CFOs may have more leverage over organized labor

With unions weakened and management emboldened by shifts in worker demographics in recent decades, labor is recalculating how to obtain more leverage in negotiations moving forward, the Wall Street Journal has reported.

"We're not making as much in this country as we used to," Ileen DeVault, professor of labor history at Cornell University's School of Industrial and Labor Relations, told the Wall Street Journal. As a result, many labor unions have lost the negotiating leverage they had enjoyed in past decades.

However, the healthcare sector remains pretty heavily unionized, with nurses and other allied healthcare professionals often heavily represented by organized labor. But chief financial officers and other C-suite executives--in hospitals and elsewhere--who had to ride out the Great Recession, may be less likely to make concessions to labor unions than they were in the past.

And the recent solidification of the Affordable Care Act (ACA) by the U.S. Supreme Court means that unions may not be able to negotiate aggressively with management over key benefits. Instead, they will have to hash it out over relatively minor points, such as the ACA's "Cadillac Tax," David Gregory, a professor at St. John's University School of Law, told the Wall Street Journal

Potential transactions and C-suite compensation tend to both be major bones of contention between labor and management. Earlier this year, Daughters of Charity, the California-based not-for-profit hospital system, sued the Service Employees International Union-United Healthcare Workers West (SEIU-UHW), claiming it interfered with its negotiations to be acquired by for-profit hospital operate Prime Healthcare Services.

Also in California, the SEIU-UHW sponsored a ballot initiative to cap the pay of the CEO and other top executives at El Camino Hospital. That initiative passed, but has been embroiled in litigation. In another instance, the SEIU-UHW entered into an agreement with the California Hospital Association to drop a voter initiative that would have imposed compensation caps statewide if it had passed. In Massachusetts, organized labor has backed legislation that would place caps on hospital compensation and disclose offshore assets owned by hospitals.

But many hospital operators have continued about their business undeterred, with Partners Healthcare in Massachusetts recently announcing its plan to close a Boston-area hospital and eliminate about 100 jobs, the Boston Business Journal reported.

To learn more:
- read the Wall Street Journal article (subscription may be required)
- check out the Boston Business Journal article

Suggested Articles

We take a look back at health insurers' financial performance, including soaring profits, in Q2.

Employment growth in the healthcare industry cooled off in July as the sector added fewer jobs than in June as COVID-19 continues to spread.

Employers are making adjustments to their health benefits in the wake of COVID-19, but workers may not take the time to consider these new options.