The automobile industry, as already noted, instituted in 1961 a new survivor's option at lower cost to the retiree than the same option under most other plans. Under the new agreements, the cost to the retiree of electing a 50percent joint and survivor annuity with his spouse as joint annuitant-the only option offered by these plans-is one-eighth the amount of his basic pension if his spouse is 5 years younger instead of one-fifth.20 As illustrated in the following tabulation, the additional pension accruing to the retiree and to his widow is 8 percent greater than that provided in the example cited above. Joint and survivor benefit 1 Typical insured plan a 11 plans provided a guarantee of 120 months, and the remaining 2 plans permitted the worker a choice of 60 or 120 months. Since period-certain options guarantee benefits for limited periods, while joint and survivor options guarantee income for the combined life span of two people, the actuarial reduction for the former is the smaller.21 The difference in the reduction is, moreover, much greater for early than for normal retirees. The reductions for the joint and survivor option and the period-certain option in the following illustration show that the one-half payment joint and survivor option is over 3 times as costly as the 120-month periodcertain option at age 55; at age 65, it is only 1% times as costly. 22 Automobile plans Period-Certain Option. Only 25 of the 148 plans that provided optional annuities offered a periodcertain option. Since all period-certain options had the same actuarial value as the life annuities they replaced, the longer the length of the guarantee period the greater the reduction of the annuity payable to the retiree. Twelve plans permitted the worker to elect a guarantee period of any length up to a specified limit (usually 120 months), While the automobile plans reduced the pensioner's benefit by 122 percent regardless of his age or sex if the joint annuitant is 5 years younger, the reduction in other plans depends on both his age and sex. The one-fifth reduction attributed in the text is based on the assumption in footnote 2 of the tabulation. "While the foregoing is generally true, very long period-certain options exceeding, say, 120 months are often more costly than joint and survivor options paying equal benefits to a survivor considerably older than the pensioner. "A joint and survivor option paying the same amount to the joint annultant as to the pensioner is over 6 times as costly as the period-certain option at age 55, and 3 times as costly at age 65. 1 Based on actuarial reductions made by a typical insured plan. Female contingent annuitant same age as pensioner. Because of the smaller-than-usual reduction of benefits in the new automobile plans, the cost of providing a 50-percent joint and survivor benefit to a spouse for workers retiring at 65, is 10 percent-about the same as the cost of the 120month period-certain option under the example cited. Designation of Beneficiary. Three out of four plans offering optional annuities allowed the retiree to name anyone with an insurable interest as a beneficiary. Moreover, allowing him to designate "anyone" as beneficiary makes the option meaningful to the unmarried retiree by permitting him to pass his pension on to his survivor(s). All of the remaining 37 plans contained specific limitations on the designation of a beneficiary; 22 of these plans, for example, restricted the choice to the pensioner's spouse. -HARRY L. LEVIN AND STANLEY S. SACKS The 18th Constitutional Convention of the United Automobile Workers JOB SECURITY, wage policy, and organizing the unorganized were the major issues confronting the 2,331 delegates to the 18th Constitutional Convention of the United Auto Workers at Atlantic City, May 4-10, 1962. Representing 873 locals of the Nation's third largest union, the delegates considered and adopted a variety of resolutions dealing with each of these problems. Aware of the widespread national interest in its position on wage policy, the union appeared to endorse the administration's announced guidelines. It was job security, however, and not the wage issue which seemed to be of paramount concern. Job Security Union membership figures are a telling indicator as to why the job security issue was so pervasive. Between 1960 and 1961, average dues-paying membership declined by 135,122, to 1,001,018, attributable, according to union spokesmen, to job losses because of automation. Since 1956, some 300,000 members have been lost by the UAW. The union proposed to attack this problem by means of three separate approaches, two of which-protection of jobs through collective bargaining and a variety of Government policies— have been the subject of discussion of previous conventions.1 The third approach, that of working on the international level to protect jobs at home, represents a new departure, bolstering the union's reputation for imaginative innovation. The international program evinced a high degree of economic sophistication, and its adoption demonstrated the ability of the UAW leadership to muster support for a program far removed from traditional bread-and-butter unionism. "We are working in the broad world," UAW President Walter P. Reuther told the delegates, "because we can't defend our living standards at home unless we work in the world outside." To implement these aims, the leadership asked-and the delegates authorized-placing the investment income of the UAW strike fund (which amounted to $1.6 million in 1961) in a special fund, "The UAW International Free World Labor Defense Fund," beginning January 1, 1962. From this money, the the Executive Board would make "thoughtfully placed contributions" to such organizations as the International Confederation of Free Trade Unions and the International Metalworkers' Federation, to "assist the worldwide effort of the free labor movement to establish for all workers minimum fair labor standards and to improve the health, education, and general welfare of workers everywhere." Speaking on behalf of this new undertaking, Victor Reuther, director of the union's International Affairs Department, told the delegates that "nothing would give you more job protection and security against cutthroat competition of low wages than if the workers of Europe or of Asia and Latin America managed to narrow the gap between what they now get and where we are." The union leadership went beyond economic