Assuming that the average age at admission of the members of unions is thirty-five, the cost of insurance in the regular companies is far higher than the cost for an equal amount in the unions. The conductors pay their union twenty-five per cent. less than they would have to pay to an insurance company and the locomotive firemen pay considerably less than one half of company rates. These rates, moreover, are for insurance against death only, while the insurance offered by the brotherhoods also provides against total disability.
The compulsory insurance has not been in operation long enough in any of the organizations for its full effect to be seen. It is certain that as the unions grow older they must materially raise the rates at which they issue insurance. The rapid growth in membership has brought into all the unions in this class in recent years a proportionately large number of young men. The limitation on the age of the insured has contributed to this result. As these members grow older, the death rate will increase. As has been noted above, however, it has not been primarily the cheapness of the insurance but the combination of death and disability insurance which has been the advantage possessed by the union systems.
The primary purpose of the insurance features of these organizations is to obtain for the members and their families a higher degree of economic security. The two great economic contingencies against which the railway organizations provide insurance are, first, the loss to a family in consequence of the death of the income-earning member, and second, the economic hardship involved in shifting from one industry to another made necessary by certain severe physical accidents. Insurance paid to the totally disabled employee, or to the family of a deceased member, is frequentlythe means of maintaining the standard of living of the unfortunate family. The risks to which the railway employee is exposed are due to the nature of the trade, the negligence of a fellow workman, or the negligence of the employers. Compensation for only the last class is given by the law. Against the other two kinds of accident the railway employee must himself make provision, and this provision is amplest and surest when made by insurance. The organizations, as we have seen, have never entirely subordinated the idea of benevolence to the principles of business. In the early years of its history, each grand convention set aside large sums for charitable payments. Before the adoption and satisfactory operation of the Engineers' insurance system, it is estimated that eight tenths of the husbands and fathers of those who applied for charity were uninsured.[86]Purely charitable relief was found inadequate and the present systems represent a compromise between charity and business.
The insurance features have further been the means of securing and retaining members and thus building up these trade organizations as factors in collective bargaining. The power of the brotherhoods to secure satisfactory agreements with their employers is largely measured by the strength of the organizations, and that strength is usually in direct proportion to the development of their insurance systems. Thus not only is insurance a prime support in the collective bargaining of the unions, but it insures control in the exercise of that function. The infrequency of railroad strikes may be attributed largely to the almost perfect control of the head officials of the brotherhoods over their membership.
The most needed trade-union benefits are those against death and these were the first to be established. At the present time about one half of American national trade unions maintain death benefit systems. In 1904, out of a total of one hundred and seventeen national unions affiliated with the American Federation of Labor, fifty-three were paying death benefits.[87]Of those unions not affiliated with the American Federation of Labor, ten were also paying such benefits.
The development of death benefits in American trade unions resembles closely the growth of the insurance systems described in the preceding chapter. The first unions to adopt death benefits, for example, paid for a time a sum fluctuating in amount. The benefit was in each case the sum raised by per capita assessments, and the yield varied according to the membership. Thus, the Iron Molders paid a fluctuating benefit from 1870 to 1879.[88]Upon the death of a member, an assessment of forty cents and later of forty-five per capita was levied. At Detroit in 1873 the Cigar Makers inaugurated an endowment plan which provided for the payment of a death benefit, the amount of which was to be the sum raised by an assessment of ten cents on each member. Similarly, the Glass Bottle Blowers, introducing the benefit as late as 1891, made provision for paying the amount secured by an assessment of twenty-five cents per capita.[89]
When the fluctuating benefits were inaugurated the unions were without experience in the exercise of beneficiary functions. They could not calculate with any exactness the amount of the assessment necessary to provide benefits in fixed sum. They preferred, therefore, not to guarantee the payment of any amount. The character of the first death benefit in the Granite Cutters' Union illustrates the reluctance of the Union in assuming the responsibility of guaranteeing fixed benefits. In 1877 they adopted a benefit of fifty dollars, but also provided for an additional voluntary benefit to be raised by an assessment of fifty cents. After a few years the entire system was replaced by provision for the payment of a fixed funeral benefit.
The fluctuating benefit was very unsatisfactory, inasmuch as the insured member could not be certain as to what amount he would receive, and this uncertainty was aggravated by the voluntary character of the association. Even where participation was compulsory the fluctuations in the number of members were much greater than at present.
