Blue Shield and the Union: Post-Mortem II
Being a temporary office worker occasionally gives me interesting opportunities
to learn about the inner workings of the corporate world. I recently finished
a temporary assignment at Blue Shield of California where I had the opportunity
to learn some very interesting things indeed.
From December, 1980 to April, 1981, the OPEIU led a strike against Blue Shield.
In September, 1982, Blue Shield announced plans to move operations out of San
Francisco and, in the process, fire its entire clerical staff and break the union.
Based on files I saw, memos I typed and conversations I overheard, I can offer
the following confirmation and elaboration of PW's critique of the OPEIU approach.
Overt and Covert Reasons for the Relocation
Blue Shield is in some ways unique among service sector industries. Technically,
it is a non-profit organization. That fact, combined with the competitiveness
of the health insurance industry, means that Blue Shield has little opportunity
to create "working capital" which can be invested in long-range plans or operational
improvements. "Doing it as cheap as possible" is the corporate philosophy. This
is typical of the non-profit management mentality. No matter how liberal their
programs may be, non-profits provide notoriously bad wages and working conditions.
So Blue Shield grew, and data processing and clerical functions become increasingly
complex, the various clerical departments multiplied without rationalization or
planning. The whole realm of "management support" functions is nearly absent at
Blue Shield--training, operations standards, work-flow monitoring, etc. The clerical
jobs themselves are so complex as to defy belief. Blue Shield seems to have finally
recognized this by allowing for more than three months of training for the employees
to be hired at the new location. The current clerical staff never received training
this extensive and if they had their jobs would have been more tolerable.
As a result of this spontaneous, unplanned growth, Blue Shield management literally
did not know what was going on within their own bureaucracy. The knowledge of
how to process claims and all the other paperwork was in the heads of the workers,
undocumented in any other form. A good number of these workers are Asian and Black
women and from Blue Shield's point of view, they have a "communication problem,"
either because English is not their native language or because they speak a different
dialect. So the critical storehouse of operational information that Blue Shield
workers had was even more inaccessible to management.
Blue Shield finally appreciated this vulnerability at the time of the strike in
1981. Consequently, the motivation behind the relocation has to be seen as not
merely to break the union. It is also part of a concerted effort to establish
full management control over clerical production and thereby end the dependence
of management on worker knowledge. One part of this involves more training, supervision,
and standardization of procedures. A second part, of course, involves getting
rid of the current workers.
But in this light, the relocation has to be looked at more closely. Gaining control
over clerical functions means that the "communication problem" has to be overcome.
That is, of course, communication FROM Blue Shield TO workers. Blue Shield needs
workers who will receive and conform to management controls, who will follow management's
standardized procedures, and not their own. Not only unfamiliar with specialized
corporate jargon, the workers may be equally unequally unfamiliar with corporate
thinking patterns. That is, the skills of abstract, objective thinking--what is
involved in translating years of job experience into standard procedural language--may
not come easily to those who have not spent 16 years in the American system of
education. A Third World clerical worker may know very well how to do a job, but
not have the particular language skills to put it into words or writing.
So addressing the "communication problem" boils down to getting rid of workers
who cannot conform to this use of the English language. Which of course means
minority workers. Blue Shield wouldn't necessarily have to fire all minority workers
if it was willing to pay higher wages to attract non-white workers who've been
through the American public education system. But Blue Shield wants to retain
its "cheap as possible" philosophy and so has addressed the language problem without
paying higher wages.
To do that, Blue Shield had to find a white labor market willing to accept its
wages. This is why Lakeport, a resort town on Clear Lake, has been chosen as the
site of the relocation. Blue Shield's intent is clear. While there are bigger
California cities with a largely white work force (say, Sacramento or Redding),
only a small town could provide both white workers AND a depressed level of wages.
Blue Shield's relocation is not only motivated by an anti-union ideology, it is
clearly racist as well. I found this conclusion continually reinforced during
my time at Blue Shield by managers who made references like "THE Filipinos" and
told bald jokes based on mimicking Asian accents.
How the Union Helped Blue Shield Bust the Union
"We learned a lot during the strike" is the comment I heard Blue Shield managers
What Blue Shield learned was all the detailed job descriptions that had previously
been "in the heads" of the workers. Blue Shield used the four months of the strike
to begin developing a management system to end this dependence. Without the strike,
Blue Shield would never have been able to fire its workers and move out of San
Francisco because until the strike Blue Shield managers had no idea how to run
The OPEIU never seemed to appreciate this source of worker leverage, nor did it
understand how the introduction of rationalized management controls would undermine
the workers' position. In fact, the union's own bureaucratic approach contributed
to the standardization process. Unionization provided both the incentive and the
means for Blue Shield to rid itself of its SF workers.
Even after the relocation was announced the union might have been able to obtain
concessions by adopting a stand of "non- cooperation" that would have made it
more difficult for Blue Shield management to extract all the infomration needed
to effectively set up operations in the new location. But, needless to say, it
did not do so. Nevertheless, some workers on their own are apparently engaging
in uncoordinated forms of non- cooperation--records and data are being intentionally
"fouled up." Blue Shield managers blame the union, of course, but that's not only
unfair to the union--which has never endorsed such tactics--but unfair to the
workers as well, who have undertaken these activities on their own creative initiative,
in defiance of both management and union authorities.