self-interest as a justification for this resolution, declaring it to be an obligation of citizenship. Although there was some opposition among the delegates to the adoption of this program, based primarily on the use of strike fund monies for purposes other than originally intended, the resolution carried by a substantial majority. In a related action, the union once again called upon the Government to work for amendment of the General Agreement on Tariffs and Trade to include the principle of international fair labor standards. Another resolution pledged support for the proposed Trade Expansion Act (H.R. 9900), provided "adequate provision is made for the assistance of those who may suffer in consequence of its passage.' The following proposals dealing with job security were included in the union's 16-point collective bargaining resolution for possible inclusion in the 1964 collective bargaining program for the auto and agricultural equipment industries: The problem of creating job opportunity for those who are unemployed and the young people who are entering the labor force- reducing the workweek or workday The problems of the skilled trades workers-to obtain protection against outside contracting of work that can and should be done by workers within the bargaining unit . . . The problem of seniority-to improve and strengthen seniority provisions in order to bring greater equity into the distribution of available work when there is not enough for all... The problem of overtime-to prevent management from scheduling overtime for workers when fellow workers are unemployed... The Federal Government was called upon to play an increasingly active role in protecting workers' job security. Two of the more important resolutions centered on proposed amendments to the Fair Labor Standards Act. One called for amending the act to provide double time for overtime work (instead of time and one-half). "Raising the [overtime] premium to 100 percent would greatly increase the incentive to employers to put additional workers on the payroll rather than schedule overtime. . . .” The second reiterated a proposal for a flexible adjustment of the statutory standard workweek, originally adopted at the union's 1961 Special Collective Bargaining Convention. 2 Other resolutions called for a more flexible policy that would facilitate placing of defense contracts in distressed areas, the establishment of a national planning agency as a means of achieving full employment, and an amendment to the recently enacted Manpower Training and Development Act to finance relocation expenses. As for the troublesome issues posed by runaway plants, the union would relax the secondary boycott provision of the National Labor Relations Act so workers could refuse to work with materials produced under substandard conditions in such plants. In addition, the union asked for passage of legislation to prevent the location of plants in areas of labor shortage and amendments to tax laws to discourage plant closings. Public Law 87-415; for text of major provisions, see Monthly Labor Review, May 1962, pp. 532-534. See "Guides for Noninflationary Wage and Price Decisions," Monthly Labor Review, March 1962, pp. 286-287. Wage Policy In view of the recent contract settlements in basic steel and the forthcoming negotiations in the aerospace industry by the Auto Workers and the International Association of Machinists, widespread attention centered on the UAW's position on wage policy. In his first address before a labor group since he induced the major steel producers to rescind a price increase, President John F. Kennedy urged the union to show "restraint and responsibility," and reiterated the administration's wage guidelines:3 While individual adjustments may have to be made to fit the previous patterns in individual industries, in general, a wage policy which seeks its gains out of the fruits of technology instead of the pockets of the consumer is the one basic approach that can help every segment of the economy ... It is a simple, inescapable, economic truth that increases in productivity . . set the outer limits of our economic progress ... Immediately prior to the President's speech, Walter Reuther had issued a statement in which he appeared to express agreement with the President's position. "The UAW," he said, "reaffirms its historic policy of making progress with the community by seeking wage increases and improvements in fringe benefits out of the fruits of advancing technology and not through price increases." The two resolutions dealing directly with this subject, however, left room for speculation as to whether the UAW's wage policy was in fact entirely within the administration's guidelines. In the resolution "Collective Bargaining in the Aerospace Industry," the UAW called for what it termed "catchup" wage increases "to make up for the wage lag of recent years which has left [the workers] trailing behind those doing similar work in other basic industries." A second resolution dealing with national wage policy stated: the delegates . . . direct the attention of all those concerned with national economic policy to the imperative necessity for real wages to increase at a rate faster than the rate of productivity advance in order to bring demand into balance with productive capacity. The same resolution further affirmed the union's "determination to be guided by this necessity in future negotiations whenever it appears that total demand is or is likely to be inadequate to support full employment, full production, and healthy economic growth." This latter resolution was not adopted by the delegates; instead, in the closing moments of the convention, it was referred to the Executive Board, along with other unfinished business. Speaking to the press at the close of the convention, Mr. Reuther asserted that the union's wage policy was not in conflict with that of the administration. The UAW, he declared, was "100 percent for collective bargaining within a stable price structure," and there was enough "elbow room. . . in the general policy statement of the Council of Economic Advisers" so the union could operate "within the broad framework of the President's policy." Organizing "Unless the current relative decline of unionization is reversed," the resolution on organization stated, "the influence of the labor movement in American life inevitably will diminish, and, with it, the hope for the fulfillment of the principles of social