As soon as the unions became sufficiently strong, financially and numerically, and had acquired experience in the management of the benefit, they, with few exceptions, guaranteed to their members a benefit of fixed amount. A fixed payment of one hundred dollars was guaranteed by the Iron Molders in 1879 on the death of a member, and in 1882 the voluntary organization known as the Beneficial Association, which had maintained the system of special assessments, was disbanded.[90]The advantage of paying a benefit of fixed amount, as demonstrated by the experience of Local Union No. 87 of Brooklyn, led to the adoption of this system by the Cigar Makers' International Union, in September, 1880.[91]
The majority of American trade unions have inaugurated their death benefits since 1880,[92]and hence have escaped the experimental period of benefits based upon the fluctuatingprinciple. Learning from the experience of the older unions, they have in most cases paid from the beginning death benefits of fixed amount. The benefit is a definite sum in all the unions except the Watch Case Engravers' Association and the Saw Smiths' Union, which in their constitutions of 1901 and 1902 respectively provide for the payment of a benefit upon a fluctuating basis.[93]This must be attributed to the fact that the unions are not sufficiently strong to guarantee the payment of a definite amount.
Under the fluctuating system the sum paid was often larger than the amount at which the benefit was later fixed. When, in 1880, the Cigar Makers adopted a death benefit of twenty-five dollars, their membership had increased to 4400, making possible, by a per capita assessment of ten cents, the payment of four hundred and forty-four dollars upon the death of each member. The assessment of twenty-five cents levied by the Glass Bottle Blowers for each death benefit upon a membership of 2423 in 1891 yielded a greater sum than the definite amount adopted one year later. The amount paid under the fluctuating system in the Iron Molders was also larger than the fixed amount later guaranteed by the International Union.
In another respect the early death benefits and insurance systems were alike. Participation in the more important and successful death systems was voluntary. Membership in the Iron Molders' Beneficial Association, created to pay death benefits, was, for example, entirely optional.[94]The first constitution of the Granite Cutters provided for an additional voluntary benefit.[95]In both of the above named unions the voluntary idea was short-lived. In January, 1879, the Iron Molders provided for the payment of a death benefit for all members of the craft.[96]By 1884 the GraniteCutters had abolished the voluntary death benefit and paid it to all members.[97]
Thus, both the death benefit and the insurance systems in American trade unions had their origin in the movement for mutual insurance which was so widespread in the United States immediately after the Civil War. Only in the railway brotherhoods did the plan result in any considerable increase in membership. In the other unions the insurance systems were replaced by the establishment of benefits, and these were usually smaller in amount than the insurance systems had contemplated.[98]
The tendency in those unions which have longest maintained the death benefit has been to increase the amount of the benefit and to grade the amount according to the length of membership. The policy of the unions in these respects has, however, varied considerably. In some cases there has been an increase in the minimum amount paid, together with provision for the payment of larger sums to members who have been longer in good standing. In other unions, such as the Iron Molders and the Pattern Makers, the regular benefit remains as originally established, but a larger sum is paid to older members. Only a few of the older organizations retain the uniform benefit. The most notable of these are the Typographical Union, the Glass Bottle Blowers, and the Hatters.
The grading of the death benefit serves two purposes. In the first place, the funds are protected. If the benefit were uniform and large, persons in bad health would be tempted to join the union in order to secure protection for their families. The grading of the benefit is accordingly a crude but fairly effective device against a danger which presents itself as soon as the amount becomes large enough to be attractive to "bad risks." A more important reason, perhaps, for the grading of the benefit is the desire to makeit a more effective agency in attracting and holding members. If continuous membership carries with it constantly increasing insurance, the lapses in membership lessen.
The maximum death benefits paid by the Cigar Makers and the Glass Bottle Blowers are $550 and $500, respectively. The Iron Molders pay a maximum benefit of $200; the Carpenters of $200; the Pattern Makers of $400; the Germania Typographia of $200. In all these cases except that of the Glass Bottle Blowers the benefit is graded according to the period of membership. The maximum benefit is paid in the Cigar Makers and in the Pattern Makers to members of fifteen years' standing.
Only a few unions have decreased the amount of the benefit from that first established. Among these are the Brotherhood of Carpenters, the Brotherhood of Leather Workers on Horse Goods, the Tailors' Union, and the Metal Polishers' Union. In the case of the Carpenters the death benefit which was originally established at $250 in 1882 was $100 in 1905. Changes of this kind have naturally followed the too liberal policy of inexperienced unions.
The following table, giving the amount of the death benefit as originally established and as paid at present in certain of the more important unions which have adopted the graded death benefit, illustrates the variety of forms which the systems take:
A few of the unions require only that the deceased member shall have been in good standing. These unions ordinarily pay a small benefit, although the Glass Bottle Blowerspay five hundred dollars without requiring a preliminary period of membership. The term of necessary membership varies from thirty days in the case of the Barbers to two years in the Cigar Makers. The usual requirement is that the member shall have been in good standing for six months.
A few of the unions restrict the benefit to members under a certain age at the time of admission. Where such an age limit is imposed it is ordinarily fifty years, but in a few unions it is sixty years.