The Taboo Issue
Another source of worker leverage was also left unexplored by the OPEIU. The same
poor management (by corporate standards) that allows workers at Blue Shield to
consolidate operations knowledge, also results in fiscal losses of hundreds of
thousands of dollars every year (according to estimates I overheard). In the absence
of adequate controls, losses due to errors and fraud are rampant.
For most corporations today, controlling quality, costs and losses is the "profit
edge." One would think that Blue Shield's penny-pinching mangers would shudder
at these losses. But in fact, their own "cheap as possible" philosophy is the
cause of these losses.
The union might have been able to do something with this issue, by taking advantage
of the unique position that workers had because of their knowledge of operations.
Today, many companies are using the Japanese "quality circle" programs to tap
the knowledge of their workers by teaching them a few basic management techniques
that they can use to solve on-the-job problems. What if the Blue Shield union
took this initiative themselves, retaining worker control of job knowledge by
introducing quality circle concepts itself? The concession from management would
have to be the distribution of recovered losses in the form of wages and benefits
to workers, and possibly, worker representation on Blue Shield's board of directors.
That, of course, raises the debate over worker self-management. Rather than delve
into that here, I will just point out the one way the issue of Blue Shield mis-management
could have been used by the OPEIU that circumvents the self-management issue.
Normally consumers could care less whether a company is well managed or not when
they decide to buy one of its products. But in the case of health insurance, consumers
are aware that the cost of their coverage is based on risk tables which are pretty
much standard for the insurance industry. PLUS the cost of administrative overhead.
This suggests that Blue Shield customers would have just as big a stake in seeing
losses controlled as do the underpaid workers of Blue Shield. If the union addressed
this issue, it would be aligning itself directly with consumer interests and raise
the possibility of a new alliance that increased worker leverage.
But of course, the OPEIU took a typically short-sighted stand in regards to the
whole area of quality control and management productivity plans. That is, they
simply opposed them outright. This position pretty much eliminates workers from
playing a role in this crucial area of their jobs--it falls, by default, into
the prerogatives of management. And inevitably management will find ways of preventing
losses, and keep the profits for themselves, leaving workers with the yoke of
ever increasing supervision and productivity standards over which they have no
The real nature of corporate "communications"--the jargon, policies, procedures,
manuals and training programs--needs to be understood as a means of subverting
worker power by instituting a form of language control--which is to say, thought
control. When this occurs in the context of culturally diverse office workers,
this has to be understood as inherently racist. Management preoccupation with
the "language barrier" translates into the "race barrier" and "communication problems"
mean "race problems." If racism were not involved, corporations might deal with
cultural diversity by hiring more minority managers and supervisors and
increasing language capabilities throughout their organizations, "covering all
the bases" as it were. But racism is, in fact, a clear motivation behind the enforcement
of language and communications standards in the corporate world. Fighting these
forms of social control on the job is not just a matter of liberal civil rights
ideals. Language control not only discriminates against minority workers, it directly
undermines worker power. Unions could fight racism and build worker leverage at
the same time by putting the "language" issue on their agenda.
The possibility of alliances between consumers and service sector workers deserves
consideration. People consider things like health insurance, checking accounts,
insurance, drivers' licenses, and telephones to be necessities. But there's little
"freedom of choice" in obtaining these services. They're typically provided by
massive, unresponsive bureaucracies. And these same bureaucratic organizations
create alienating and exploitative job conditions for clerical workers.
Above all, the case of Blue Shield reveals the need for a new approach to organizing
office workers. The strike tool is no longer effective when modern communications
make it possible for companies to locate clerical operations anywhere.
A brief postscript from Lucius Cabins, author of past Blue Shield coverage:
There are a few important differences between the analysis the author makes here
and the one I made in PW #'s 1 and 2. First of all, I think that offering strategic
advice to the unions is hopeless (especially to OPEIU which has been unusually
myopic with respect to this case). The author is right when he says "a new kind
of worker leverage within the corporate world must be found--and used," but PW
has featured a number of articles in different issues which attempted to describe
the role of unions in bolstering the status quo and preventing new forms
of leverage from being developed. I don't expect unions to be of much help to
any office workers interested in seriously undermining the domination we experience
daily. What's more, as the Blue Shield case amply demonstrates, most unions cannot
even guarantee "the basics" like protecting jobs and improving work conditions.
The author also suggests that self-management through employee representation
on the Board of Directors and the establishment of Quality Circles might have
improved working life for Blue Shield workers. Although putting an end to the
authoritarianism of managers is a real need, the fact remains that the actual
work they do is inherently useless (the processing of health insurance data) and
no kind of self-management can change the purpose of Blue Shield in society.
Finally, the author dismisses the strike weapon categorically, but there's more
than one kind of strike. There is an important distinction between legal strikes,
which disempower workers by taking them outside on picket lines and separating
them from the production they otherwise control, and the extra-legal possibilities
of wildcat and occupational strikes, under the control of the workers themselves.
Nevertheless, this article is an excellent expose of the all-too- typical,
racist practices of corporate management. Thanks for sending it in.