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Collective Bargaining and the COLA Factor

(This article first appeared in the November/December 2006 issue of The American Postal Worker magazine.)

After negotiations for a new national contract during which we have reached an agreement, I have heard remarks such as: “The raise is only 1.5 percent; they should have gone to arbitration.”

Such commentary not only pays short shrift to the negotiation process, but ignores the Cost-Of-Living raises that we have to fight for during contract talks.

“COLA raises are not automatic. They would not exist if the union had not been around to negotiate them.”

Fortunately, we have always been able to keep the “COLA clause” in our contracts, whether they are negotiated or are set by interest arbitration. COLA raises have been a consistent feature of our contract and an extremely important part of your pay package. Few working people in American receive salary adjustments tied to inflation; no other federal employees are covered by a contract that features a COLA.

Lost COLAs

The last day of our USPS contract is typically midway through the cost-ofliving evaluation period established by the contract: the last adjustment was based on the July Consumer Price Index; the next is based on January’s. But the contract ends in mid-November. Our bargaining history has been such that by the time we reach an agreement and have the basic salary re-based, the first COLA is usually small because it is governed by a short evaluation period.

When we do not reach an agreement and the contract proceeds to arbitration, we have to wait even longer to receive our next COLA raise. Arbitration takes months, and no arbitrator has ever given us COLAs that we missed while waiting for the decision. This, of course, affects your salary and your retirement benefits. (A few times, however, arbitrators have awarded us one-time bonuses that have roughly approximated the amounts of lost COLAs, but bonuses do not become part of your base pay and do not become part of retirement annuity.)

Prior to 1994, our arbitrated contracts (1978, 1984, and 1990) were completed in a timely fashion and we were able to retain our COLA adjustments — although, due to shorter evaluation periods, some were smaller than they should have been — during each round of negotiations.When we went to arbitration in 1994 and again in 2000, however, all we could do was watch helplessly as the Postal Service managed to prolong the process, which resulted in the loss of two COLA raises each time.

In addition, the salary levels for these two contracts were re-based during times when the majority of inflation factors came into play in the evaluation periods taking place before the re-basing. The first COLA in the 1994 contract was one of the smallest ever and the first COLA in the 2000 contract was smaller yet: zero dollars. Because this evaluation period was short and took place during a time of low inflation, we in effect lost three COLA raises in the 2000 agreement as we waited for the arbitrator to issue an award.

I point this out only to remind everyone that COLA raises are not automatic — they are in no way a gift from the Postal Service — Cost-Of-Living Adjustments are strictly a union-negotiated pay raise. They would not exist if the union had not been around to negotiate them.

Recent History

Your most recent COLA raise was $812, almost a 2 percent increase for most employees. Earlier this year, you also received a $457 COLA (approximately 1 percent), along with a 1.6 percent raise, which totals a 4.6 percent salary hike in 2006 — a raise of 4.6 percent.

In deciding whether to settle a contract or go to arbitration, your negotiating team must factor in the rate of inflation. Would lost COLAs be low or high? Would it be worth it to lose those COLAs while awaiting an arbitrator’s award, which would be unlikely to be greater than the amounts lost?

Fortunately, your negotiating team, led by President Burrus, has ample experience in these matters. You can be sure that the team will not lose — or give back — any hardfought gains from the past.

Veterans and Tariffs

The Department of Veterans Affairs estimates that on any given night in 2005, close to 200,000 veterans were homeless. That represents a significant share — roughly one-third — of the nation’s homeless-adult population. You’ve probably noticed the subhead above this paragraph and are wondering: What does this have to do with tariffs?

Tariffs are taxes that the U.S. government places on products made in other countries where the foreign government subsidizes the manufacturing process to make the products more marketable, that is, less expensive, here. Tariffs are supposed to make it more difficult for these imports to compete with American-made products.

The tariffs are designed to offset the amount of the subsidies so that the products’ cost in this country will reflect the true cost of producing those goods and give our manufacturers and workers a real shot at competing against those products.

This Congress has managed to run up a $9-trillion deficit; has done little or nothing to hold down the cost of health care; seems no closer to addressing all the issues associated with immigration problems; and has consistently under-funded the Veterans Administration department.

But this Congress has managed to eliminate more than 1,800 tariffs, which has meant the closing down of hundreds of U.S. plants and the elimination of tens of thousands of American jobs — and, gee, where do you think the homeless population comes from?

Meanwhile, we wave the flag and say we support our troops.

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