6-24-05, 9:20am
Total compensation for private industry union workers in March 2005 averaged $33.17 per hour, or 30.4 percent higher than the average of $23.09 per hour for nonunion workers, according to new data from the Bureau of Labor Statistics. The 30.4 percent differential for 2005 is significantly higher than the 26.3 percent differential for 2000 and the 27.5 percent differential for 1995.
Since the 2001 recession, wages and benefits for nonunion workers have been pushed down, while wages and benefits for union workers have remained more consistent and rising costs for health care have pushed up the benefits portion of hourly costs of union workers.
Wages for union workers averaged $20.76 per hour in March 2005, compared with $16.72 for nonunion workers.
The difference in benefits, however, is far more significant. Total benefit costs for nonunion workers are $6.38 per hour, compared with $12.41 per hour for union workers — almost double the nonunion rate. When legally required benefits are excluded, union benefits are worth $9.46 per hour, more than double the $4.38 per hour value of nonunion benefits.
Benefits now represent 37.4 percent of total compensation for union workers — the highest portion ever recorded, compared with 27.6 percent for nonunion employees.
Health benefits for union workers now cost an average of $3.41 per hour, more than double the $1.42 per hour cost for nonunion workers. The $3.41 hourly cost is up from $2.17 in 2000.
Health care benefits represent 10.3 percent of total compensation for union workers — again, the highest share ever recorded. With real union wages remaining roughly flat while health care costs continue to soar, benefits in general and health benefits in particular represent an ever-larger part of total compensation.
In comparison, health care benefits represent 6.2 percent of total compensation for nonunion workers, up from 5.0 percent in 2000.
The difference in costs for retirement benefits accounts for 28 percent. Employers pay union workers $2.39 per hour in retirement benefits while nonunion workers receive only $0.72.
Paid time off benefits are also substantially greater for union workers, who receive paid leave worth $2.25 per hour, compared with $1.46 for nonunion workers. This difference in benefits accounts for 13.1 percent of the difference in benefit costs between union and nonunion workers.
Union workers also receive higher supplemental pay, which includes overtime and premium rates, shift differentials and nonproduction bonuses. Union workers receive an average of $1.09 per hour for these benefits, compared with $0.63 per hour for nonunion workers.
Because the cost of most legally required benefits such as Social Security is based on wages, legally required benefits for union workers average $2.95 per hour, compared with $2.00 per hour for nonunion workers. This cost difference accounts for 16 percent of the total benefit cost difference for union and nonunion workers.
Health care benefits for union members have always been far superior to those of nonunion workers and far more costly. The difference in costs is now so large that employers have become far more aggressive in their efforts to pull union health benefits down to nonunion levels.
Health care cost increases moderated this year, with most employers reporting increases averaging 10 percent, down from the 12 percent to 16 percent increases of recent years. However, the continuation of double-digit cost increases means that employers will continue to push for substantial reductions in health care benefits for both union and nonunion workers.
The rising portion of health care benefit costs in total compensation does not represent better care or a higher standard of living for workers, however. Instead, it only means more money for the insurance, health care and pharmaceutical companies.
Health benefit costs are holding down hiring in the U.S., with domestic employers unwilling to create any significant number of new permanent positions and foreign employers reticent to invest in the U.S. given the high cost of health care benefits. A recent survey of 100 top-level foreign executives with major U.S. subsidiaries found that foreign companies no longer rate the U.S. as their prime investment choice, according to the Organization for International Investment. The top-ranking reason they gave was health care costs.
With health care benefits for union workers negotiated as part of the total compensation package, a cut in health care benefits with no equivalent increase in wages or other tangible benefits is tantamount to a wage cut. Labor Research Association
© 2005 Labor Research Association
