for certain procedures.
* Annual deductible and co-insurance based on insurance company allowed charges and not the actual charges submitted by the in-network physician or hospital.
* 100 percent benefits on satisfying the annual out-of-pocket maximum.
* Radiology management procedures to be implemented to reduce redundant or unnecessary tests adding to health care costs with no penalty to the member if the required authorization is not obtained by the physician.
* Reduction in the cost of generic medication to $5 at both retail and mail service.
* Personalized Medicine to be established allowing for the proper medication at the proper dose the first time for specified illnesses.
* Pharmacist contact with physician to assure you are receiving proper medication at the most affordable price to you and the plan.
* You and your physician will have the final decision on medications.
* Establishment of annual deductibles and co-insurance for in-network services.
*Increase in the co-pay for brand name medications.
* Emergency room co-pay increased to $75.
To further assist in understanding the health care provisions in the National Rail Contract, here is a response to some of the myths raised:
MYTH: I will now have to pay $50 for cotton balls in the hospital under this proposal.
FACT: The annual deductible and 5 percent co-insurance you pay is on the allowed charges that the insurance company has negotiated with your provider. For example, the doctor charges $200 for a procedure and the allowed charge by the insurance company is $65. You would only pay $65 toward the annual deductible. If the annual deductible has already been satisfied, you pay only $3.25 as the 5 percent co-insurance up to a maximum of $1,000.
MYTH: Medco will dictate what drugs I will receive regardless of what my doctor prescribes.
FACT: Medco pharmacists will contact your doctor to discuss the medication prescribed and suggest alternative medications that can save you money without jeopardizing your health. The final decision on medications is made by you and your physician.
MYTH: Railroads are showing record profits and now is the time to get higher general wage increases and not give up anything in return. We must stand firm and fight. This is a bad deal.
FACT: The nation is facing the worst economic downturn since the Great Depression. Legislators at all levels of government are imposing wage and benefit concessions on union and non-union employees and passing laws that eliminate collective bargaining rights. The situation in this round of bargaining is nearly identical to that in 1996 when Arbitration Board No. 559 settled the UTU National Agreement. That arbitration panel ruled that the total economic picture is controlling, not just the railroads’ current economic situation at the time. (This decision is reprinted, below, in its entirety.)
The National Rail Contract provides a compounded general wage increase of 18.24 percent – and more than 20 percent when factoring in the certification pay. THIS IS A GOOD DEAL!
Arbitration Board No. 559 Decision from 1996:
BEFORE THE ARBITRATION BOARD Constituted Pursuant to a National Mediation Board Arbitration Agreement Made and Entered Into On April 16, 1996 By and Between CERTAIN CARRIERS REPRESENTED BY THE NATIONAL CARRIERS’ CONFERENCE COMMITTEE Arbitration Board and No. 559 CERTAIN OF THEIR EMPLOYEES National Mediation REPRESENTED BY THE UNITED Board TRANSPORTATION UNION (National Mediation Board Case Nos. A—12709, A—12710, A—1271l, A—12712 and A—12713) AWARD Oklahoma City, Oklahoma
May 8, 1996
This award is made in conformance with the Railway Labor Act pursuant to a voluntary arbitration agreement executed by certain carriers represented by the National Carriers’ Conference Committee (Carriers) and the employees of these Carriers represented by the United Transportation Union (UTU). That Agreement was executed on April 16, 1996, under the auspices of the Chairwoman of the National Mediation Board. A copy of the Arbitration Agreement is attached as Appendix “A.”
John B. Criswell, Robert 0. Harris, and Preston J. Moore were duly selected as members of the arbitration board. John Criswell was appointed to serve as Chairman of this Board. Such designa- tions and appointment were made in accordance with the Railway Labor Act and the terms of the parties’ Arbitration Agreement.
The UTU represents approximately 40,000 conductors, brakemen, switchmen, engine service personnel and yardmasters, or about 27% of the total number of employees represented in this round of national bargaining involving the Nation’s freight railroads.
The railroad companies in this dispute are represented by the National Carriers’ Conference Committee.
