By Drew Aversa
Union membership in America is rapidly declining and being challenged by nonunion competition. In 1983, 20.1 percent of Americans were members of unions compared to 11.1 percent in 2014. Some highlights from the 2014 United States Department of Labor report on Union Members1 follow:
- Public-sector workers had a union membership rate (35.7 percent) more than five times higher than that of private-sector workers (6.6 percent).
- Median weekly earnings of nonunion workers ($763) were 79 percent of earnings for workers who were union members ($970).
Statistics like these fuel a contentious debate between the value of a union workforce compared to a nonunion workforce. While this debate rages, it cannot be overlooked that the history of organized labor in this country has advanced wages sustaining a middle class beneficial to consumption, challenged and developed industry leading safety standards, provided employees with basic rights that benefit nonunionized employees, ensured benefits that protected and retained people in more physically demanding careers, and gave employees an ability to retire.
A main point of contention between labor and management often boils down to pensions. Unionized employees receive better pension plans. Not only are they more likely to have a guaranteed benefit in retirement, their employers contribute 28 percent more toward pensions.2
Employee vs. Independent Contractor
Did you know that the words “employee” and “employer” are legal definitions? “Under common-law rules, anyone who performs services for you is your employee if you can control what will be done and how it will be done. This is so even when you give the employee freedom of action. What matters is that you have the right to control the details of how the services are performed.”3 The majority of public safety professionals who provide emergency medical services (EMS) in America are employees of public agencies or private ambulance companies (i.e., their employers). Furthermore, employers are responsible for paying taxes on their employees and providing basic benefits, including healthcare.
Private companies driven by shareholder profitability challenge Internal Revenue Service definitions as they try to shift from employees to independent contractors. “The general rule is that an individual is an independent contractor if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done. The earnings of a person who is working as an independent contractor are subject to Self-Employment Tax.” (3)
In the labor management struggle, companies from Microsoft to Uber have challenged the integrity of the courts as they argue that their services are carried out by independent contractors and not that of employees. While Uber has long positioned itself as merely an app that connects drivers and passengers-with no control over the hours its drivers work-the California Labor Office cited many instances in which it said Uber acted more like an employer.
Is It The Beginning of an End?
I started my career as a $12/hr. employee working for the nation’s largest for-profit ambulance company, American Medical Response (AMR). AMR used advanced technology (big data) early on to deploy resources using system status management. This technology aimed to reduce risk and increase profitability by shifting appropriate resources to areas that statistically had the highest probability of response. During our shifts, dispatch would announce the service level in the county, with Level Zero meaning no paramedic ambulances available in the county; in a typical day, system status management had nothing to “manage” as resources were not available (i.e., risk vs. reward).
As a young firefighter, I sat at the dinner table and posed a startling question to my crew, “I’m concerned that there will be very few firehouses in 20 years. What are your thoughts?” While municipalities need public safety services to protect their citizens, management is in constant review, determining risk vs. benefit of fire, law enforcement, and EMS services that encounter significant costs necessitated by employing a skilled workforce that is competent to respond and mitigate emergencies (e.g., an insurance program). If system status management worked for private for-profit companies, why would it not be implemented to save municipalities money?
A few years later, San Jose (CA) Mayor Chuck Reed commissioned a study by IBM.4 The IBM study said what I feared years before: The city should reduce fire service costs and must look into new ways to provide EMS.
Uber and Healthcare
On the superficial level, Uber gets us places, but behind the profits it is first and foremost a technology company that is fueled with big data. The current state of affairs for America’s healthcare systems is not good. Fiscal concerns, perhaps more than any other factor, are driving the demand for big-data applications. After more than 20 years of steady increases, healthcare expenses now represent 17.6 percent of gross domestic product-nearly $600 billion more than the expected benchmark for a nation of the United States’ size and wealth.5
Uber executives had a vision to disrupt industries, first starting with transportation and now taking their success into other industries-including healthcare. Will Uber be a player in public safety?
Defend Your Position or Innovate Your Interests?
For those unfamiliar with contract negotiations, there are two negotiations strategies that are used to drive results, good and bad: position-based and interest-based.
