Beneficiary Features of American Trade Unions Part 3

The new system differs in two important respects from the old. In the first place, the rates are graded according to age, and secondly, the new system provides that a member may retire five years after entrance, or thereafter at any successive period of five years up to seventy, and that his premiums shall be fixed according to the time of retirement and the period of his expectancy.

The disability certificates provide for an indemnity of eight dollars per week for loss of time resulting from disability caused by accident or sickness, a maximum of twenty weeks' disability during any one year.[58] However, should a member, after entrance into the a.s.sociation, become disabled permanently by "tuberculosis, paralysis, locomotor ataxia, dropsy, cancer, diabetes, sciatica, chronic rheumatism, chronic kidney or mental disease, or any other chronic disease," not especially named in the const.i.tution, that may, in the judgment of the board of directors, cause permanent drain upon the funds of the a.s.sociation, the said member shall receive the disability allowance for twenty weeks, after which all payments shall cease and his certificate shall be cancelled.[59] The disability insurance is thus really sick insurance.

[Footnote 58: The Postal Record, Vol. 17, p. 6.]

[Footnote 59: Const.i.tution 1905, Art. 12, in The Postal Record, Vol. 19, pp. 2-6.]

To aid members who are too old to take advantage of the plan offered for securing annuities by their own financial efforts, the a.s.sociation, in convention at Portland, September, 1905, endorsed an "extended leave of absence retirement plan."[60] The Post Office Department of the United States was requested to grant an extended leave of absence to "superannuated or permanently impaired" carriers on condition that they accept 40 per cent. of their regular salary, while retired, and that they pay the remaining 60 per cent. to the senior subst.i.tute in their office. Under the conditions of this plan, the applicant for retirement must submit himself to the board of examiners, who shall, after a physical examination by the physician of the board, determine his eligibility. The results of this plan would be two-fold: first, to relieve the detrimental effect of superannuation upon the efficiency of the service, and, secondly, to remove the fear of those who look for more drastic measures of relief. Aside from a regular pension grant by the Government this plan is considered the most efficient method of securing adequate protection for the superannuated who are too old to avail themselves of the opportunities offered under the system of annuities.[61]

[Footnote 60: The Postal Record, Vol. 18, pp. 220-222.]

[Footnote 61: The Postal Record, Vol. 19, p. 6.]

The princ.i.p.al obstacle to the successful operation of disability insurance has been the difficulty experienced in its administration--largely on account of the impracticability of closely defining permanent or total disability. With almost every revision of the const.i.tutions changes were made in the definition of the term "disability." Strict construction of the law by the executive officials led to dissatisfaction and often to appeals from their decisions to the insurance committees, or to the boards of trustees.[62] During the early years disability claims were often presented through subordinate officials, who were either unable to interpret the laws aright, or were unwilling to a.s.sume the responsibility of p.r.o.nouncing the claims illegal. The Engineers, after a period of thirty-two years, in 1898 adopted a satisfactory definition of total disability: "Any member of this a.s.sociation losing by amputation a hand at or above the wrist joint; a foot at or above the ankle joint; or sustaining the total and permanent loss of sight in one eye or both eyes, shall receive the full amount of his insurance."[63] Similar definitions of disability have been worked out by the other railway organizations. The Conductors add to this "total loss of the sense of hearing." The Switchmen include "the loss of four fingers of one hand, at or above the second joint." Disability, as defined by the Letter Carriers, means inability, because of sickness or accident, to perform the regular duties of a letter carrier.[64]

[Footnote 62: Proceedings of the Nineteenth Annual Session of the Order of Railway Conductors of America, 1887 (n.p., n.d.), p. 69.]

[Footnote 63: Const.i.tution, 1899 (Cleveland, 1898), Art. 28.]

[Footnote 64: Const.i.tution of the Letter Carriers of the United States, 1905, Art. 13, in The Postal Record, Vol. 19, No. 1, p. 3.]

The most important development in the insurance systems of the railway unions has been the change in the amount paid from an uncertain to a fixed amount. This evolution is best ill.u.s.trated in the history of the older organizations. In the period from 1868 to 1884 the amount paid was the sum collected by levying upon each member a certain a.s.sessment for each death or disability. The amount of the benefit therefore varied with the number of members. In the first stage, the Engineers paid one dollar per member upon each death and fifty cents in each case of disability, the Conductors paid one dollar per member upon each death or case of disability, while the Firemen paid fifty cents upon each death or case of disability.[65] The membership was small and the a.s.sessments were largely regarded as benevolent contributions. This phase is well ill.u.s.trated by the early history of the benefit among the Conductors.

The first benefit, paid in December, 1871, amounted to $48. During the first thirteen years of the department's activity 19 claims were paid.