On November 1, 1994, the NCCC, in accordance with Section 6 of the Railway Labor Act, served notice on the UTU of their demands for changes in the collective bargaining agreements. The UTU responded with their notices beginning in mid-November, 1994, and continuing thereafter for some time.
The first formal meetings occurred on December 14—15, 1994. After several months of negotiations, both parties applied to the NNB for its mediatory services, the tJTU on March 3, 1995, and the Carriers on March 10, 1995. The applications were docketed as NNB Case Nos. A—12709, A—l2710, A—12711, A—12712, and A—12713.
Staff mediator Samuel J. Cognata was initially assigned to mediate this dispute. NNB Chairwoman Magdalena Jacobsen ultimately joined the mediation efforts. They met with the parties on numerous occasions throughout the following year. On December 1, 1995, after a great deal of hard and intensive negotiations, the Carriers and the UTtJ reached an agreement (December 1995 Agree- ment).
The December 1995 Agreement was placed before the appropriate UTU constituencies for approval. The Agreement was approved by a practically unanimous vote of the General Chairmen. However, when submitted to the membership, the agreement was rejected.
In view of the fact that both parties use the December 1995 Agreement as their departure point, albeit in different directions, a brief description of that agreement seems appropri- ate.
The term of the December 1995 Agreement covers the 5 year period beginning January 1, 1995 and ending December 31, 1999. Wage adjustments and a guaranteed COLPJ generate a minimum increase of 14.3% over that period. All the wage adjustments were applica- ble to overmiles, unlike the past two national agreements. A continuing COLA at the end of the agreement, similar to the last round, also was included. The pact provides for periodic health and welfare offsets similar to the previous round’s agreement except that the amount offset is cumulative from year to year, as opposed to the one shot annual offset in the last agreement.
Insofar as fringe benefits are concerned, the December 1995 Agreement essentially called for no change in the national health benefits plan, deferred improvements in the national dental plan and established, in 1999, a national vision plan. While benefits under the health plan were not changed, eligibility for benefits was tightened. Similarly, vacation eligibility service requirements were raised. Several vacation plan improvements were agreed to as well.
As to rules changes, UTU obtained certain flowback rights for engine service personnel, enhanced employment opportunities in certain line sale transactions, greater work opportunities for employees on terminal companies, a seniority accumulation require- ment, and an opportunity tied to promotion to expedite the rate progression timetable. In addition to a comprehensive moratorium, as provided in the previous round, the Carriers obtained a displacement rule change that accelerated certain employee mark up obligations upon returning to work, and an enhanced customer service rule that offered the promise of tailoring rail service to specific customer needs. Finally, the parties agreed to establish a Wage and Rules Panel 2000 which would study and make recommenda- tions concerning various pay and work rules.
On April 15, 1996, the NNB, in accordance with Section 5, First, of the Railway Labor Act, offered the parties the opportuni- ty to submit their dispute to arbitration. The UTU accepted the NNB’s proffer of arbitration on April 15, 1996, and the Carriers accepted it later on the same date. On April 16, 1996, the parties executed an Arbitration Agreement pursuant to which this Board was created.
The Board commenced hearings on April 30, 1996. The hearings continued on May 1 and 2, 1996. The hearings were held in Washington, D.C. The parties were given full opportunity to present positions, oral testimony, and documentary evidence. The transcript of the proceeding consists of 241 pages. The tJTU submitted statements of position on the issues that included four volumes of supporting exhibits and two addendums. The Carriers submitted 18 exhibits. The parties’ collective submissions to this Board amounted to some six feet of paper.
After a full consideration of the evidence and arguments of the parties and upon the entire record, the Arbitration Board makes the following findings and Award.
DISCUSSION AND FINDINGS OF THE BOARD
The Board approaches its task mindful of the extraordi- nary set of circumstances that makes its determinations so critically important. Every round of bargaining in the rail industry and every dispute that comprises a round affects the vital interests of many groups. Here, however, in addition to the traditional considerations, there are other important factors.
