June 30, 2011

Evolving Arbitration

Marc Comtois

Sam offers Fred $10, but Fred wants $30. To solve the problem, they call in their buddy, "The Arbitrator", who decides $20 is fair. Sam pays more, Fred gets more.

The next week, Fred asks Sam for $30 again, but Sam says he's only got $13 in his wallet. Fred says Sam is holding out. They go to The Arbitrator, who says Sam isn't holding out, but he should check back at the house and he could probably come up with more than $13. To be fair, The Arbitrator says Sam should give Fred $17.50.

The next week, in anticipation of the request, Sam offers Fred $10 and explains that's really all he can afford, assuming he gets paid next week. Fred still wants $30, but says he can live with with $20 so long as Sam kicks in an extra $.30 a week to help him buy a pack of gum. They turn to The Arbitrator, who thinks Fred is asking a bit much, given Sam's current financial situation, but in the spirit of cooperation agrees that Sam could handle $12.50 along with the $.30 per week.

Then, The Arbitrator says from now on, he'll take the last best offer from each of them and pick one.

Sam prepares for Fred's next request. Based on past precedent, the Arbitrator has never awarded exactly what either of them has proposed before, but "compromise" always results in Sam paying more than he offered. Sam assumes he'd better build a compromise-type number into his next offer so that it has a realistic chance of getting picked. As usual, Sam expects he'll have about $10 in his wallet when Fred comes calling, but he scrapes together a few more bucks--some from his kid's allowance--knowing that, based on past transactions, Fred will want more and will get more--he always has.

When the time comes, Sam offers Fred $15 and the $.25 gum subsidization and crosses his fingers. Fred asks for $20 along with $.30 per week for gum--the price has gone up. The Arbitrator looks at both offers. The price of gum has gone up and Sam and Fred are only $2 apart as far as the main nut. Besides, Winston, their friend from East Greenwich, has been loaning their other friend James $25 regularly since last year and Sam makes almost as much as Winston. And Sam has always managed to come up with more than his original offer.

The Arbitrator sides with Fred.

Sam moves out of state.

Fred walks up to Winston...

Comments, although monitored, are not necessarily representative of the views Anchor Rising's contributors or approved by them. We reserve the right to delete or modify comments for any reason.

The unions all work together across the various towns and even hire the same people. WHy don't the towns do the same thing? All get together, figure out what they can realistically pay and that be the number that every town submits. Can't they also work with TIm Duffy to pay the same legal team to represent all of them across all the contracts? One of the major problems is the union leadership is professional and experienced and the school committees they're dealing with are either relatives of union members or very inexperienced moms and dads who got on the committee simply because they wanted to support the schools for a better education for their kids. Next thing they know, they have teachers and lawyers telling the newspapers that they don't respect education and they're ruining the schools. It's no wonder that the unions win so often.

And Same should have only offered $1.

Posted by: Patrick at June 30, 2011 8:57 AM

This isn't going to pass. Too bad. Because we need a 10% sales tax and the highest property taxes in America to finally beat some sense into the progressive brainwashed a Moron Majority of this state that has elected the party of maggots, cronies, welfare queens and union scumbags continuously since 1934.

Posted by: Tommy Cranston at June 30, 2011 9:20 AM

Great analogy but you left out the part where their friend the 'Arbitrator', a former state senator and piss poor lawyer who wants to be a judge someday, gets the call from his friend and former colleague Dominick.

Posted by: Max Diesel at June 30, 2011 10:12 AM

You also left out where Fred has been making $10 for 6 years and thought it was time for a raise. Fred and Sam aren't going to see the Arbitrator next week but in 3 years when the contract is up. At which time they'll haggle over a wage for 6 months or a few years all the while Fred is still making the same $10. If the arbitration is binding then the Arbitrator isn't going to side with either party, he is going to look and see what Tom, Dick, and Harry are paying their employees in similar sized companies doing similar work and use that as a basis for his decision.

The simpletons who frequently rant and rave on your comments section might find this to be a witty and accurate analogy but its pretty simplistic and way off the mark. Do some research for us, pick a city or town that has binding arbitration with a union and delve into the arbitration history over the years. Find out what each side asked for, what they offered in return, and what they were later awarded. It would take some time but would be far more valuable and insightful than a quick hit-piece like this.

Posted by: sierra1 at June 30, 2011 5:45 PM

If the arbitration is binding then the Arbitrator isn't going to side with either party...
The second clause in no way follows from the first. The assumption that "fairness" automatically follows from maximizing power in the hands of unaccountable officials is just bizarre.

Posted by: Andrew at June 30, 2011 7:37 PM

Where is the power being maximized? If they've gone to arbitration then the two parties that you claim are in bed together, the union and the politician, can't agree and therefore are not in bed together. That's why they're in arbitration. Arbitrators don't frequently pick one side over another unless a demand or counter-demand is particularly egregious.

Posted by: seirra1 at June 30, 2011 8:24 PM

Power is being maximized in the hands of the arbitrator, who is given the power to impose taxation on people he or she is not accountable to. There's no recourse, if the arbitrator makes bad decisions the people's control of the policies they must live under is lost.

Posted by: Andrew at June 30, 2011 8:38 PM

Couldn't the arbitrator just as easily make a bad decision that hurts the union? Or is there no such thing as a bad decision as long as its the union that's getting screwed?
Or is the solution to let the union workers make the same wage years after a contract expires and then let the outgoing mayor cut a deal so he can get elected to higher office? Then have the whole thing crumble with a new mayor, old mayors in DC and the only ones left holding the bag is the union guys wondering what the hell just happened.