The last was $70, and the average amount paid was $88.[66] This system continued until 1881-1884, when a general revision of const.i.tutions in these three brotherhoods limited the amount of insurance paid, and laid the foundation for issuing insurance certificates in fixed sums. In the second period, from 1883 to 1890, the number of a.s.sessments remained undetermined; but the amount of the benefit was limited to a fixed sum and all surpluses were placed in reserve. The Conductors and the Firemen took the initiative in this change and in the const.i.tution of 1881 fixed the maximum amount for death or disability at $2000 and $1000, respectively; the Engineers, in the const.i.tution of 1884, placed this maximum at $3000.

[Footnote 65: Const.i.tution of the Locomotive Engineers, 1869, in Journal, Vol. 4, p. 31; Proceedings of the Railway Conductors, 1868-1885 (Cedar Rapids, 1888), p. 119; Locomotive Firemen's Magazine, Vol. 21, p.

181.]

[Footnote 66: Proceedings of the Eighteenth Convention, 1885 (Cedar Rapids, 1888), p. 754; The Railway Conductor, Vol. 4, p. 188.]

The Brotherhood of Railroad Trainmen, the Order of Railroad Telegraphers, the Switchmen's Union, and the Maintenance-of-Way Employees did not pa.s.s through the first period of development, but were organized during the second stage when the amount of insurance was limited. The Trainmen, the Telegraphers, and the Switchmen, in their first const.i.tutions of 1883, 1887 and 1886, respectively, and the Trackmen (Maintenance-of-Way Employees) in 1892 fixed the amount paid at the definite sums of $300, $1000, $500 and $1000, respectively.[67] The Letter Carriers, although organized after the railway unions had fixed at a definite sum the amount of insurance to be paid, for several years paid only a sum equivalent to one a.s.sessment, at the regular rates, upon all the certificates in force at the time of the death of the insured.[68] The amounts paid on the second death, March 22, 1892, and on the third death, July 28, 1893, were $599.16 and $596.12, respectively.[69] Finally, in the third period, from 1890 to the present, the number of a.s.sessments was also fixed.

[Footnote 67: Const.i.tutions for the several years. Reference is made to the Trackmen's Const.i.tution, 1893 (n.p. n.d.); Proceedings of the Second Annual Convention, 1893, in Advance Advocate, Vol. 2.]

[Footnote 68: The Postal Record, Vol. 5, p. 185.]

[Footnote 69: _Ibid_., Vol. 5, p. 138.]

Another important change in the method of conducting these insurance systems was made in the decade from 1890 to 1900. The organizations with two exceptions have not adopted the policy of the insurance companies in varying the charge with the age of the insured. The device they have commonly used is the differentiation in the amount of insurance which may be taken in such a way that the older members may insure themselves only for a smaller amount. As early as 1886 the Firemen provided that only members under forty-five years of age might take insurance,[70] and in 1887 the Telegraphers adopted an age limit of fifty years.[71] The Conductors, under the const.i.tution of 1890, provided that any member between the ages of fifteen and fifty might take $2500 of insurance against death or disability, and any member between the ages of fifty and sixty might take $1000 against death and $500 against disability.[72] In 1892 the Engineers introduced an age limit of fifty, and in 1894 further differentiated applicants so that those under forty years of age might secure $4500, those under forty-five years of age might obtain $3000, and all over forty-five and under fifty years of age, $1500.[73] Even now the Switchmen and the Trainmen offer equal amounts to members of all ages at the same rate.

[Footnote 70: Const.i.tution, 1886 (Terre Haute, n.d.), sec. 71.]

[Footnote 71: Const.i.tution, 1887, Arts. 12-13, in the Railroad Telegrapher, Vol. 2.]

[Footnote 72: Const.i.tution, 1888, second edition (Rochester, 1890), p.

38.]

[Footnote 73: Const.i.tution, 1894 (Peoria, 1895).]

The Maintenance-of-Way Employees and the Letter Carriers not only limit the age of the insured but also grade the charge per $1000 according to age. In the case of the former, members from eighteen to thirty-five years of age pay $1 monthly per $1000 of insurance; those from thirty-five to forty, $1.25; from forty to fifty, $1.50. Insurance rates in the Letter Carriers' Mutual Benefit Department have, with the exception of the first year of operation, been graded according to age.

The minimum and maximum age limits are twenty-one and fifty-five years.

The monthly rates vary according to age from 77 cents per $1000 of insurance at twenty-one years to $2.06 at fifty years.

The following table shows the regulations as to the amount and rate of insurance issued according to ages:

Amount of Insurance Organization. Age Cla.s.ses. Issued.