As we look to the immediate past, we are reminded that rail labor and management are recovering from a round of substantial acrimony that required Congressional imposition of settlements for most of the rail unions, including the tJTU. As we look ahead, we recognize that there is no formal agreement yet in place with respect to this round of national bargaining (although one agreement is currently out for ratification). And, finally, as we focus on this particu- lar dispute, we observe an unprecedented set of negotiations: informal as well as formal talks, leadership changes, and not the least, two rejected agreements.
Thus, the impact of this Award and its obvious effect on those that are formally parties to the proceedings, and those that are not, require the exercise of the greatest of care in fashioning our conclusions. We begin by assessing the positions advanced by the parties.
A. The UTU Position
The UTU has reviewed the bargaining history and the ratification results, and concluded that what is needed is more in the way of money and less in the way of rules relief. Rather than 14.3% (compounded) in general wage increases and 7.5% in lump sums as called for in the December 1995 Agreement, the UTU now says that the agreement is the “springboard” and the employees it represents should receive 21% (non—compounded) over three years in general wage increases. As to rules, the reverse psychology applies.
While the December 1995 Agreement provided relief with respect to displacement, customer service adjustments, and eligibility requirements for vacation, dental, and health and welfare benefits, the tJTU proposes that all those items be dropped, including the commitment to establish a National Panel to consider comprehensive restructuring of the entire pay and rule system.
The justification for these revisions is twofold, (1) that is what it will take to satisfy the needs of the members, and (2) the Carriers’ record profits permit greater sharing with UTU employees.
The organization might be right as to what its members want. Whether it is right to give them that is another question. We believe it is not enough to simply claim “more” and be rewarded with more. Good faith bargaining is put at risk by rewarding employees with greater gains for simply saying “no.” The automatic rejection of agreements reached by experienced and elected organization representatives without further justification is a destructive practice that cannot be tolerated. We may disagree with the Carriers’ remedy in these circumstances, but we do agree with the Carriers that a rejection of an agreement without any persuasive explanation is unacceptable.
The organization responds by saying that the justifica- tion for greater increase lies in the record profits reaped by the industry over the last several years, especially last year. The organization’s witness analyzes the financial reports and the economic data and advises that the fortunes of the industry have never been better: net income is at a record high; earnings are up all over; operating ratios continue to fall; earnings per share are escalating; return on investment could not be better; etc.
On the other hand, the Carriers presented an imposing array of figures as well, all warning that whatever financial gains have occurred, and they have occurred, they have been modest at best. They point out that even with the so—called “success,” the industry lags behind levels of profitability routinely found elsewhere. Furthermore, competition from trucks and other modes continues to exert incredible pressure on prices, capital demands soar unrelentingly, etc.
We think that before jumping into this thicket, we are better off to step back and ask ourselves, what will the exercise gain us? We do not think that “bigness” alone or profits by themselves are persuasive reasons for recommending wage increases. If that were so, the biggest company in the country should have the highest wage rates for its employees. But that is not the case, and it is not the case because it makes no sense.
That is not to say that where employees’ wages are suppressed for a period of time, due in part to poor financial returns, a union cannot argue for wage hikes when financial good health returns. But, insofar as the rail industry is concerned, there is no such argument available. The facts are to the contrary. Rail employees enjoy a significant advantage over employees in other industries. That conclusion stands whether one analyzes wage trends, wage levels, or total compensation, compares competitors such as truck, other transportation modes, or industry generally. The figures are in the record, and they are unassail- able. As to employees represented by the UTU, as opposed to railroad represented employees generally, the conclusions are identical. The only difference is that the differences are greater.
Thus, in our view, the union’s claim that current profit levels justify greater wage increases does not fly.
B. The Carriers’ Position
Unsurprisingly, the Carriers’ analysis of the post ratification tea leaves is just the opposite. Simply said, the Carriers urge more work rules relief and less money. The support- ing arguments, broadly stated, are that the rejection of the December 1995 Agreement and the organization’s subsequent actions demand no less than a merits analysis of all issues. Compromise and delay via referral to a Wage and Rules Panel are no longer tolerable. And as to the merits, the Carriers are entitled to significant relief on a large number of pay and work rules and entitled to that relief immediately. Insofar as wages are concerned, the union should accept less than the December 1995 Agreement for a number of reasons, not the least of which is that delayed implementation of the Carriers’ quid — rules relief, justifies diminishment of the union’s quo — the wage increases. To do otherwise, argue the Carriers, is to reward the organization and its membership for failing to live up to its responsibilities. The Carriers argue that this practice must be stopped, that the membership be taught a lesson, and the only way to have the message understood is to hit them where it hurts —— in the pocketbook.