Posted by: sierra1 at June 30, 2011 8:46 PM

Sierra, you keep referring to the Providence Fire Department, but this bill had nothing to do with them. This was about teachers. Teachers get raises every year. So your "still making $10 six years later" is not valid.

Why does the PFD have one of the highest staffing levels in the US?

Posted by: Patrick at June 30, 2011 9:44 PM

Nice theory, Sierra1. But the reality experienced by Rhode Island has been just the opposite: binding arbitration has been very, very good to labor. See Steve Frias' op-ed of last November.

As for bags, again, nice theory. But only the taxpayer has been left holding the bag as, for decades, selfish politicians have handed out very generous compensation and obscene pensions (retire and start collecting after only twenty years of work? are you kidding me???) from our checkbooks.

Posted by: Monique at June 30, 2011 9:51 PM

Patrick, I do not keep referring to PFD. I am neither a fireman nor a teacher so I am speaking generally about the arbitration process.
Monique, I don't think the average Rhode Islander has any clue about arbitration and the back stabbing, lying, BS that goes on in negotiations that eventually ends up in arbitration. I haven't read Frias op-ed, I will look into it, though I doubt it will be at all enlightening. From experience, arbitration is not as union friendly as you may think.
As for 20 years and out, maybe it should be pushed back a bit. But ask yourself honestly if you want to see a 60+ year old patrolman showing up to the scene of a disturbance, Domestic assault, serious accident where lives may be in danger. I've seen old patrolman who won't retire because they have nothing else, they're a danger to the public, themselves, and the other officers they work with. I personally have been injured due to their inaction and inability as have many others.
As for me I don't want some aged firefighter trying to rescue me or my family from a car wreck or burning building because you think he hasn't put in enough time yet, pretty arrogant of you. The job is a young mans game, its that simple.
Teachers, I guess if they're not senile they can keep teaching.

Posted by: seirra1 at June 30, 2011 11:26 PM

Nobody is saying 60*. Just 55 like most Fire and police all over the damn country. You know, states that are not 50 out of 50 in business climate?

Posted by: Tommy Cranston at July 1, 2011 8:52 AM

sierra1 said:
"The simpletons who frequently rant and rave on your comments section might find this to be a witty and accurate analogy but its pretty simplistic and way off the mark."

Actually, some of us have actually been there. At the table negotiating and then testifying. But the thing I remember most was my brethren trying to find out who new the guy (the arbitrator) and do we have an in. Lets not ignore that this is the State of Rhode Island. The system was if you got a pro-labor guy you made out great if not, you still got something and you knew by the time the decision came down that you had another shot in less than a year. The taxpayer ends up holding the bag in either scenario.

Posted by: Max Diesel at July 1, 2011 9:25 AM


Yes, an arbitrator could make a bad decision from the perspective of the union, or be a King-Solomon-in-reverse who manages to makes decisions that hurt everyone involved. The point us, if the arbitrator is someone inclined to make poor decisions that don't benefit the community, what can the community do about it, to reverse damage being done by one individual? The answer, in the binding arbitration schemes that keep getting proposed in RI, is nothing.

Hoping that you get a better arbitrator, or better receiver, or better king next time around isn't a valid governing philosophy. And feelings amongst the citizenry that they cannot change or influence the claims on their incomes and property that will be enforced by government has led to civil unrest all throughout history.

Posted by: Andrew at July 1, 2011 2:52 PM

Based on past postings here, seirra1 (sometimes "sierra1") is or was a police officer, so he is not totally disinterested on this matter, as his "I am neither a fireman nor a teacher so I am speaking generally about the arbitration process" statement might lead you to believe. Please correct me if I am wrong, I have no direct knowledge on the matter.

I do, however, have direct knowledge about the arbitration process. To answer Seirra's question, the problem with arbitrators, particularly binding arbitrators, is that they are not actually neutral at all. This is a progressive illusion. True neutrality is examining a case in isolation on its objective merits. The arbitrator selection process ensures that arbitrators with polar decisions, i.e. ruling for one side or the other, are quickly weeded out of the system because nobody selects them again. What results is the arbitrator pool is composed almost entirely of arbitrators who "split the baby" most of the time, or rule down the middle. This is not fairness or neutrality - it is the opposite, as most cases should objectively result in a clean judgment for one side or the other (e.g., awarding the union no raises if the city is broke, not splitting the difference between the requested 8% increase and the city's 0% ability to pay). Arbitrators also tend to be a very particular type of attorney through self-selection, typically coming from a organized labor background since arbitration primarily involves employment law and collective bargaining agreements. Arbitrator case law, though not binding, heavily influences opinions as well and is extremely pro-union. The AAA canon of progressive discipline is one illustration of many of this reality. All of this is why unions are willing to trade in all of their usual tools for binding arbitration. It is the equivalent of checkmate in their chess game against the taxpayers. There is nothing left for which to fight if they can ensure yearly increases from a friendly arbitrator who must grant them in order to find future work.

The result?

Arbitrator Awards Boston Firefighters 19% Raise, Mandates Testing:

The city could afford 14%. The union wanted 21%. The arbitrator ruled down the middle, as always. The union got its pay raise and taxes went up. See how that works?

Posted by: Dan at July 1, 2011 4:20 PM
Post a comment

Remember personal info?

Important note: The text "http:" cannot appear anywhere in your comment.