Contract negotiations have traditionally been position-based. The parties each commit to a position early in the process and think only of their own wants and needs, an adversarial method of bargaining that pits the parties against one another, with little focus on future relationships.
Interest-based bargaining is a method of negotiating that focuses on meeting the underlying concerns, needs, or interests of the parties involved in the negotiation. The parties are encouraged to communicate what is important about an issue rather than arguing for a specific position or solution. This type of bargaining allows the parties to understand where the other party is coming from and is cooperative.
Lastly, innovation is defined as the introduction of something new-a new idea, method, or device.
Shared Values
Without law and order, healthcare, and a responsive group of public safety professionals, our society would not be what it is today. We all agree that law enforcement, firefighters, and paramedics are important to our communities and national security. What we don’t all agree on is how much our public safety professionals are worth.
The management executive negotiating public safety contracts has a position of cost constraints and other departments vying for funding, raises, etc. The labor executive has a position to protect his membership and number of positions. The interests of both include providing the highest level of public safety services to the community so that each of their families is protected and safe.
Bureaucratic Negotiations vs. Private Innovation
Public safety (law enforcement, fire, and EMS) collective bargaining contract periods can range from months to years with ending results lackluster based on the commonly adopted position-based negotiation strategy, both for labor and management. Private-sector innovation is in constant progress, seeking to disrupt bureaucracy and the status quo using stakeholder collaboration as a mechanism to navigating positions while understanding the interests vital to shared success. Vision and execution are what drive companies like Uber.
The IBM report in San Jose suggested a new service delivery model for lower-level EMS calls directed by a series of questions from city dispatchers resulting in the birth of the fire department squad program.
The city was pleased to not be sending a $500,000 firefighting apparatus on nonlife-threating calls; however, it was not pleased to have the squad staffed and driven by a union salaried firefighter/paramedic, costing the city more money than a squad staffed and driven by a private ambulance company EMS providers. Meanwhile, Uber strategized behind the scenes and collaborated on ways to enter the healthcare industry offering greater access and cost-savings to consumers. While Uber strategized another disruptive service, labor and management were still struggling to come to a commonsense solution on community-based paramedic programs aimed at increasing efficiency and reducing system costs. At no time did all (labor, management, and Uber) collaborate on a shared vision of success, ensuring a sustainable solution to minimize disruption of vital public safety services.
In Comes Uber
Uber is entering the healthcare industry starting with the delivery of flu shots on demand and looking into a monthly healthcare subscription service. As community paramedic programs develop after years of long-fought battles to a commonsense solution, Uber stands ready to take market share from unionized EMS providers in this service area. My prediction and vision is that Uber will soon be asking for the opportunity to contract with municipalities to provide Uber EMS, on-demand medical care for low-level calls in partnership with management. Uber is not concerned with labor’s positions and knows that the speed of innovation and cost savings will attract the attention of city managers in no time.
Would you trust Uber EMS to provide the same level of care and service as that currently offered by your professional fire department and ambulance provider when you dial 911?
Career Vs. Job
A career is defined as an occupation undertaken for a significant period of a person’s life and with opportunities for progress. A job is defined as casual or occasional work. Will Uber EMS provide career paths or more jobs?
The importance of effective labor-management negotiations is its strength in creating rewarding careers, opportunities for growth, safe workplaces, high standards of service, and retention of a skilled workforce. Labor-management arguments allow speed to market for job providers who want to secure their stake in common service areas typically provided by local municipalities.
Sound the 911 Alarm
If and when Uber EMS gains market share, displacing public agencies, acquiring private ambulance company market share, and using big data to revolutionize service models, the extinction of the American middle class would be at question. Service delivery and overseeing standards of care based on local contracts are not issues for a billion-dollar organization already familiar with delivering five-star drivers under local contracts in each city across America. The service level position is not a good position for labor and management or a good use of their time as Uber innovates faster than the average bargaining cycle and provides consumer ratings showing that its operational speed does not detract from quality of service.
The pivotal question for both labor and management: When will Uber acquire its first EMS contract for nonemergent care?