The Carriers’ message has some appeal. After all, history is filled with Commission Reports that analyzed pay and work rules and recommended substantial change. Yet, the results often were to toss the analysis into the trash bin or to make only the most modest adjustments. Similarly, the Carriers’ concern with deterioration of the process is a real one and as we commented earlier, one that must be addressed. However, as we spell out in more detail later, our difficulty with the Carriers’ recommenda- tions is that they are not warranted in these circumstances. That is harmful in itself. It is even worse at this point with a BLE agreement out for ratification. And prospects for other agreements would be undermined as well.
C. The Board’s Award
Having rejected the positions advanced by the parties, we come to where our instincts have told us all along we should be. That is, to endorse in substance the parties’ December 1995 Agreement. We do so for a number of reasons.
We first look at the agreement itself and ask ourselves whether it is a fair and reasonable settlement. Both on an overall basis and as to important key provisions. We think this test is met in every respect. It is fair and reasonable. it provides satisfactory wage increases, a mixture of general wage increases and lump sums, that will exceed that received by most American workers and satisfies legitimate expectations. it follows as well a generous last year increase in the 1991 Implementing Agreement of a 4% July 1, 1994 general wage increase and a 2% January 1, 1995 lump sum adjustment. It also addresses certain key needs identi- fied by the union, such as flow back rights, greater work opportu- nities for employees confined to rosters of terminal companies, and an accelerated entry rate schedule.
For the Carriers, wages are generous but not excessive. Rules relief is provided in an immediate sense by revisions in the displacement obligations imposed on employees returning to work and the modest increases in eligibility requirements for the health and dental plans, as well as vacation benefits.
Employees gain as well through maintenance of a generous health benefits program with the most modest of employee cost sharing arrangements. A new vision plan as well as an expanded dental program provide a generous benefits package.
In the long run, further improvements may come from the Wage and Rules Panel. The parties had committed themselves to a serious and comprehensive analysis of pay and work rules, and we are persuaded to take them at their word.
Having concluded that the agreement is fair and reason- able insofar as the parties are concerned, but recognizing the precedent the agreement carries with respect to the remaining rail negotiations, we must ask ourselves whether the agreement is fair and reasonable in that context. We think so. We have looked at the agreement in terms of how it compares with respect to industry generally, not just with UTU employees. The answer is the same. It does compare favorably.
In fact, there is no other answer. In light of the BLE ratification effort, we find that to recommend more or less would be destabilizing at best and potentially destructive to this entire round of bargaining. In addition, portions of this agreement developed in discussions with other operating and non—operating groups and found their way into the December 1995 Agreement. In short, we find the agreement reached by the parties to be fair and reasonable in all respects. Given that, we must respect what the parties have done and endorse the December 1995 Agreement. Nothing has changed since the agreement was made except for the non- ratification. There is no warrant for less favorable treatment of employees because of their vote. It is enough to adopt the same terms their leaders found acceptable.
Secondly, there are precedents within this industry, including this organization. We cite several as examples of the many. Only a decade ago the UTU rejected in its ratification process a tentative national rail agreement. At that time, the fireman—manning issue was identified as the offending provision. The dispute was submitted to an Emergency Board, as opposed to an Arbitration Board. The Emergency Board reaffirmed the parties’ tentative agreement with little in the way of change.
An even more recent industry precedent is Arbitration Board Award No. 458. That Board endorsed a tentative agreement reached in national negotiations between the Brotherhood of Locomotive Engineers and the NCCC. There, after reviewing all the arguments the BLE advanced as to why the rejected agreement should be substantially revised, the Board was not persuaded to stray from the parties own efforts. In summarizing, it said:
“In short, the realities that confront this Board permit no other conclusion.” (Arbitra- tion Board No. 458, Award, p.8)
Although that answer applies here as well, the Board does not stop its analysis here. Rather, the Board also grounds its opinion on some very important considerations it believes are vital if collective bargaining in this industry is to prosper. As contrasted to our other reasons, it is more ephemeral but no less important.