justice for which historically the labor movement has been the Nation's most powerful advocate." In his keynote speech to the convention, Mr. Reuther pointed to the Internal Disputes Plan adopted at the 1961 AFL-CIO convention * as a most significant step toward a method for settling disputes within the labor movement, "so the whole labor movement can get on with the job of organizing the unorganized." In addition, the newly created standing committee on organization of the AFL-CIO, under Mr. Reuther's chairmanship, was held out to the delegates as a great opportunity "to replace conflict with cooperation between unions so that all may progress together in bringing the great mass of unorganized workers into the ranks of the labor movement." The lack of specific recommendations on the techniques to be employed underscored one obvious difficulty in achieving this goal, especially with regard to white-collar workers. In a separate resolution, the UAW officers were directed: ... to develop and put into effect promptly a comprehensive, coordinated program designed to respond to the needs of white-collar workers, particularly in the areas of organizing the unorganized, research, education, public relations, and internal union administrative structure. In discussing this resolution, delegates reflected the quandary which besets the labor movement. One delegate spoke on the need to develop special techniques to appeal to white-collar workers because they are "different." A second denied the existence of this difference and proposed to do away with the use of the terms "blue-collar" and "white-collar." A third questioned the desirability of organizing white-collar workers at all. A fourth protested what he considered to be inadequate servicing of those white-collar workers already organized. Collective Bargaining With no negotiations scheduled in the auto and agricultural implement industries until 1964, the convention turned most of its attention to the 1962 negotiations in the aerospace industry. The delegates unanimously passed a resolution which endorsed the negotiation proposals adopted by a joint Auto Workers-Machinists Aircraft and Missile Collective Bargaining Conference in February 1962. That program called for action in four broad areas-job security, wages, welfare programs, and union security. On job security issues, the resolution gave the highest priority to an adequate program of layoff benefits and separation pay. Declaring that the aerospace industry "is essentially a public enterprise," with the Federal Government holding "the power of life and death over the corporations," the resolution called upon the Government to recognize that it has a special obligation and responsibility to the workers. the workers. Specifically, it asked for (1) Government reimbursement of companies for supplemental unemployment benefits and separation pay benefits, (2) procurement policies that would provide a more even flow of work and more adequate notice of cancellations and cutbacks, and (3) a new Federal program, under the auspices of the U.S. Employment Service, to insure that laid-off, experienced aerospace workers be given hiring preference at other aircraft and missile plants. In addition to a call for "catchup" raises, mentioned earlier, the wage program included demands for an improved cost-of-living clause, the inclusion of an annual improvement factor provision, and a streamlined, more equitable job evaluation and job classification system. The health insurance program included employer payment of the full cost of the plan for For a description of this plan, see "The Fourth Biennial Convention of the AFL-CIO.” Monthly Labor Review, February 1962, pp. 133-135. The top five officers were all reelected by acclamation-President Reuther, Secretary-Treasurer Emil Mazey, and Vice Presidents Richard Gosser, Pat Greathouse, and Leonard Woodcock. Elected to the new posts of board members at large were Ken Bannon, director of the union's National Ford Department; Douglas Fraser, formerly codirector of Region I-A; and Nelson J. Edwards, formerly an international representative. Mr. Edwards is the first Negro to be elected to the Executive Board. On the matter of salaries, the convention voted to continue the 3-percent annual increment for all elected officers, and the Executive Board was authorized to increase staff member's salaries by 3 percent as of January 1, 1963. The following salary rates are now in effect: A number of changes were made in the union's trial procedures. It was indicated to the delegates that some of these changes were the result of advisory opinions rendered by the Public Review Board. "The financial condition of our union is the best in the history of the organization," reported Secretary-Treasurer Mazey. Total resources of the union exceeded $60 million, more than double the figures reported at the 1959 convention. general fund exceeded $7.6 million, while the liquid assets of the strike fund were $36.8 million. No changes were suggested or made in the $5-permonth dues. The Finally, the name of the union was changed to the "International Union, United Automobile, Aerospace and Agricultural Implement Workers of America," the word "aerospace" replacing the word "aircraft." The amendment reflected the changing nature of the industry and, more importantly, left no room for doubt concerning the union's asserted jurisdiction. Other Matters As usual, the UAW adopted a far-reaching legislative program. It set forth a 12-point legislative program of its own (including several mentioned earlier) and, in addition, endorsed legislative proposals already pending in 21 subject areas. The UAW's endorsement of the administration's program covered a wide gamut, including medical care for the aged under social security, Federal aid to education, and the Youth Employment Opportunities Act. On the civil rights front, the convention called for a comprehensive civil rights law and a Federal fair employment practices act. In addition to President Kennedy, others addressing the convention included Secretary of Labor Arthur J. Goldberg, Governor Richard J. Hughes of New Jersey, United Nations Under Secretary Ralph Bunch, and Rabbi Morris Adler, chairman of the Public Review Board. In other convention action, the UAW's Social Justice awards were presented to Mrs. Eleanor Roosevelt, Upton Sinclair, and Mrs. Mary Heaton Vorse. -DAVID A. SWANKIN Division of Wages and Industrial Relations |