Hard Bargaining

Harvard and its largest union in protracted negotiations on wages and health benefits

The contract between the University and the Harvard Union of Clerical and Technical Workers (HUCTW) expired June 30, and with no agreement on a new one, the two parties have engaged in increasingly public exchanges during recent weeks—suggesting large economic differences between them. In the past, such negotiations have typically proceeded smoothly, with timely agreement on new contracts.

The Union’s Wage and Benefits Positions

The HUCTW, Harvard’s largest union—with some 4,600 support-staff members in administrative and office positions, laboratories and libraries, and health services—has organized public events and petitions to rally support for its cause. And it has issued fact sheets laying out its arguments on compensation and healthcare benefits.

The fact sheet on “University finance and pay increases,” published September 26, begins with a sober note about continued and deepening “negotiating difficulties” between the union and Harvard. It argues that “The University has recovered strongly from the financial crisis of 2008-2009”; that the endowment had strong investment returns in fiscal years 2010 and 2011, enabling Harvard to increase the level of funds from the endowment distributed to the schools in fiscal 2011 and 2012; and that it is “clear that Harvard has entered a new period of confident expansion.”

As evidence of the latter, the fact sheet points to the continuing reconstruction of the Fogg Art Museum, the Business School’s rising Tata Hall, the beginning of undergraduate House reconstruction, and new plans for construction in Allston—each with multimillion-dollar price tags, and in some cases many times that. The union also points to the online edX venture, for which the University has pledged to provide and raise $30 million; the $40-million learning and teaching initiative; and new courses of study and degree programs. Finally, it suggests that budgetary caution has eased somewhat, with anecdotal evidence of more relaxed travel and entertainment spending, computer purchases, and so on.

In this context, the union claims, “There is a troubling discrepancy between the cautious, pessimistic pronouncements of Harvard’s leaders and the significant expansion being carried out across the University.” It then cites 18 years, up to 2009, during which the annual pay increase for HUCTW members averaged 4.5 percent, and data showing a pay pattern that gave members real (above-inflation) compensation gains—typically about 1.5 percent per year from 2002 through 2009. In the subsequent two years, the union says, wage increases were moderated in response to the financial crisis, and members realized little if any real income gains. In current negotiations, the fact sheet concludes, “Harvard staff need to be supported with the kind of steady salary growth that ensures at least a gradually improving standard of living.”

The healthcare fact sheet describes the contours of a specific proposal to reallocate the costs of employee benefits among all Harvard workers. The cost for Harvard employees to participate in employer-sponsored health coverage is progressive: that is, the portion of the premium an employee pays rises depending on her or his wages or salary. For 2012, those pay ranges are less than $70,000; $70,000-$95,000; and more than $95,000. For example, the monthly cost to an employee for family coverage in the University’s HMO (the least expensive plan) would be $210, $290, and $370 respectively.

According to the HUCTW, the employees falling into those tiers bear, respectively, 15 percent, 20 percent, and 25 percent of the cost of their health coverage. As health costs have risen, the union argues, “lower-paid employees in the University have come to bear an unsustainable burden, contributing as much as 10 percent of their gross Harvard pay toward family health plan premiums. At the same time, higher-paid employees may pay as little as 2 percent of income or less for the same family plan.” The union suggests that peer institutions use more sharply progressive formulas, lessening the share paid by lower-income employees and increasing the share paid by higher-income staff and faculty members. More generally, the HUCTW says it advocates changes in healthcare payment systems, investments in wellness and health-education programs, and cost-saving educational programs. In all, the union says it is “deeply concerned about the difficulty we have encountered in trying to convince Harvard administrators to collaborate on long-term health care solutions.”

Harvard’s Response

On October 9, the University took the unusual tack of issuing a letter from vice president for human resources Marilyn Hausammann to University leaders and managers detailing Harvard’s negotiating position, and then calling it to the attention of the wider community in an October 16 Harvard Gazette interview with Hausammann and Bill Murphy, director of labor relations.

(An earlier University statement, posted September 27 but not as widely disseminated, emphasized the more recent, flat endowment results and said: 

Almost all of the University’s revenue sources face heightened pressures, from decreased funding for research to the impact of volatile global markets on our endowment. These revenue pressures, combined with the need to make targeted investments to advance Harvard’s academic mission, are likely to have long-lasting implications for the University’s finances.

