Problem: Financial Analysis and Wage Negotiations

Background:

The Gotham Company is a business services outsourcer. CWA Local A represents 250 workers at the Company. The Union is currently negotiating a new 3 year contract with the Company.

There are three job titles:

30 Clerks who make between $8.25 and $15.35 per hour.

200 Customer Service Reps who make between $10.00 and $17.35 per hour.

20 Technical Service Reps who make between $15.00 and $22.35 per hour.

In our earlier contract, we achieved wage progressions but they have the same increases between the steps for each of the jobs and the greatest money at the highest steps. They are also 7 year schedules. The following are the current schedules:

Step / Service in Months / Clerk / CSR / TSR
0 / Start / 8.00 / 10.00 / 15.00
1 / 6 / 8.20 / 10.20 / 15.20
2 / 12 / 8.45 / 10.45 / 15.45
3 / 18 / 8.75 / 10.75 / 15.75
4 / 24 / 9.10 / 11.10 / 16.10
5 / 30 / 9.50 / 11.50 / 16.50
6 / 36 / 9.95 / 11.95 / 16.95
7 / 42 / 10.45 / 12.45 / 17.45
8 / 48 / 11.00 / 13.00 / 18.00
9 / 54 / 11.60 / 13.60 / 18.60
10 / 60 / 12.25 / 14.25 / 19.25
11 / 66 / 12.95 / 14.95 / 19.95
12 / 72 / 13.70 / 15.70 / 20.70
13 / 78 / 14.50 / 16.50 / 21.50
14 / 84 / 15.35 / 17.35 / 22.35

The members are asking for annual wage increases of 4.0% in each of the 3 years. During their last contract, they received annual wage increases of 3.0% in each year. They would also like to reduce the schedule to 5 years (10 steps, 60 months). At the time of the last contract three years ago, there were 350 CWA represented employees at the company.

Management’s position:

The Company cannot afford to give the proposed wage increase.

Union’s position:

The Company can afford to give the proposed wage increase.

Exercise

  1. Using the attached data, calculate the amount and percentage changes that occurred between 2009 and 2010 and 2008 and 2010 for each line item.
  1. You are a bargainer for Management:

a)Using the attached data and your results from #1 above, create an argument to support Management’s position.

b)What additional information might be useful to have to further support Management’s position and why?

  1. You are a bargainer for the Union:

a)Using the attached data and your results from #1 above, create an argument to support Management’s position.

b)What additional information might be useful to have to further support Management’s position and why?

  1. Using the exponentializing calculator prepare new progression schedules that have equal percentage increases at each step and move to a 5 year schedule.
  1. Assuming the 4% annual wage increase demand, what is the compounded value of the wage increase be over three years? How many new dollars does that mean for a Technical Service Rep at top pay, after 3 years?