Show Me The Benefits

Like millions of other workers these days, Sprint employees on strike in Hickory, N.C. this fall weren't demanding "show me the money."

"The people are just fed up with their benefits being cut," one employee remarks.

Instead, Sunday Morning correspondent Susan Spencer reports, it's "hands off my benefits."

From health care to disability to pensions, across many industries, workers today are realizing with dismay that company-provided benefits are costing them more and providing them less.

"Every benefit cut that you have is a cut in your wages," says the local president of the Communication Workers of America union Gary McClure. "It's a cut in your ability to provide for your family."

McClure says his members walked, much of their anger fueled by Sprint's proposal to eliminate the caps on how much they pay for health insurance; a bitter pill for members who remember once paying nothing at all.

"From going from 1996 to paying nothing, we have, now, some members that's paying as much as $2,400 a year in premiums," McClure notes.

For Joan Parker, the last straw was Sprint's plan to cut the disability coverage from a year to six months. She's a breast cancer survivor.

"I was out of work for nine months. Today," Parker says, "I would be fired because of the new plan that they're offering us on our disability, our paid time off. I wouldn't have a job."

Add to that the company's proposal for sharp cutbacks in its 401(k) contributions and Parker -- after three decades on the job -- is thinking of getting out.

"I have never let them down, but it sounds like they would not hesitate to let me down," Parker says.

Sprint insists it's letting no one down, that its belt tightening is both appropriate and unavoidable.

Health costs have gone through the roof and 90 percent of companies, now, have their employees help and participate in the payment of it.

Vice president Audrey Schaefer says that after a series of mergers, Sprint's just putting everyone on an equal footing.

"Next year three quarters of our employees will see no, or little, increases," Schaefer says.

But for workers unfortunate enough to suffer long-term illness, like Parker, Sprint will have less to offer.

"We thought it really made sense for us to be standardized amongst most companies our size and that standard is 26 weeks of disability," Schaeffer explains.

As for Parker's claim that she'd have been fired under those new rules, Schaefer says, "I can't imagine that would be the case."

In fact, after 26 weeks, Parker technically wouldn't have been fired, just put on long-term disability. But there's no way to sugar coat the company plans for cutbacks in 401(k) contributions.

"In the interest of fairness, what we'd like to do is get all of our employees on the same plan," Schaefer says.

Oddly enough, in "getting employees on the same plan" companies today never go for the plan with the most generous benefits for everyone, but rather, the cheapest. The trend today is downward.

In the last five years, the percentage of businesses that offer health coverage has fallen from 69 to 60 percent.

And premiums are soaring, up more than 9 percent this year. Not as big a leap the year before, but still rising faster than inflation or wages.

As for retirement benefits, only about one in five workers today still has the old-style defined benefit plan, that dependable monthly pension check. In 1975, more than 40 percent could count on it.

These days, workers are counting on themselves, with more than 40 percent in so-called defined contribution plans, like 401(k)s, where the employee -- and usually the company -- both kick in.

The markets will determine how well they do.

Of course, companies don't have to have any pensions at all. In fact, when the railroads started, generosity was an afterthought.

Syl Scheiber, benefits expert with Watson Wyatt Worldwide consultants, says the question was how to get rid of those old guys.

"And after two or three decades of operation, they discovered that their workers were -- some of their first workers -- were beginning to get old.

"The guys in the engines were having heart attacks and going to sleep and causing major accidents. So the firms started pension plans to allow people to retire," Scheiber says.

But companies didn't really get into the benefit business big time until World War II when wages were capped.

"So they started sponsoring pensions and -- and health benefits as a way to attract workers, a way to give them larger -- larger pay without giving 'em cash," Scheiber explains.

Those World War II workers are now gone or fading fast and Tom Donohue, president of the U.S. Chamber of Commerce, says the big promises companies made to them simply can't be kept for their baby boomer kids.

Donohue explains the company line. "Here's what they said: if you work, you retire, you go on a cruise and come home and statistically die at 63.9 years of age, we'll give you benefits for health care and pensions for as long as you live.

"The only thing is they broke the deal. They now come home after the cruise and live for 16-and-a-half more years," Donohue says of workers.

Blame demographics for benefit changes, he says, not companies just trying to survive. But in some industries, like the bankrupt airlines, workers say the companies are to blame.

Pat Friend, president of the Association of Flight Attendants, sees a warning for all of us.

"And it's all about using the bankruptcy code to reduce your labor costs," Friend says.

"I don't think anyone in this country who has a defined plan can ignore the fact that their company could some day use the bankruptcy code to break those -- the promises that have been made to them over many, over many years.

"Thirty years, 40 years of a career," Friend says, "of, of working for a company, believing you're building a secure retirement and it's wiped out in one day. It's gone."

Despite the airlines' experience, most experts think companies will keep offering benefits of some kind because they'll have to.

"That's what we're going to need to attract, in a competitive way, the workers that are available because we are going to have a major shortage of workers," Donohue says. "So if you think you are going to get rid of your health plan, you can forget it."

Although, says Donohue, plans will be far different from those of the past.

"Health care plans that would allow people to put aside tax-free money to help themselves. They don't do pensions, they do 401(k)s. They may not have a comprehensive health care plan, but they can be encouraged to support, for example, a catastrophic plan."

Benefits expert Scheiber agrees. "It's a new world that we're facing. And we can sit here and curse it all we want, or we can try and figure out how to make it work. And I, you know, I believe that the good old days were the good old days and it would be nice if we can go back to them. I'm afraid we might not."

As those striking Sprint workers now know so well, they settled their strike just before Thanksgiving. Medical costs will go up. 401(k) contributions will go down, but Sprint gave a little, too, and in these days of change, the union figured that's about as good as it gets.