ANALYSIS: Employers Expect Wage-Benefit Tradeoff With Unions in 2019

Most employers with union contracts expiring in 2019 expect their workers to have the upper hand in wage negotiations, according to Bloomberg Law’s annual Employer Bargaining Objectives survey. But when the issue of health care hits the bargaining table, most employers are confident that they, not labor, will be the ones gaining concessions.

Now in its 34^th year, the annual survey gauges unionized employers’ confidence levels, describes the terms of their current contracts, and identifies their ‘‘wish lists’’ and priorities as they prepare to renegotiate contracts with the labor unions that represent their employees.

Here are some key findings from the 2019 report, which summarizes the survey responses from 114 participating employers across a broad array of industries and regions.

Bargaining Confidence Remains High in 2019
Almost all responding employers said they were either “fairly confident” or “very confident” about achieving their bargaining goals this year. This is a consistent trend in the data collected in this survey: Employers are nearly always confident that they will achieve their objectives in overall bargaining.

What they actually walk away from the bargaining table with is another story, and varies by type of benefit.

Employers Seem Willing to Budge on Wages …
With the backdrop of a strong economy and tight labor market, the majority of employers (59%) are willing to make concessions on pay in 2019 labor negotiations.

What this means in terms of dollars and cents is that employers intend to be a bit more generous about raises this year compared with last year, continuing a nearly decade-long post-recession trend of gradually loosening the purse strings. About three-quarters of management representatives (74%) will propose first-year pay increases in the range of 2% to 3.9% That’s up from 64% in 2018, and the highest mark since 2002.

…But Health Care Is Another Story
On the surface, concessions on pay seem to put money in employees’ pockets. But if management gains concessions on health care, that money may come straight back out again, in the form of higher premiums, deductibles, or out-of-pocket maximums.

That appears to be what most survey respondents are counting upon. Only 20% of employers said they are willing to make concessions on health care and insurance benefits in the coming year. In contrast, 53% of organizations will seek to gain concessions from unions on these provisions.

For example, just over one-third (35%) of labor relations directors noted they intend to add or increase employee contributions to health care premiums. Only 4% said they will bargain to reduce or eliminate any cost-sharing payments that are currently in place, such as premium contributions, deductibles, or co-payments.

Pensions, 401(k)s Remain Top Retirement Plans
A slim majority (53%) of the surveyed employers’ expiring contracts provided for traditional defined benefit plans, closely followed by tax-deferred retirement savings plans, such as 401(k) plans (46%). While traditional pensions have edged 401(k) plans the past two years, they have been on a gradual decline over the past two decades. In fact, since 2007, tax-deferred savings plans have been the most popular retirement benefit in every year but three.

Few employers said that they plan to make changes to their retirement benefits. However, employers are more likely to seek to eliminate or reduce traditional pension benefits (12%) than they are to add or improve this type of retirement package (3%). Meanwhile, employers are heading in the opposite direction concerning 401(k) and other tax-deferred retirement savings plans: More are looking to add or improve such a plan (9%) than to eliminate or reduce it (2%).

Further Details and Added Analysis
Newly added to Bloomberg Law, the 2019 Employer Bargaining Objectives report contains detailed survey results and helpful benchmarking information on all of these provisions, as well as other forms of compensation and benefits, job security, worker replacement, and contract duration. The extensive 34-year track record of the study allows for evaluating today’s trends in relation to decades of historical data. And, as a new feature, the 2019 report includes side-by-side analyses comparing respondents’ objectives to data from actual union contracts.

With assistance from Survey Research Analyst Andrew Hellwege.