It originates in the observations we noted as to the efforts both parties have made to overcome the bitterness of the last round and to restore vigor to the collective bargaining process. It can truly be said that this round began not with the service of formal notices in November, 1994, but more than a year before that date when informal talks first began.
This effort not only survived leadership changes but was nourished by them. The new UTU team brought with it a determina- tion to depart from the easy but unproductive ways so often taken in the past of letting others resolve the issues and take the blame. The agreement of the parties contains numerous examples of subjects being addressed and solutions fashioned. It contains as well a new—found commitment to continue this effort through the Wage and Rules Panel.
We marvel at the remarkable turnaround this revitaliza— tion has had already on the policy making body of the UTU -— its General Chairmen. We contrast their response to the 1994 Denver Agreement with the 1995 December Agreement. A change of that magnitude -— from almost complete opposition to practically unanimous support —- is not in our view solely attributable to the extra dollars or other adjustments. It signifies something far more fundamental.
We accept the fact that there are those who would point to the membership rejection and the Carriers’ clamor for immediate and comprehensive rules relief as more accurate predictors of future behavior. That may be the case. There have to be serious concerns when the industry significantly improves its profitability and the union membership rejects a contract that both provides wage increases above the national norm and preserves their work rules. And concerns as to inequities are bound to rise when executive compensation soars, profits multiply, but employment levels plummet and legitimate needs of workers are ignored.
While that case can be made, we do not believe it will happen here. We do not share the view that this is a permanent fork in the road leading to labor disarray. We think that the rank and file is capable of understanding the leadership’s determination to solve the problems of the workplace, not leave it to others. We do not dismiss lightly our concerns with membership rejection generally. Those concerns become acute here in view of the UTU leadership’s success in the negotiations and preparations for ratification.
We are confident that both parties are determined to address their problems and reach solutions on their own. The tentative agreement is an example of that. We believe the parties’ creation needs nurturing, not second guessing. We cite with approval comments of some distinguished colleagues in a recent airline interest arbitration case. In responding to a position advanced by one party, the Board stated:
“Interest arbitration, bound as it is to existing norms, is an inherently conservative process. Rarely will a party be able to convince an interest arbitrator to make major ‘innovative’ changes in the status quo, re- gardless of their merit.” (American Airlines and APFA, Interest Arbitration Award, October 10, 1995, pp. 54—55)
This Board, too, believes that these issues should be negotiated by the parties. And, here, that is the case. The parties worked hard and successfully. They forged an agreement. They had the courage to make the lead settlement. They reached an agreement expeditiously, some three months after the current UTU leadership took office. And they had the determination to make an agreement without government intervention. They are entitled to their successes.
1. The request of the Carriers dated November 1, 1994, a copy of which is affixed to the Arbitration Agreement as Exhibit B and all other proposals advanced during mediation or before this Board, are denied in their entirety except as otherwise provided in paragraph 3.
2. The request of the United Transportation Union dated on or after November 16, 1994, a representative copy of which is affixed to the Arbitration Agreement as Exhibit C, and all other proposals advanced during mediation or before this Board, are denied in their entirety except as otherwise provided in paragraph 3.
3. The tentative 1995 agreement, understandings, and attached letters, with certain modifications that are due to the passage of time and the issuance of this decision, are confirmed as our Award. A copy of such agreement and such letters that include these changes is affixed hereto as Appendix D and shall constitute in its entirety this Board’s Award. This Board hereby finds that its Award constitutes a full and complete response to the specific questions submitted to it.
4. The Award shall become effective on the date issued and shall remain in effect in accordance with its terms until changed pursuant to the provisions of the Railway Labor Act.
5. The Award shall be final and conclusive upon the parties to the Arbitration Agreement as to the facts determined by the Award and as to the merits of the controversy decided. The Award shall be applied in the same manner as if reached through agreement and signed in the parties’ customary manner.
Issued at a meeting of the Arbitration Board on May 8, 1996.