Wage offer involves more than meets the eye

Your boss offers $2.25 an hour more than you make now. It’s a no-brainer – right? You take it.

So why would some Building Trades unions turn down such an offer – then actually go on strike for more?

Because $2.25 an hour isn’t what it seems. That $2.25 has to cover not only wages, but all benefits. Only a small portion actually winds up as take-home pay.

Take Pipefitters Local 455, for instance. Members have been on strike for a month since they rejected a three-year contract that would provide annual increases of $2.26, $2.30 and $2.35 an hour.

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Business manager Jerry Barnes explained how $2.26 an hour might break down, using ballpark figures:

* 65 cents, reserve fund for retiree health care. By setting aside money now, the Pipefitters guarantee that members will have access to health insurance once they retire, Barnes said. The plan is structured so that retirees pay one-third of the monthly premium, the reserve fund covers one-third, and a similar employer fund covers one-third.

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‘Our actuary says we need to add $2.10 over the next three years,’ Barnes said. ‘Otherwise, health-care costs are going up so fast that the money going into the fund won’t be enough to cover it.’

* 40 cents, health insurance for active employees. ‘That’s to keep the guys who are working where we’re at,’ Barnes said.

* 25 cents, pension. Members have a defined-benefit plan, and must vote whether to allocate part of the general increase for their retirement.

* 15 cents, apprenticeship training. ‘The contractors are always saying they want the best apprenticeship program in the U.S.,’ Barnes said. ‘That’s how we pay for it.’

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* 10 cents, targeting. This job development fund helps union contractors compete against non-union bidders who may be undercutting wage-and-benefits standards.

* 71 cents, wages and taxes. ‘You add it up, everything else takes a pretty big chunk of the increase,’ Barnes said. ‘Then you take taxes out, and what do you wind up with? It doesn’t leave you much on the paycheck. It doesn’t leave you much for groceries.’

This article was written for The Union Advocate newspaper, the official publication of the St. Paul Trades and Labor Assembly. Used by permission. E-mail The Advocate at: advocate@mtn.org

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