an introduction to costing a collective bargaining agreement...an introduction to costing a . ......
TRANSCRIPT
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An Introduction to Costing a Collective Bargaining Agreement
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Glossary of terms Direct wages = Straight Time + Overtime Wage-related fringe benefits = Vacation, Holiday
Pay, Sick Leave, etc. Baseline = Costs prior to new contract Hours Worked vs. Hours Paid = On Clock vs. On
Clock + Any Paid Leave
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1) Determine the Weighted Average Base Rate for
your bargaining unit. 2) Calculate the proposal’s costs for each contract
year. 3) Add all of the contract years together & check
your work.
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Grade Members x Rate = Wage per Hour A – I 25 x $12.00 = $300 A – II 30 x $12.50 = $375 A – III 15 x $13.00 = $195 B – I 50 x $15.00 = $750 120 $1,620 Total Members = 120 Total Wages per Hour = $1,620
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Total Wages Per Hour Total Members $1,620 = $13.50 120
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Let’s say the employer offers a 9% wage increase spread over three years.
Is one option below better than the others? 1) 5% in Year 1; 2% in Year 2; 2% in Year3 2) 3% in Year 1; 3% in Year 2; 3% in Year 3 3) 2% in Year 1; 2% in Year 2; 5% in Year 3
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Front Loaded: 5% in year 1; 2% in year 2; 2% in year 3
New Avg. Weighted Avg. Weighted Annual Year Base Rate + increase = Average x Members x Hours = Wages 1. $13.50 + 5% =$14.18 x 120 x 2,080 = $3,539,328 2. $14.18 + 2% =$14.46 x 120 x 2,080 = $3,609,216 3. $14.46 + 2% =$14.75 x 120 x 2,080 = $3,681,600
Total Cost of Proposal #1 = $10,830,144
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Even Distribution: 3% in year 1; 3% in year 2; 3% in year 3
New Avg. Weighted Avg. Weighted Annual Year Base Rate + increase = Average x Members x Hours = Wages 1. $13.50 + 3% =$13.91 x 120 x 2,080 = $3,471,936 2. $13.91 + 3% =$14.32 x 120 x 2,080 = $3,574,272 3. $14.32 + 3% =$14.75 x 120 x 2,080 = $3,681,600
Total Cost of Proposal # 2 = $10,727,808
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Back Loaded: 2% in year 1; 2% in year 2; 5% in year 3
New Avg. Weighted Avg. Weighted Annual Year Base Rate + increase = Average x Members x Hours = Wages 1. $13.50 + 2% =$13.77 x 120 x 2,080 = $3,436,992 2. $13.77 + 2% =$14.05 x 120 x 2,080 = $3,506,880 3. $14.05 + 5% =$14.75 x 120 x 2,080 = $3,681,600
Total Cost of Proposal # 3 = $10,625,472
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Front Loaded: 5% in year 1; 2% in year 2; 2% in year 3 Cost: $10,830,144 Even Distribution: 3% in year 1; 3% in year 2; 3% in year 3 Cost: $10,727,808 Back Loaded: 2% in year 1; 2% in year 2; 5% in year 3 Cost: $10,625,472
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Vacation Leave
Additional Holiday
Change in Healthcare Deductible
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Members x Vacation Weeks 30 x 1 week = 30 55 x 2 weeks = 110 25 x 3 weeks = 75 10 x 4 weeks = 40 120 255
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Total VAC Weeks Total Members 255 = 2.13 weeks 120
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Year 1 Year 2 Year 3 Hourly Wages $14.18 $14.46 $14.75 Hrs in Workweek x 40 x 40 x 40 No.of VAC wks x 2.13 x 2.13 x 2.13 No. of Members x 120 x 120 x 120 Annual Cost: $144,976 $147,839 $150,804
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Year 1 Year 2 Year 3 Hourly Cost $14.18 $14.46 $14.75 No. of Members x 120 x 120 x 120 Hrs. in Workday x 8 x 8 x 8 Annual Cost: $13,613 $13,882 $14,160
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Employer is asking to increase the employee’s deductible from $1,000 to $1,500 per year.
Employer’s Annual Healthcare costs are: $1,200,000 with Current $1,000 deductible $1,050,000 with Proposed $1,500 deductible $150,000 = Annual cost transferred to the
bargaining unit.
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This proposal will save the employer $150,000 at the members’ expense!
Let’s break this down to an hourly figure: $150,000 Annual Cost Transferred to Members 249,600 hours Bargaining Unit’s Total Hours Paid (120 members x 2,080 hours per year) = 60 cents per hour
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Year 1 Year 2 Year 3 $ 3,539,328 $ 3,609,216 $ 3,681,600 Wage Increase Proposal $ + 144,976 $ + 147,839 $ + 150,804 + Vacation Leave $ + 13,613 $ + 13,882 $ + 14,160 + Holiday Proposal $ - 150,000 $ - 150,000 $ -150,000 - Health Benefit Proposal $ 3,547,917 $ 3,620,937 $ 3,696,564 Subtotal Total Cost of Contract Items Over Three Years = $10,865,418