Nurse Pensions Matter, Even if They are all off the Table for Now

Twin Cities hospitals and nurses represented by the Minnesota Nurses Association are negotiating a new, three-year contract. The negotiations are taking place about seven months before the contract expires on June 1. That’s unprecedented, and – if the talks are successful – a huge benefit for all parties, including the community.

The opportunity for success in these early negotiations is enhanced by a limited agenda. Twin Cities hospitals made a huge concession to promote an early settlement. The contract talks will focus only on wages for nurses. An agreement now would mean that MNA nurses working in Twin Cities hospitals will continue to be among the highest paid in the country.  The average hourly rate for an MNA nurse working in a Twin Cities hospital is more than $44. Annualized, this rate translates into a salary of more than $91,500. That’s based on actual earnings from a survey of payroll data at hospitals in the Allina Health, Children’s Hospitals and Clinics of Minnesota, Fairview, HealthEast, North Memorial and Park Nicollet systems. The Twin Cities hourly rate is significantly higher than the national level. According to the most recent Bureau of Labor Statistics data (2011), the average hourly rate for registered nurses nationally is $29.03.

Agreeing to early negotiations limited only to wages also means that the current benefit and pension programs for MNA nurses will remain without changes if a new three-year contract is reached. While that’s good news for nurses, it doesn’t change the reality that a new approach to retirement security is needed. This isn’t just an issue for hospitals and nurses, but for the country.

Conversations, new solutions needed

The problem with pensions is the same challenge facing Social Security. It’s a math problem. We are living longer than ever before. A baby born about the time Social Security was created could expect to live only to about age 64 – a year less than the retirement age originally set by the program. In other words, the expectation was that people would work a full career, then draw benefits for only a few years.

For hospitals, the economic reality of pensions is significant. The cost of the pensions as a percentage of payroll has grown from 6.4 percent in 2007 to an estimated 11.4 percent for 2013. That’s unsustainable over the long-term.

If early negotiations are successful, a new contract for MNA nurses that deals only with wages resolves some issues. It would avoid the uncertainty that comes with protracted negotiations and the threat of a possible strike.  It also avoids the time and energy that goes into conducting traditional negotiations. 

Hospitals, though, are operating in a demanding environment today. Those who pay for health care, including individuals, insurers and government programs, are demanding that hospitals and other health providers do more for less. Hospitals are achieving that goal. The cost of health care has risen by less than 4 percent over the past year, a remarkable contrast to the double-digit increases routinely seen over much of the past two decades. The dramatic slowdown is the result of fundamental changes in how health care is delivered, and Minnesota hospitals are leading the way by delivering that care with innovation. It’s a fact that Twin Cities hospitals are recognized among the best in the nation when it comes to quality care. 

Building on this success will require basic changes in the cost structure of hospitals and other health care providers. Quality care requires outstanding care providers. Attracting and retaining the best nurses, for example, has pushed full-time nursing salaries in Twin Cities hospitals to among the highest levels in the country.

If a fair settlement can be reached on a new three-year contract, we  are hopeful that nurses and their unions will join hospitals in finding new and better ways to address the other pressing issues challenging hospitals.

Working together to find fair solutions on managing costs, including pensions, will take time and patience. In the immediate future, though, the hospitals’ full commitment will be to reach an agreement in early negotiations.