I. Graduate Student Union will leave us financially worse off.

Your net financial benefits of having a graduate student union can be calculated as follows:

(Your Net Benefit) = (Increase in Salary) + (Increase in Benefits) – (Decrease in Financial Aid) – (Union Dues)

If a union forms, you will have to pay union dues whether or not you are a member of the union as long as you hold a position that is part of the bargaining unit. The currently popular estimate of dues rate is 1.44% of individual paycheck. (Of course, this number could be higher. At NYU, the rate is 2%.) If you are a student in the Sciences and make $36,000 per year as a Research Assistant, then this amounts to $518 per year. If you are a student in Humanities and make $21,200 per year as a Teaching Fellow, then you would pay $305.

If you have spoken with a union organizer, he or she might have told you that the union can negotiate a higher salary and greater benefits on your behalf that would be more than enough to offset your financial loss. The union, with its greater collective bargaining power, may be able to negotiate a contract that guarantees you free dental and vision care, dependent healthcare, childcare subsidies, subsidized housings, and so on. It probably won’t.

There are two reasons behind this assertion.

  • Where will the money come from? First, it is hard to identify a new source of revenue that could support any significant increase in benefits (such as free dental care) or salary (5 percent increase over last year’s salary). The University has three main sources of revenue: research grants, tuition, and returns on the endowment. In order to provide graduate students additional benefits or pay, the University will have to get more money from one or more of these sources.

    • Research grants: A sizable portion of the University’s budget derives from research grants that originate from federal, state, and private sources, and are won by the prestigious faculty. The total amount of grants available to the world each year is an external variable over which the University has little control. The best Harvard can do is to incentivize its faculty to get the most funding they can and they are known to be very successful at doing so. Federal funding for research has been decreasing over the years, forcing the University to seek other sources of revenue to support their research and related programs. Given the situation, it is hard to expect research grants to be a source for new expenditures.

    • Tuition (and financial aid): Some professional schools, such as the Medical School, the Business School, and the Law School, may be able to raise their students’ tuition to cover the extra costs. This is not really feasible for Schools like the Graduate School of Arts and Sciences (GSAS) (which enrolls the majority of the graduate student population) that pay for most of their students’ tuition. If push comes to shove, the Faculty of Arts and Sciences (to which the GSAS belongs) might raise the undergraduate college tuition or ask the graduate students to pay their tuition earlier than they are currently expected to do so. Any increase in student salary or benefits would be offset by this additional individual expense.Similarly, if the University is required to provide additional compensation, then it may reduce the amount of financial aid it provides to graduate students. For example, many graduate students, especially in the Humanities and Social Sciences, receive what is known as “top-up”. In simplified terms, top-up is an additional financial support that the University provides to Teaching Fellows in certain programs with the intention of allowing them to focus more on their study and worry less about earning money, say, by teaching additional sections. The union may be able to negotiate increased salary and benefits but the University may decide to reduce financial aid, resulting in no net benefits to students.

    • Endowment: Many people think that given the size of its endowment (about $36 billion as of June 2016) Harvard University surely has the capacity to give its employees significantly greater benefits and pay. A lot of people see the endowment as a free pool of money that the University administrators could spend however they see fit. This is far from true.There are a couple of good recent articles that explains the University’s endowment (one from the Crimson and another from Gazette). As these articles explain, the endowment is made up of 13,000 individual funds, the majority of which are restricted (87% according to the Crimson article), meaning the funds have to be used for specific purposes (say, to provide financial aid to Korean graduate students who study Physics and recently became American citizens). When donors donate money to create an endowment they specify the terms of use to which the University is legally bound. This means the University cannot “just take the money out of the endowment” and give more salary and benefits to its graduate students. (It would be a different story if someone could convince a billionaire hedge fund manager that additional benefits to graduate students such as free dental and vision care are worth donating $100 million for to create a new endowment. That might still not be enough money though.)More importantly, what the University spends are not the endowment funds themselves but the returns on the investments made with those funds. If the University makes 6.5% return on the investments and if the inflation was 2.5% that year, then the University can spend up to 4% of the endowment without starting to use up the original funds. If the University has net negative returns, like how it lost $2 billion this past year, then to fulfill their fiducial responsibility the University administrators would have to tighten the budget by cutting back support to various programs.

