When I was working at a facility that had a bargaining agreement with IATSE local 839, The Animation Guild, I found the benefits to be in abundance:
- Individual Account Plan – A retirement account completely employer funded.
- Defined Benefit Plan – A traditional pension plan that was also employer funded.
- 401k – No vesting periods, funded by employee.
- PPO health insurance – No deductibles , no co-pays.
As I explained in previous posts, I was able to keep my health insurance almost 2 years after voluntarily leaving for a non-guild facility. Benefits were also portable if you go to another guild facility and there are no extra costs to include family members. When I explain to my fellow co-workers that I paid about $400 a year in dues for such great benefits their response is the same:
It must be too good to be true.
For a while my sentiments were the same and that my employer was probably paying through the roof for my guild negotiated benefits. However, after doing some research in how those benefits are funded, a strong case could be made that organization of VFX Facilities could actually save them money. If anything, it would probably be wash since the health and retirement benefits the guild provides would replace employer-provided benefits.
The Bureau of Labor Statistics reports that the national average employers pay for benefits on top of employees’ salaries is about 30%. According to industry sources, that’s about in line with what VFX facilities pay on top of artist salaries. One commenter on my blog claims it to be 50%!
So how much would organization actually cost? Well according to sources in the IATSE, the national labor organization that The Animation Guild is a part of, a guild employer would have to pay the following for each worker:
- about $4 per hour worked plus about a 6% contribution into the IAP (Individual Account Plan).
I estimate the IAP contribution to be about $6000 a year. If you want to see how that number is calculated go here but lets make an assumption and calculate the amount based on an artist’s salary.
- Assume an artist works 40 hours per week for a total of 2080 hours a year.
- Assume that artist makes $48 an hour for a nice even salary total of about $100,000 per year.
The total amount an employer would probably have to pay to the guild would calculate to be about $14,500 per year. (*Correction – this amount isn’t paid to the guild, it is paid into the health and pension benefits. The only money paid to the guild are the dues paid by workers.) That’s far less than the national average of 30% employers pay to administer benefits.
How is it possible for the guild to provide better benefits at a more competitive price? The answer is in residuals and the economics of scale.
This is the biggest discovery that many of us fail to make. Members of the IATSE earn residuals from the big 6 studios that directly fund the health, retirement, and pension benefits they recieve. Everytime a theater ticket, DVD, or re-run of a movie or television show is sold, a percentage of that money goes to fund benefits for IATSE members.
You are probably thinking that would amount to a lot of money and it is.
In 2008, residual income for benefits amounted to $378 million dollars! For 2009 that number is projected to be $365 million. This is why the IATSE is able to provide such great benefits at a low cost to employers and members. 55-60% of the costs for those benefits are paid for by the big 6 studios with residuals earned from sales of movies and television shows worldwide.
Economics of Scale
If you were to purchase health insurance individually, you’ll find that it’s really expensive. Part of the reason why is that it’s costly to adminster a plan just for you. Also, as an individual you have very little bargaining power with large insurance companies. However, if you join a group of people that need health insurance, you would have more bargaining power and the costs can be spread across the group making it cheaper. Like many employers, some VFX houses are able to get health insurance for their workers at a less expensive price because they can employ 200-1000 workers and bargain a bit.
The same can be said for the IATSE on a much larger scale. They sign collective bargaining agreements with hundreds of employers in the US and Canada which employ almost 120,000 members. When you combine the shear scale of the number of members and the residuals that pay into those benefits, you begin to realize how such good benefits are provided at a good price.
It’s important to note that the costs of healthcare have been rising throughout the world. The same can be said of the guild benefits. However, they have the organization to keep costs down and make sure that the rise in health care costs are slower than the national and worldwide average. They are able to accomplish this by offering their own set of clinics members can choose to visit at a lower cost and they recently increased the number of qualifying hours per year from 400 to 450.
I believe as more VFX artists become educated about organization, the more likely it will happen. We need portable benefits as we move from facility to facility, project to project. The guild has already been providing that for almost the last 50 years to thousands of workers. The question is whether we will choose to organize sooner or 40-50 years later down the line.
Eventually we will look back on this time and history will ask this question: In the midst of one of our industry’s darkest hours, did we stand up to answer the call? Perhaps the answer is right here.