Big Wage Cuts at MediaNews “Crown Jewel”

MediaNews, the national newspaper chain that owns the Oakland Tribune and recently purchased the Contra Costa Times and the San Jose Mercury News, has unveiled its proposal to cut wages for new reporters at the Merc by more than thirty percent. The offer, made in union contract negotiations, provides a stark glimpse of how MediaNews plans to manage a newspaper that its CEO Dean Singleton called earlier this year one of the “crown jewels” of the now-defunct Knight Ridder media empire.

Under the MediaNews proposal, new reporters and photographers hired after the contract is signed would earn a minimum salary of $43,509 when they reach three years’ experience. By contrast, employees under the current contract would earn at least $63,941 annually, according to a memo from the San Jose Newspaper Guild, the union that represents Merc reporters, photographers, editors, and advertising staff. The company’s proposal also would require current employees to pay up to $7,362 more a year for health care and retirement benefits.

The wage proposal was immediately denounced by union leadership as insufficient to attract and maintain top-quality journalists in the ultra-expensive Silicon Valley. “Exactly who in this valley can afford to take these types of hits from wages like ours?” Luther Jackson, head of the union, wrote in the memo to union members. “It remains a mystery to us.”

An assistant to Mercury News Executive Editor Susan Goldberg referred an inquiry to the newspaper’s corporate counsel, who did not immediately return a phone call seeking comment.

The wage proposal comes as no surprise for followers of MediaNews. The company prides itself in cutting costs. It’s also required under a business model that calls for going deeply into debt to purchase more newspapers. Click here for the company’s latest annual report.

MediaNews has told the union that if it does not meet its contract demands by November 30, then it will move forward with plans to lay off 101 employees in December, including 69 union members of which 40 would come from the newsroom. “To put it another way, the company has now framed the discussion to say that any attempt by the Guild to avoid concessions translates into more layoffs,” Jackson wrote in the latest memo.

The wage proposal follows an announcement that MediaNews plans to lay off an additional 116 advertising and business staffers in March if the union refuses it contract demands. Those layoffs are also part of the company’s plans to centralize its business and advertising functions for all of its East Bay and South Bay papers to a new campus at Bishop Ranch Business Park in San Ramon. MediaNews also plans layoffs at its East Bay papers and it intends to move the Tribune news staff out of the Tribune Tower in downtown Oakland in the coming months.

This is the latest memo from Jackson:

    Guild Bargaining Bulletin #10
    Nov. 6, 2006

    Late on Friday, the company delivered to the Guild its proposal for wages,
    giving us for the first time the real picture of what the company wants from
    its current employees and how it intends to operate in the future.

    The company’s wage proposal has two significant parts. First, the company is
    offering a one-half percent wage increase for 2007 and a one-half percent
    wage increase for 2008. Our last wage increase took effect on January 1,

    Second, the company issued its proposed top minimum salaries for new hires.
    For “Level 1” employees — the highest paid workers in the bargaining unit
    — the top minimum would be $43,509 a year (reached at three-years
    experience). That would be down from $63,941 for current employees (reached at six-years experience). Level 2 top minimum would be $41,387 after three years; Level 3 would be $39,264 after three years; Level 4 would be $36,414 after two years; Level 5 would be $31,212 after two years. (See Bargaining Bulletin #8 for the current classifications proposed to be included in each level). As in Level 1, every new top minimum would be thousands, some tens of thousands, of dollars below current scale.

    Earlier Friday, publisher George Riggs issued a memorandum to employees
    suggesting that the company was making some extraordinary gestures by
    putting its “economic” proposal on the table at this time, and by offering
    to reduce from 69 to 42 the number of planned layoffs from the Guild on Dec.
    19 if the Guild agreed to the company’s concessions by Nov. 30. In fact, the
    company has been dribbling out its economic proposals for the past seven
    weeks. The proposals regarding health insurance and retirement, the first
    pieces of which we heard about on Sept. 21 and the rest of which we received
    on Oct. 12, are every bit as important to economics as wages. It’s only now
    that we can get a picture of just how large a figure the company wants its
    employees to pay.

    As a reminder, the company has proposed that the $148.28 per week in wage
    reductions (also known as diversions) that Guild members have accepted in
    past contracts to cover health costs be completely ignored and that members
    now pick up 27 percent to 37 percent of health premiums (depending on the
    plan); nearly 60 percent of dental premiums; and upwards of 40 percent of
    vision premiums. In addition, the company has proposed that the $106.50 per
    week in wage reductions that Guild members have accepted in past contracts
    to cover pension costs also be ignored, with the company substituting a 401K
    match for the existing defined benefit pension plan.

    To illustrate what the full package means, take as an example a member now
    earning top minimum on Schedule 1 ($63,941 annually). That salary would be
    increased next year by $319. At the same time, that member’s take-home pay
    would be reduced at least $1,327 for single-person health (Kaiser), dental
    and vision coverage, or $3,526 for family health (Kaiser), dental and vision
    coverage. (The figures are significantly greater under the Blue Cross Point
    of Service plan. These figures are based on 2006 rates, which are certain to
    increase.). If that member also wants to have money for retirement and
    currently does not divert income to a 401K, that member would have to put
    $3,836 from his income (6 percent, pre-tax) into a 401K in order take
    advantage of the maximum company match (a retirement package that for many members would be inferior to what we now have).

    In sum, that $319 wage increase would be offset at minimum by the $1,327
    health care premium and potentially as much as $7,362 if he is covering a
    family and wishes to keep an approximate pace on retirement.

    And that’s for members who are paid according to the highest schedule.
    Members who are paid less would face the same health care premiums, while
    facing the same retirement dilemma. Dispatch clerks, for example, who now
    earn $45,708 at top minimum, would have their $228 wage increase offset by
    the same thousands of dollars in new health and retirement costs.
    (Bargaining Bulletin #5 includes a link to the full range of company
    proposed health plan costs).

    Exactly who in this valley can afford to take these types of hits from wages
    like ours? It remains a mystery to us.

    Not to be forgotten, as reported in our Sept. 27 “What the MN proposal
    means” note, the company wants you to work for a year without earning any
    vacation, effectively taking from your pocket a full year of accrued
    vacation that you currently are owed when you leave the company.

    There would be a slight savings — about $11 a week for top-scale — to
    members who pay into the Guild’s Long Term Disability plan, currently 0.9
    percent of salary. The company proposal includes its own LTD plan in which
    the company would pay the premium.

    That, in sum, is the package the company is urging us to accept in order to
    see 42 of our colleagues get laid off instead of 69 on Dec. 5, with no
    guarantee that the remainder (or more) wouldn’t be laid off the day after a
    new contract went into effect. You will recall that the company first
    presented its layoff plan on Oct. 20 as a requirement of rapidly declining
    revenues and independent of union negotiations. Just weeks before the layoff
    announcement, the company was hiring Guild members in a business as usual
    fashion, seeing no problem in bringing on new employees at current wage and
    benefit rates. As presented to us now, however, every dollar the company
    wants to extract from Guild members is linked to next month’s job total. To
    put it another way, the company has now framed the discussion to say that
    any attempt by the Guild to avoid concessions translates into more layoffs.

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