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USW: Proposed concessions threaten incentive pay, would 'devastate retirees'

Steelworkers rally in August in downtown Gary and prepare to march to U.S. Steel Gary Works.

The United Steelworkers union expressed concerns that ArcelorMittal and U.S. Steel's contract proposals would strip away hard-won benefits and "devastate retirees."

The union expressed concerns that U.S. Steel wants the unilateral right to change incentive plans that boosts worker paychecks, and that ArcelorMittal has proposed removing safety net provisions and increasing workers' out-of-pocket health care costs by hundreds of dollars. 

"Incentives are an important component of compensation for hourly employees at U.S. Steel and in the steel industry," the USW said in an update to members. "On average, hourly employees at U.S. Steel earn several dollars an hour in incentive pay under hundreds of plant and departmental incentive plans. Now, management is proposing changes that would give them the power to modify these plans at their discretion."

U.S. Steel has proposed tossing out the existing incentives that form "a significant part of steelworker pay." 

"They are productivity driven and help to achieve levels of efficiency within our mills that have us performing at or below the two man-hour per-ton average that is a world-class productivity standard," the USW said in its update. "Our incentives have helped to achieve the productivity improvements that have taken place within USS in recent years. When your union and management together conclude that the existing incentive plans aren’t working, we can bargain changes that meet both our members’ concerns and production needs."

The company said it wants to simplify the program by aligning worker incentives with the management incentive it can modify without union input.

"Management justifies its proposal to switch all hourly employees to the new and ever-changing Operations Incentive Plans as an effort to make sure that we are all 'pulling on the same oars together,'" USW said. "But their proposal does not explain how this would work. In fact, the proposal is simply for language that would 'enable' the company – without union involvement – to modify and consolidate the existing union incentive plans however they see fit."

The union said the company has not given it enough information about how the proposed incentive program would work.

"In short, if we agree to this 'enabling language,' we don’t really know what we’re signing up for," the union said in an update to members. "And, that seems like that’s management’s plan. Perhaps we would be able to grieve incentive changes, but the company’s idea is that management would largely be free to modify the existing incentive plans however it sees fit."

USW also voiced concerns that concessions ArcelorMittal is asking for would wipe out any proposed pay increases. The steelmaker is asking workers to pay $198 per month for health care as well as increased deductibles, copayments and specialty drug costs that would cost workers $750 per year in out-of-pocket expenses.

The union estimates an employee with a family would pay $7,100 in health care premiums over the three-year length of the contract, and another $2,200 in out-of-pocket expenses. All new hires would be placed on a high deductible health care plan where families would have to pay $3,000 in deductibles before it would kick in, and then the proposed plan would only cover 80 percent of services.

The USW is especially concerned about retirement benefits, saying ArcelorMittal's proposal would "devastate current and future retirees." Pre-Medicare retirees would see monthly premiums double to $440 a month for families and $220 a month for individuals.

Future Medicare retirees would see premiums double to $220 for families and $110 for individuals by the end of the three-year contract.

"Many of these current retirees are on fixed incomes, and this kind of increase would devastate monthly budgets and finances," USW said in an update to members. "They want to offer the same high deductible plan to pre-Medicare retirees who can’t afford the increased premiums – meaning higher out-of-pocket costs for the retiree. ArcelorMittal management simply wants to discard people once they’re out of the plants and mines and break the promises made to them over decades of hard and dangerous work."

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Business Reporter

Joseph S. Pete is a Lisagor Award-winning business reporter who covers steel, industry, unions, the ports, retail, banking and more. The Indiana University grad has been with The Times since 2013 and blogs about craft beer, culture and the military.