The Economic Impact of Runaway Capitalism
Capitalism enthusiasts rejoice that Uber is driving down prices for the consumer and making things more affordable. What happens when we have a national workforce of 1099 independent contractors? Where are the public economic graphs from our government demonstrating the impact of an American economy of a full-time, independent contractor workforce? Bottom line: Lowering wages and benefits will not increase consumption in the long run.
Remember, I started my career as an employee of a private for-profit ambulance company at $12/hr. I obtained a certificate as a paramedic and not a degree, because government reimbursement rates for ambulance transport prohibited paying paramedics similar wages to nurses who held degrees; policy inherently devalued EMS pay from its inception. As an employee, I was given health benefits, logged time in Social Security, and was covered under workers’ compensation laws if I was injured serving the public.
Here’s what the Uber EMS independent contractor model would look like: It pays the provider $12/hr. (which comes out to an approximate net of $8.40/hr. after taxes), does not pay health benefits under the theory that the provider can use the Affordable Care Act, and doesn’t contribute to retirement via Social Security.
Throughout the 1930s, Americans struggled to consume basic goods and services during the Great Depression. While there were numerous factors that played into the economic collapse of our society, a few should be noted as they are relevant to the state of affairs for Americans in the workplace:
- Stock market crash of 1929.
- Bank failures.
- Reduction in purchasing across the board.
- American economic policy with Europe.
- Drought conditions.
- In 2015, the aforementioned conditions exist despite all-time low unemployment rates.
- Recovery from 2008 financial crisis (stock market and bank failures).
- Increase in 1099 independent contractors who work the same hours as “employees” yet receive lower wages and no benefits.
- Unstable American economic and foreign policy.
- Drought conditions and exponential growth in urban areas.
The position divide between labor and management is grave. Private sector speed of innovation in conjunction with a bottom-line mindset will gain the attention of the public as companies like Uber vie to deliver community preventive care, including low-level EMS. The lack of collaboration between labor and management poses a threat to innovation, which damages their standing with the average citizen.
This leads to a modern society that may no longer relate to the long-fought history to provide critical services while maintaining a highly skilled workforce.
The end result, the extinction of organized labor and bureaucratic management, leaves vital services in the hands of private companies that challenge the integrity of our judicial system as companies force the change from employee classification to independent contractor status.
Recommendations
I firmly believe in protecting the interests of America’s dwindling middle class. The value of organized labor should not be lost, nor should the value of a management team who sees the necessity of retaining a skilled workforce. The polarity infused through position-based negotiation is restricting both sides from doing what they are there to do, which is to understand the interests of each side, knowing that the interests of those who employ them (local taxpayers) deserve the best services from their first responders. Service is government’s first duty to its citizens.
To stay relevant and to protect the interests of the citizens, labor and management must do the following:
- Form agile innovation teams, not delayed negotiation teams.
- Possess vision or consult with those who do.
- Rapidly shift from position-based strategies to interest-based strategies.
- Be present early and often with private industry partners and politicians to discuss their plans and figure out ways to find an equitable solution, protecting valued careers; know your market share and how much would be lost if Uber landed a service agreement.
- Do not posture; innovation and speed to market come from trusting relationships and working together, including your competition.
- Mentor and engage your next generation of labor leaders early in their careers.
As organized labor continues to decline at alarming rates, how much are we willing to save to disrupt public safety and, in the end, erode the entire middle class?
Endnotes
1. United States Bureau of Labor Statistics, “Union Members-2014,” January 2015, www.bls.gov/news.release/pdf/union2.pdf.
2. Walters, Matthew, and Lawrence Mishel, “How Unions Help All Workers,” Economic Policy Institute, August 2003, www.epi.org/publication/briefingpapers_bp143/.
3. Internal Revenue Service, “Independent Contractor Defined,” www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Independent-Contractor-Defined.
4. Woolfolk, John, “IBM report suggests fewer San Jose cops and firefighters needed,” San Jose Mercury News, February 2012, www.mercurynews.com/ci_19890479.
5. Kayyali, Basel, David Knott, and Steve Van Kuiken, “The big-data revolution in US health care: Accelerating value and innovation,” McKinsey & Company, April 2013, www.mckinsey.com/insights/health_systems_and_services/the_big-data_revolution_in_us_health_care.
