Economics And Negotiations: Not Always Cut And Dry

One of the ongoing challenges related to examining orchestra negotiation issues is taking something with a relatively large number of dynamic variables and editing it down to point where you don’t need intimate knowledge of multiple components in order to identify and understand the related issues. Some topics are better suited to this than others while some are stubbornly immune. Case in point, the recent unemployment benefit negotiation brouhaha in Richmond, VA.

On 2/3/2012, Aaron Andersen posted an excellent comment to an article about the Richmond Symphony Orchestra’s (RSO) growing labor animosity; what makes the comment so valuable is it is one of the better examples I’ve come across that demonstrates just how deep some of these waters are.

At 403 words, Anderson’s comment is just about as concise as can be on a topic such as this while still offering something of value to nearly every reader. It not only covers the math but how it applies to the dynamic environment of negotiations; which, in turn, is tied to overall labor relations, which is a critical factor in determining institutional health.

In the end, Anderson doesn’t attempt to justify whether or not the RSO’s decision to cut its budget is the right thing to do; instead, it examines the dynamic impact of one method the organization utilized to implement those cuts and how they might be counterproductive.

In short, process matters and you can’t expect much good to come from an applying an overly static analysis to something as dynamic as labor relations and debt management.

Andreson’s comment is such a gem; I’m going to post it here, unedited.

First of all, the RSO Board and Management should have gotten their economics and Negotiation 101 right. From the excerpt of the newspaper article you posted here: [source link].

“The Richmond Symphony pays its unemployment insurance out of pocket to the tune of about $70,000 a year, he said. But the bulk of the Virginia Symphony’s claims go directly through the state’s system, funded with taxpayer dollars.”

Unless I’m reading that wrong, or unless the journalist got it wrong, which is possible, the RSO pays $70K per year, but the musicians get more than that in benefits. In other words, the tax payers are subsidizing the fact that the RSO is a 38 week orchestra, instead of a 52 week orchestra. Offloading a portion of employee compensation to taxpayers is a good thing for the RSO management, a pretty sweet deal for the musicians AND the administration, and now they’re trying to end it! I’m having trouble swallowing my scorn, here, really.

Even if the comparison to teachers is appropriate (and that can be debated–I don’t know how much Richmond teachers are paid, but it is quite possibly more than $33-44K per year), that doesn’t change the fact that it is an economically foolish move to reduce your costs $5 by reducing your employees’ wages $10. They have asked the Virginia legislature to remove a subsidy to their own employees.

As counter-intuitive as it may sound, a better way to reduce costs by $70K would have actually been to cut total orchestra compensation by $70K. It might be harder to negotiate such a cut than to lobby for legislation, maybe, but the musicians would be better off than if this legislative change goes forward.

From a negotiations perspective, the administration has tried to get the musicians to give up something that has more value to the musicians than it has to the administration. Dumb, dumb, dumb. Except they are going around the musicians, and trying to change the environment of the negotiations instead. Do they really now expect the musicians NOT to ask for higher pay to offset any lost unemployment compensation?

Another thing, and I assume this is the fault of the orchestra… The fact that no discussion of financial issues can happen outside of the negotiations process means that this information will NEVER be discussed objectively and rationally. It’s only going to be discussed in an adversarial situation. Good luck with that.