Engineers ............. Under 40 years. $4500 40 and under 45. 3000 45 and under 50. 1500

Conductors ............ Under 35 years. 3000 35 and under 45. 2000 45 to 50. 1000

Firemen ............... Under 45 years. 3000 45 and over. 1500

Trainmen .............. No age restriction. 1350

Telegraphers .......... 18 and under 45. 1000 45 and under 50. 500 50 and under 60. 300

Switchmen ............. No age restriction. 1200

Maintenance-of-Way Employees ........... 18 and under 45 at graded rates. 1000

Letter Carriers ....... 21 to 55 at graded rates. 1000 to 3000

The necessity for a reduction in the amount of insurance issued to the older men was more urgent among the Engineers and the Conductors than among the other railway organizations, since the latter form the school of apprenticeship from which the engineers and the conductors are drawn.

In the Trainmen's and the Switchmen's organizations the young men contribute materially to the cost of insuring the old men. This charge is not so heavy as might appear at first sight, since in both organizations many members withdraw when they are promoted to higher positions in the service. In grading the amount of insurance offered according to age, the brotherhoods have made a compromise between an a.s.sessment on each individual according to the liability incurred, and a system in which the welfare of the individual is regarded as entirely at one with the welfare of the membership. The principle of solidarity is still recognized, but under limitations.

Originally these unions collected a.s.sessments to meet death or disability claims after the occurrence of the death or disability.

Considerable delay was thus entailed in the final settlement. All of them, with the exception of the Engineers, now hold reserve funds for the payment of claims. The Conductors took the initiative by providing in the const.i.tution of 1881 that the grand secretary-treasurer, on paying a claim, should levy the regular a.s.sessment upon each member to be held in reserve to pay the next claim.[74] This was followed in 1885 by a regulation of the Trainmen which required all members to pay in advance one death a.s.sessment. This was repealed by the convention of 1886; but the convention of 1888 re-enacted the law. The Firemen provided in 1888[75] that the subordinate lodges should collect all dues quarterly in advance.

[Footnote 74: Const.i.tution, 1903 (Pittsburg, 1903), pp. 80, 86.]

[Footnote 75: Const.i.tution, 1888 (Terre Haute, 1888), secs. 50, 52, 53.]

In determining the amount of insurance offered, the organizations have had necessarily to consider what their members can afford to pay. Only a certain per cent. of earnings can be set aside for insurance purposes, and that amount has been determined only by the long experience of the organizations. Again, the insurance must be in an amount which accords with the idea of the workmen of what const.i.tutes a satisfactory provision against death or disability. The amount offered must for this reason be comparable with that offered by insurance companies.

The following table shows the minimum and the maximum amounts paid by the several brotherhoods:

Minimum Maximum Brotherhoods. Amount. Amount.

Brotherhood of Locomotive Engineers ... $1500 $4500 Order of Railway Conductors ........... 1000 3000 Brotherhood of Locomotive Firemen ..... 1500 3000 Brotherhood of Railroad Trainmen ...... 500 1350 Order of Railroad Telegraphers ........ 300 1000 Switchmen's Union ..................... 600 1200 Maintenance-of-Way Employees .......... 500 1000 Letter Carriers' a.s.sociation[76] ...... 1000 3000

[Footnote 76: Under a unique system, known as the "Post Mortem Deduction" scheme, the actual value of a certificate of the Letter Carriers' a.s.sociation at date of issue is fifteen per cent. less than its face value plus the amount of one a.s.sessment, and the value of the certificate does not become equal to its face value until the member has paid a.s.sessments equal to fifteen per cent. of the face amount (Const.i.tution, 1904, pp. 67-68).]

Originally, except in the case of the Letter Carriers, the maximum amounts paid were much lower than at present. As the membership increased, a greater benefit was paid. In 1887 the Conductors' maximum insurance was $2500, and in 1888 the Firemen's, the Trainmen's, and the Switchmen's was raised to $1500, $1000 and $800, respectively. Each of the railway organizations has since raised the maximum; the Engineers to $4500 in 1892; the Conductors to $5000 in 1893, reduced since 1899 to $3000; the Firemen to $3000 in 1903; the Trainmen to $1350 in 1903; and the Switchmen to $1200 in 1901. While the Engineers, the Conductors, and the Firemen offer insurance in relatively large amounts, only a small per cent. of the membership take out certificates for the larger sums.

On June 30, 1904, of the 54,434 Firemen, 43,228 carried $1500 certificates, while only 717 carried $2000 certificates, and 824, $3000 certificates.[77] On November 1, 1904, of the 41,124 Engineers, 24,187 carried $1500, and 10,337 and 1602 carried $3000 and $4500, respectively.[78] In each of these organizations the $1500 certificates are thus in greatest demand. The rule restricting the amount that members over forty-five years of age may take lessens the number of policies for larger sums, but it is evident that the great majority of members in these unions do not care to insure for more than $1500. The Letter Carriers are an exception to this rule. The report of the Chief Collector for December 1, 1905, shows that out of 5284 insurance certificates in force there were 473 $1000 certificates, 386 $1500 certificates, 541 $2000 certificates, and 3884 $3000 certificates.[79]