The following table shows the conditions imposed upon the payment of the death benefit in the more important unions:
Only a few unions make good physical condition a requisite for admission to the death benefit. In a small number provision is made that if death result from disease incurredprior to admission the union shall not pay the benefit. In the majority of the unions every member admitted to the union is covered by the death benefit. Some of the unions, such as the Brotherhood of Carpenters, the Boot and Shoe Workers' Union, the Brotherhood of Painters, and the Pattern Makers' League, provide a smaller benefit for those not eligible at time of initiation. In the Brotherhood of Carpenters any apprentice under twenty-one years of age, or any candidate for membership over fifty years of age, in ill health and not qualified for full benefit when admitted to the union, is limited to a funeral allowance of fifty dollars.[99]The Boot and Shoe Workers' Union provides that members of sixty years of age, or those afflicted with chronic diseases at time of initiation, shall be eligible to half benefit only.[100]In the Brotherhood of Painters members of sound health and over fifty years of age when admitted are eligible to a semi-beneficial benefit of fifty dollars and to a funeral benefit of twenty-five dollars in case of death of wife.[101]
The requirement of a preliminary period of membership serves to protect the union against the entrance of persons who wish to join because they are in ill health and are anxious to secure insurance which they could not otherwise get. None of the unions provide, however, for any deliberate selection of risks, and the mortality is higher than it would be if the applicants were examined.
The death benefit is thus regarded by the unions not as a pure matter of business. It is paid partly on charitable grounds, and the small increase in the cost of the benefit occasioned by the lack of strict physical requirements is regarded as more than compensated by the increase in the solidarity of the organization thus attained.
In several important unions the death benefit has been made the basis for a disability benefit. Thus a member receiving the disability benefit loses his right to the death benefit. So closely are the two benefits associated in theseorganizations that they are practically a single benefit. This combination of death and disability benefits is found chiefly in those trades in which the workmen are exposed to great danger of being disabled by accident.[102]The principal unions maintaining the disability benefit are the Iron Molders, the Brotherhood of Carpenters and Joiners, the Cigar Makers, the Painters, the Wood Workers, the Metal Workers, the Glass Workers, and the Boot and Shoe Workers.[103]
Nearly all the unions thus combining death and disability benefits grade the disability benefit. They usually also differentiate the two benefits either in the amount paid or in the period of membership required for eligibility to the benefit. The Iron Molders, the Cigar Makers and the Painters pay the same sums in case of disability as of death.[104]The other unions, with one exception, provide for a greater maximum benefit in case of disability. The period of good standing required to draw a particular sum is usually greater in the case of the disability benefit than in the case of the death benefit. The provisions of the Brotherhood of Carpenters are fairly typical.[105]After six months' good standing members become eligible to a deathbenefit of one hundred dollars, but they are not eligible to a disability benefit until they have been in membership twelve months. The maximum death benefit is two hundred dollars, while the maximum disability benefit is four hundred dollars. The maximum death benefit is paid on the death of members in good standing for one year, while to be eligible to the maximum disability benefit requires a membership of five years.[106]
The following table shows the amounts of the death and disability benefits in the more important unions, as originally established and as paid in 1905:
The ratio of disability benefits paid to death benefits paid varies in the different unions according to the definition of disability adopted. The Iron Molders' Union, which took the initiative in adopting a national disability benefit,undertook to pay benefits to all disabled members, with two exceptions. First, the disability must not have been caused by dissipation, and secondly, the member must not have been disabled before joining the Association.[107]The Granite Cutters' Union, however, when establishing their voluntary insurance association in 1877, limited the benefit to members disabled for life by any real accident suffered while following employment as a granite cutter.[108]The two benefits were unlike in that the Iron Molders paid the benefit no matter how the disability had been incurred, while the Granite Cutters paid only when the disability resulted from a trade accident.
Some of the unions now paying the disability benefit, as for example the Boot and Shoe Workers, have followed the policy of the Iron Molders in paying the benefit in all cases of disability; while others, for example the Brotherhood of Carpenters, pay only where the disability is incurred "while working at the trade." Under this system, in the case of the Iron Molders, the claims for disability were so numerous that in 1882 the term "permanent disability" was defined to mean "total blindness, the loss of an arm or leg, or both," and since 1890 also paralysis.[109]Similarly in 1880 the Granite Cutters defined more exactly what constituted total disability.[110]
The younger unions have usually adopted the later revised definition of the term "permanent or total disability," with such modifications as are made necessary by the peculiar nature of the trade. The system of the Brotherhood of Carpenters and Joiners, adopted in 1886, and still in force, defines permanent disability as "total blindness, the loss of an arm or leg, or both, the total disability of a limb, the loss of four fingers on one hand, or being afflicted with anyphysical disability resulting from sudden accident."[111]The Amalgamated Glass Workers as late as 1900 had made no attempt to give definite limits to the term "total disability," but in 1903 they adopted the definition of the Carpenters and extended it to include disability resulting from paralysis.[112]The Amalgamated Wood Workers, however, still provide simply that to receive the benefit members shall be disabled from following the trade.[113]
The definitions adopted by the unions are intended as guides for and restrictions upon the administrative officials, but in all cases the latter are given considerable latitude. The cost of the benefit, therefore, depends largely upon the strictness with which the officials construe the rules. In those unions where the injuries entitling to a benefit are not specifically defined, the officers have great discretionary power. Indeed, even if they have the best intention, it is in many trades often impossible to obtain positive evidence as to the totality or permanency of the disability. For example, the Brotherhood of Painters find it almost impossible to pass intelligently upon claims for disability resulting from lead poisoning.