Over the past year, seven of our other unions have agreed to new contracts that included wage increases between 2 and 3 percent. These were fair agreements that reflected challenging economic times, and administrative and professional employees received an average base wage increase of 2.65 percent. In our discussions with the HUCTW, our offers with regard to wages are clearly consistent with the internal and external job markets.)

Hausammann’s letter notes that “we typically refrain from discussing our negotiating position while contract talks are underway,” the better to focus attention on bargaining. “But now that more than three months have passed since the University’s contract with the Harvard Union of Clerical and Technical Workers (HUCTW) expired,” she continued, “I think it’s important to share with you details about some of the issues on the table and to dispel several mischaracterizations of the University’s position.”

Wages. Hausammann wrote that

the average wages and benefits for our colleagues who are represented by the HUCTW rank in the top 25 percent when compared to workers in similar positions across the local job market. In other words, HUCTW members enjoy better wages and benefits than 3 out of 4 workers in similar positions throughout greater Boston. Base wages for Harvard’s non-union administrative and professional employees grew by 4.2 percent over the last three fiscal years; HUCTW base wages grew by more than double that, 9.5 percent, over the same period, at a time of significant global economic pressures.

But, she continued, “the University is not immune to market forces,” and cited the recent report of declining endowment value in fiscal 2012 and pressure on tuition and federal research funding. Seven other unions, she said, had during the past 18 months agreed to contracts providing annual wage increases between 2 and 3 percent. In that context, “HUCTW leadership is seeking wage increases that greatly exceed what our other colleagues across campus, union and non-union, are receiving.” Harvard’s September 21 contract offer to HUCTW included a 2.8 percent increase in the first year, 2.5 percent in the second year, and 2 percent in the third year—the latter subject to re-evaluation and reopening “if the economy improves sufficiently.” (Since this offer appears well below the 3.1 percent increase HUCTW says members, on average, received in 2011, that appears to leave a very large gap.) In the Gazette interview, Murphy said HUCTW members who earn less than $50,000 would realize a pay increase of about 3 percent in the first year, a rate he said exceeded the rate of inflation.

Health benefits. Hausammann’s letter cites Harvard's early adoption of progressive payments for health premiums, and its co-pay reimbursement program for lower-earning employees. But, she wrote bluntly, “one proposal put forward that we cannot accept would shift more than $1.5 million in healthcare costs away from HUCTW members and other employees earning less than $50,000 per year, and onto other Harvard employees. That did not meet our test for a fair and equitable agreement.” Thus, apparently, the HUCTW proposal for a realignment of the progressive-income tiers, and/or the introduction of a new, fourth, lower tier, is not acceptable to Harvard.

(In commenting on employee-benefit costs last year, vice president for finance and chief financial officer Daniel S. Shore said, of continuing increases in costs, that health benefits for calendar year 2012 therefore introduced significant increases in employee co-payment, deductible, and maximum out-of-pocket spending schedules, particularly for retirees. But he characterized those changes as "modest" and emphasized the need for further steps. That suggests that the University’s resistance to the HUCTW proposal, which does not seem to involve a large sum of money, may reflect a separate decision to impose greater premium cost-sharing on nonunion, higher-income employees—not subject to negotiation. In the Gazette interview, Hausammann said, “The changes we’re making to premiums this year are done in such a way to minimize the effect on employees earning less than $70,000 per year”—perhaps foreshadowing what is on tap. Open enrollment for employee benefits in 2013 begins at the end of this month. The cost schedules accompanying employee options then may reveal whether that is already part of Harvard’s financial strategy, and therefore an issue that has made the University resistant to the HUCTW’s cost-shifting proposal—lest a transition to higher premium payments by higher-paid employees be amplified further.)

Hausammann concluded, “We remain committed to working with the leadership of the HUCTW to reach an agreement that is fair to employees who are represented by the union and to employees across the University as a whole. But based on the pace and substance of the discussions to date, we are preparing for the bargaining process to continue for some time.” That suggests no ready resolution to bridging the different positions.




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