      Significant increases in benefits and pay would be possible to even consider when the University endowment is performing well and expected to do so for many years to come. However, the market is always unpredictable and it would be wise of the University to put a reasonable cap on its spending. Especially, in the current climate, such increases might be well-characterized as fantasies.

      If the University has no extra money to pay for additional expenses, then they simply cannot. The union supporters have not yet provided any convincing evidence that there is a new source of funding to pay for additional expenses they might demand once the union forms. They could also argue that certain University funds are being misappropriated or spending mis-prioritized, but they have done neither so far.

  • Strike is the only weapon but probably not an effective one.  Strike is the ultimate weapon of a union. It is practically the only, albeit very powerful, source of negotiating power when the union discusses the terms and conditions of your employment with the University. This weapon, however, may never be used or, if used, is likely to financially harm you.

    • Strike is unlikely: The UAW union constitution specifies the procedure through which a local union can call on a strike. First, two-thirds of union members are required to vote in a secret ballot vote to request an approval from the parent union organization. I can hardly imagine a situation where the overwhelming majority of the bargaining unit feels so poorly about their experiences at Harvard to vote for a strike and face the significantly disruptive consequences that will result.

      Second, the rules of calling strikes are such that a strike can be used only as a last resort after substantial negotiating efforts have failed. Section 2 of Article 50. Strike of the UAW constitution states:

      If the Local Union involved is unable to reach an agreement with the employer without strike action, the Recording Secretary of the Local Union shall prepare a full statement of the matters in controversy and forward the same to the Regional Director and International President. The Regional Director or her/his assigned representative in conjunction with the Local Union committee shall attempt to effect a settlement. Upon failure to effect a settlement s/he shall send the International President her/his recommendation of approval or disapproval of a strike. Upon receipt of the statement of matters in controversy from the Regional Director, the International President shall prepare and forward a copy thereof to each member of the International Executive Board together with a request for their vote upon the question of approving a strike of those involved to enforce their decision in relation thereto. Upon receipt of the vote of the members of the International Executive Board, the International President shall forthwith notify in writing the Regional Director and the Local Union of the decision of the International Executive Board.”

      These checks and procedures are in place because while workers are on strike, the parent union has to pay the workers “strike pay” which comes from the union’s strike fund (part of your dues money will go to maintain this fund). This is obviously a precious fund for the union and thus the people who have the authority to approve strikes should judge wisely when to exercise their power.All of this is to say that the local graduate student union will not be able to make unreasonable demands—things like free dental and vision care might qualify, at least in the eyes of the upper level managers in the union hierarchy—and go on strike if it cannot win those terms during the collective bargaining. Given the pressure from above, the local union will have to settle for more reasonable terms, which would translate to marginal to practically no improvements in benefits or pay given the constrained resources of the University.

    • Strike pay and penalty for “crossing the picket line”: While the union goes on strike and you stop reporting to work, the University is allowed to stop paying you salary and contributing to your benefits. If the strike occurs at the end of a contract, then you may lose your benefits such as health insurance and other assistance you may be receiving from the University. Beginning the 8th day of a strike, you will be able to start collecting $40 per day strike pay Monday through Friday and may be eligible to apply for strike benefits. (During the first seven days of a strike, you don’t get anything. This might be the reason why the University of Oregon Graduate Teaching Fellows went on a strike for only eight days. My guess is that the higher ups in the union wouldn’t allow for a longer strike because then the union would have to start paying the people on strike.) However, you will have to participate in the strike activities such as picket assignments. You can learn more about strike pay and benefits here.

      While the union is on strike, you have the freedom not to participate and report to work. However, the union can fine you for “crossing the picket line”. The union has this measure in place in order to discourage workers from undermining its collective effort to economically damage its employer while on strike. According to a rumor, several Harvard University Dining Service (HUDS) workers who reported to work during the strike were fined over $300 a day by their union. The union leaders visited them at their homes at night, presented the bill for thousands of dollars, and intimidated them to stop crossing the picket line. In addition, many workers got their strike pay checks late and were told not to cash out the checks until a later date (perhaps, due to low balance in the strike fund). I hope nothing like this ever happens to our graduate students.

In summary, the union will cost you several hundreds of dollars every year but won’t be able to negotiate and win enough benefits to offset your loss. This is because the University is already financially constrained and because the union won’t be able to effectively use its only weapon, strike. If the weapon is used, it will likely to cost you more than what the union can gain for you as a result.

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