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Longview Fibre Co. wants employees to pay more for health care benefits
Sunday, August 6, 2006 1:37 AM PDT
By Evan Caldwell
Printable version
E-mail this articleOn Monday, more than 1,200 Longview Fibre Co. pulp and paper workers will vote again on a labor contract that asks them to make major concessions.
The company is asking them to pay hundreds, if not thousands of dollars more annually to cover the cost of health care for themselves and their families.
Though the latest proposal is a little sweeter than an earlier one the union soundly rejected last month, it reflects a growing reality in the labor-management relations in America: faced with increasing competition from abroad, U.S. companies are asking workers to share a rising share of the burden of soaring health care costs.
Nationwide, health care spending was $1.9 trillion in 2004 and is forecast to reach $4 trillion by 2015, according to the National Coalition on Health Care, a Washington, D.C.-based organization working to improve health care.
Workers will eat more of the rising cost for health care, said David Groves, spokesman for the Washington State Labor Council/AFL-CIO, which represents unions in Olympia. It is not directly involved in the Fibre talks.
"Most employers are proposing dramatic health care cost increases," Groves said. "It's tough. You understand the motivation. (Companies) have increased costs and want to stay competitive in this new, global market. We want to work with them to identify incentives to cut health expenses for the company without the huge premium increases."
Under the contract up for a vote Monday, Fibre workers reportedly would pay up to 25 percent of the cost of their health insurance coverage, up from 10 percent currently. There would be a $100 per month cap for single workers; $200 cap for two people; and a $250 cap for a family of three or more. The cap now is $50.
Groves fears that big concessions from the Fibre union could set the tone for other local labor contracts. The more workers pay for health care costs, the more money gets sucked out of a community to pay insurers, he said.
"Any big increase in health care costs sets the bar for many other employers who are competing for workers there," Groves said. "That triggers a race to the bottom."
"The less money (workers) have, the less money the community has," said Greg Pallesen, vice president of the Association of Western Pulp and Paper Workers in Portland. "They are taking the money in health care plans and spending it elsewhere. We can't keep taking money out of our communities and expect to survive."
Pallesen said he could not discuss specifics of contract talks between Fibre and AWPPW local 153. He acknowledged, however, that health care has taken the spotlight.
"A number of (area pulp and paper mills) have similar medical coverage to Fibre," Pallesen said. "The pulp and paper industries have had very similar plans over the years. ... And they are looking at these talks."
Local 153 officials declined to discuss contract talks with The Daily News.
Many employee benefit packages developed in the years following World War II, when health care costs were low and American business and industry led the world, said Lower Columbia College economics instructor Shon Kraley said.
"In the '50s and '60s, there wasn't global competition, we were the only ones left standing after World War II."
It's different now. Not only have health care costs risen far faster than inflation, the economies of developing nations such as India and China, with low labor costs and other competitive advantages, are pinching U.S. manufacturers.
"Some people have been somewhat isolated in this area, they haven't had to deal with global competition before," Kraley said.
"As health care is taking a bigger chunk, companies could eventually shut down because they cannot eventually compete," Kraley said. "This is a general economic premise -- if you are not cost-effective, you cannot compete."
Businesses need to change, he said. "The companies that realize that will be the ones that will still be here in 20 years."
Fibre has reported losses in its pulp and paper operations for much of the last decade. Whether its succumbs to a hostile takeover bid by two Portland investment firms, or it is sold or not, Fibre must become more profitable, and one way to do that is to cut benefits.
Nevertheless, Fibre workers' health benefits would compare favorably with those of other workers even with concessions proposed in the current contract.
About 90 percent of union workers in private industry had access to employer-sponsored medical care plans as of March 2005, according to the Bureau of Labor Statistics of the U.S. Department of Labor. Employee contributions to medical care premiums averaged $295 per month for family coverage and $69 for single coverage, the BLS reported.
The days in which employers pay the majority of health care costs are waning, said Chris Bryant, owner of Bryant Wealth Management in Longview.
"We need to realize that eventually you will be paying into a 50/50 split, maybe more," Bryant said, "If you have a good company, plan to start saving now. Because that is a trend that will not stop.
"I think, in the future, companies are not even going to pay for your health care and retirement," Bryant said.
Fights over health care benefits helped fuel the 2002 Boeing strike. The Seattle airline manufacturer had proposed to continue offering health care and pensions to current workers but severely decrease and even cut it for newcomers.
Nationwide, employers are seeking to hire new workers with weaker health care and pension plans, and union workers run into lack of sympathy from community members who think they earn higher-than-average wages, said Groves, of the state labor council.
"The reason we have it as good as we do now, is because of our union forefathers," Groves said. "Without unions, we wouldn't have weekends and eight-hour days. They were willing to withhold their labor for that. (Negotiations) are about the future generations."
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