In the Matter of )
DEPARTMENT OF THE NAVY )
NAVY RESALE AND SERVICES )
SUPPORT OFFICE )
NAVY EXCHANGE SERVICE CENTER )
AUBURN, WASHINGTON )
and ) Case No. 91 FSIP 182
LOCAL 2600, AMERICAN )
FEDERATION OF GOVERNMENT )
EMPLOYEES, AFL-CIO )
Following a Notice of Hearing in the above-referenced case, Panel Member John R. Van de Water conducted a factfinding hearing in Auburn, Washington, on September 24, 1991, on the issue of wage rates for Administrative Support (AS) employees. At the hearing, a stenographic record was made, testimony and arguments were presented, and documentary evidence was submitted. Following the hearing, the parties submitted additional evidence and filed posthearing briefs. Thereafter, the factfinder submitted his report to the Panel, without recommendations, and it has now considered the entire record.
ISSUE AT IMPASSE
The proposals and positions of the parties regarding the above-stated issue are set forth in the attached factfinder's report.
In examining the parties' respective positions on this issue, we note, preliminarily, that there is no disagreement that the wage rates paid to AS employees are approximately 20 percent lower than the prevailing rates in the Auburn area.
Thus, the fundamental issue before the Panel is the extent to which this gap should be closed. In addressing this question, we will focus on three factors which have emerged as central to the resolution of this impasse: (1) whether there is a demonstrated need to alter the status quo; (2) whether other concerns militate against altering the status quo; and (3) the Employer's ability to pay.
With respect to the first factor, we conclude that the Union has, in fact, demonstrated a need for an increase in wage rates for these employees. As indicated above, it is undisputed that the wage rates paid to AS employees are significantly lower than those paid to employees working in similar occupations in the same geographical area. The unrebutted wage data provided by the Union indicate that in 1990, the average AS employee at Auburn earned $7,104 less than a minimally adequate living wage.l/ In our view, this is persuasive evidence that under the existing system, workers are not compensated appropriately for the work they perform and that a change is indicated.2/
Turning to the second factor, we find that the concerns raised by the Employer do not outweigh the Union's clearly demonstrated need for change. In this regard, the Employer maintains that a wage increase for AS employees beyond the percentage awarded to GS employees would have a negative impact on the morale of other bargaining-unit employees whose wages remain capped. While we are mindful that a wage increase for AS employees may create some
discontent among prevailing rate employees in the same unit, we see no reason to perpetuate low wages for one group of employees simply because Congress has decided to cap the pay of other Federal workers. To do so in the circumstances of this case would be to penalize unfairly AS employees and fail to give proper deference to their newly-won 1/ See Factfinder's Report at 6.
2/ The turnover statistics at the facility do not alter this conclusion. While the Employer contends that the projected turnover rate for calendar year 1991 of roughly 36 percent is very low, and thereby indicative of employee satisfaction with the existing wage rates, the numbers, standing alone, are not conclusive. In this regard, it provided no comparability data which would serve as a benchmark to support its view that such a turnover rate is low. Moreover, although most departing employees did not specify that
they were leaving the service center for higher wages, it is reasonable to believe that a number of those who indicated that they were leaving "to accept another job" were, in fact, dissatisfied with the low wages paid by the Employer. right to bargain over wages. Thus, we reject this argument as a basis for
maintenance of the status quo.
The Employer also avers that an increase in wages as proposed by the Union would have a negative impact on the ability of the exchanges in the Auburn region to support morale, welfare, and recreation (MWR) programs, thereby necessitating a reduction in the programs and services offered to military personnel and their dependents. While the exchanges may choose to reduce their contributions to MWR programs as one way of offsetting the additional cost of wages, it is by no means the only possible adjustment. Thus, we find that the Employer's assertion that MWR programs will necessarily suffer if the wages of AS employees are increased is merely speculative. Moreover, even if MWR funding is reduced as a result of wage increases awarded to AS employees, we are convinced that such a reduction is fair given that these programs have benefited at the expense of these employees for a number of years.
A third concern raised by the Employer is that there are two bills currently pending in Congress which, if enacted, would lift the pay cap for prevailing rate employees. It urges us to adopt a wait-and-see approach, maintaining that the Panel would be out of step with Congress should it do otherwise. However, even if Congress were to enact legislation which lifts the pay cap for prevailing rate employees, this would not end the matter because AS employees now have the right to bargain collectively for wages. Thus, we are not persuaded that potential Congressional action with respect to wages for prevailing rate employees should have any impact on the current dispute.
Finding nothing to militate against alteration of the status quo, we will now examine the Employer's ability to pay. It is clear from the financial data provided by the Employer that profits at the exchanges in the Auburn region are likely to be significantly lower in fiscal year 1991 than they were in fiscal year 1990, primarily as a result of the movement of military personnel to the Middle East in support of Operation Desert Storm. It is also equally apparent, however, that the exchanges are profitable operations and are likely to remain so. In this regard, once these troops return to their home bases, a subsequent rise in exchange profits is likely to occur. In reviewing the overall profit picture, we also note the Employer's assertion that the profits generated in prior years have already been committed, and that the cost of any wage increase would have to be paid out of profits generated in fiscal year 1992. Overall, we are persuaded, based on the financial data submitted by the Employer, that it has the ability to pay a moderate wage increase, which would be an incremental improvement over the current wage rates.
In accordance with the above discussion, we conclude that AS employees are entitled to an increase in their wage rates. Because of the uncertainty of the Employer's profit margin for fiscal year 1992, we believe that a 19 to 20 percent wage increase, as proposed by the Union, is extreme. Moreover, given that profits from previous years have already been committed for other purposes, retroactivity, as contemplated by the Union's proposal, would be overly burdensome. Accordingly, we shall order that wage rates for the approximately 75 AS employees be increased by 10 percent beginning with the first full pay period in 1992; the new rates shall remain in effect through the life of the parties' collective-bargaining agreement. In our view, this compromise solution represents a fair balancing of the equities as presented
by the parties in the circumstances of this case.
Pursuant to the authority vested in it by the Federal Service
Labor-Management Relations Statute, 5 U.S.C. § 7119, and because of the failure of the parties to resolve their dispute during the course of the proceedings instituted under the Panel's regulations, 5 C.F.R. § 2471.6(a) (2), the Federal Service Impasses Panel under § 2471.11(a) of its regulations hereby orders the following:
Wage rates for AS employees shall be increased by 10 percent beginning with the first full pay period in calendar year 1992. The new rates shall remain in effect through the life of the parties'
By direction of the Panel.
Linda A. Lafferty
February 10, 1992