The following table shows the sums paid for death and disability claims in certain unions for which statistics are procurable.
The addition of a disability benefit to the death benefit as appears from the table does not add greatly to the cost of maintaining the benefit. In general, the amount paid for disability ranges from five to ten per cent. of the total paid for both benefits. The cost of the benefits is somewhat increased also by the loss of dues from the time of the disability to the death of the insured.
An increasing number of unions pay a wife's death benefit as well as the regular death benefit. This form is ofcomparatively recent adoption and its success has not yet been thoroughly demonstrated. Nine American unions were reported to be paying this benefit in September, 1903, and eleven in September, 1904.[114]The following is a list of the unions reported as paying the benefit in 1904: Bakers and Confectioners, Brotherhood of Carpenters and Joiners, Cigar Makers, Compressed Air Workers, Lace Curtain Operatives, Freight Handlers, Painters, Paving Cutters, Photo-Engravers, Cotton Mule Spinners, Tailors.
The Deutsch-Amerikanischen Typographia took the initiative in the adoption of this benefit at the New York Convention in May, 1884,[115]and was immediately followed in thesame year by the Brotherhood of Carpenters and Joiners[116]and in 1887 by the Painters[117]and the Cigar Makers.[118]For the year ending September 30, 1904, the Carpenters, the Painters, and the Cigar Makers paid more than 92 per cent. of the whole sum expended by the eleven unions that have adopted this benefit.
The wife's death benefit is designed to defray the cost of burial. It is, therefore, small in amount, not exceeding fifty dollars in any of the unions in which it is important. The following table gives the minimum amounts of the wife's funeral benefit paid under the original and under the present rules in the five unions in which the benefit is of importance. The term of membership required for participation in the benefit is also shown.
The wife's death benefit is not graded except in the case of the Carpenters, where the minimum benefit is twenty-five dollars for six months' and fifty dollars for one year's membership. The minimum given in the above table is in all other cases also the maximum.
The success of the wife's death or funeral benefit is not beyond controversy. The Tailors, who began to pay the benefit in 1889, abandoned it in 1898. The benefit was at first seventy-five dollars after three months' membership, but it was remodelled until in 1896 it became a graded benefit ranging from twenty-five dollars to fifty dollars accordingto the length of membership. The chief objection to the benefit was that unmarried members were taxed to support the benefit although they did not participate in the advantages. In 1898 Secretary Lennon declared that the benefit "was based on real injustice, giving one member more benefits for the same dues paid than to another."[119]In other unions which maintain the benefit this objection has been met to some extent, as in the Cigar Makers, by paying the benefit on the death of the widowed mother of an unmarried member provided she was solely dependent upon him for support. Provision is usually made that no member shall receive the wife's funeral benefit more than once. This rule is intended partly to prevent fraud but chiefly to meet the complaint that the benefit confers unequal advantages.
The unions which have adopted the benefit have all experienced difficulty in safeguarding it against fraudulent claims. They usually require, for eligibility to the benefit, that the wife be not in ill health at the time the member is admitted to the union. In the unions which have had the benefit longest in operation it has been found possible materially to lessen the number of claims for the wife's benefit after some experience in its operation.
The following table shows the percentage of claims paid by the Painters for wife's and member's death benefits for a series of biennial periods:
It will be observed that the ratio of the number of wife's funeral benefits to the number of member's funeral benefits has steadily fallen for a considerable number of years. The experience of the Painters is probably typical, although thenumber of claims of each kind is not ascertainable in the other unions.
The combination of the wife's funeral benefit with the death benefit causes a material addition in the cost of the death benefit. This increase is greatest in those unions in which the wife's benefit is relatively large in amount. The following table shows the sums paid for member's and wife's death benefits in three of the more important unions:
From this table it appears that the expenditures on account of the wife's funeral benefit in these unions range from twelve to twenty-five per cent. of the total sum spent for death benefits. In the Cigar Makers' Union and the Typographia it is probably still less.