Kaiser, Unions Reach Deal Without 2-Tiered Pay

Strike was scheduled to begin Monday
By Bob Cronin,  Newser Staff
Posted Nov 8, 2021 7:00 PM CST
Updated Nov 14, 2021 1:25 PM CST
30K Workers Threaten Strike Over Wage Cuts
LVN Jessica Sanchez administers the Pfizer COVID-19 vaccine to Nathan Webster, 9, at Kaiser Permanente in Bakersfield, Calif.   (Alex Horvath/The Bakersfield Californian via AP)

Update: Kaiser Permanente and a group of unions have reached a tentative agreement on a four-year contract, averting a strike by employees in eight states. The deal reached Saturday includes pay raises and drops Kaiser's plan for a two-tiered wage system, the New York Times reports, that would pay new hires much less. It also "provides safe staffing," a union official said. Workers had been scheduled to walk off the job Monday. Talks are continuing with some pharmacists and engineers. Our original story from Nov. 8 follows:

Business is booming at hospitals, including the 700 heath centers, clinics, and medical offices run by Kaiser Permanente in nine states. Yet the health care giant wants to pay employees less, and unions representing more than 30,000 of them have set a strike deadline for Nov. 15. The main issue is Kaiser's proposal for a two-tiered pay system, the New Republic reports. The details of the standoff, complete with proposals that at times seem to conflict with common sense, include:

  • The wage plan. Kaiser wants to pay new hires 26% to 39% less than it pays existing employees for the same work. Current employees would receive a 1% raise. That would make job openings less attractive though hospitals generally are having trouble filling openings, per the New Republic, and many to most nurses are thinking about quitting. But Kaiser says that it has to cut costs, and that "escalating wages are half the cost of health care." Kaiser reported income of $6.4 billion in 2020.
  • Strike costs. A specialist agency is lining up replacement nurses, promising pay as high as $12,500 per week for scab nurses, plus expenses. That would put the weekly cost of replacing 19,000 nurses on strike at $237 million. "Clearly the company is being disingenuous in their desire to cut costs," said Jane Carter, a member of the bargaining team for a health care union involved.
  • The trend. Two-tiered systems were the rage in the 1980s, usually by companies in trouble, and by auto companies during the 2007 crash. They caused tension between employees paid on different scales for the same work, and Fiat Chrysler's CEO called them unworkable in 2015, per NPR. But they're back, and Kellogg and John Deere employees are fighting them now.
  • The reasoning. Kaiser said it's trying to cut patients' costs. There might be other ways to do that, Carter said. But she doesn't see why a growing operation would do this, and she thinks training and turnover costs would only increase in the long term. Not to mention the replacement costs. "I'm a labor economist," she said, "and I don’t understand how this company can legit put forward this proposal."
  • Employee reaction: "Equal job, equal pay rate, you know, we deserve that—everybody does, and that’s not just Kaiser alone; it’s just all workers," said a health care worker in Hawaii, per KHON. A lead pharmacy technician in Southern California suggested looking at negotiations differently, per KTLA. "This is an opportunity for Kaiser to step up for health care workers by offering adequate wages and addressing our safety, staffing concerns," Lucy Alcantar said.
(Read more Kaiser Permanente stories.)

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