Who the furkus is Burton Turkus?

Burton Turkus was an attorney, an author, and most influentially to our industry, an arbitrator.

Waaaay back in the days of the original Promises, Promises, in April of 1963 to be exact, Mr. Turkus presided over an arbitration between, well, just about every theatrical union, and the then named, League of New York Theatres.

Here’s what went down 50 years ago . . .

There was a 13-day strike in 1960 known as the “Broadway Blackout” which was the result of the failure of Actors’ Equity and The League to come to terms on a new agreement.  The biggest outstanding issue?  The creation of a brand new pension fund for the Actors.

The Actors got their pension fund as a result of the walkout.  As part of the agreement, they graciously agreed to help The League lobby the City of New York for the removal of the 5% Admissions Tax that was levied on all theater tickets at the time.

The theory was . . . if they could get rid of this 5% tax, they could use that 5% to pay pensions to all the unions.  The league would be happy because they wouldn’t be paying any more than they already were.  And the unions would be happy, too, because they would all get pensions.  Happy-happy, joy-joy!

Well, it wasn’t so easy.

The two sides were successful in getting the City to do away with the tax on tickets (!) . . . but there was a disagreement in how much of that 5% should go to AEA, and, consequently, how much of the remaining amounts should be distributed to the other eight unions involved.

Make sense?

Simplified:  The 5% tax went away.  So they had a pot of 5%.  But how to whack it up?

Enter the esteemed Mr. Turkus, who, in the “Burton Turkus Award of 1963” (as it is affectionately referred), created a system for determining who got what.

First, the actual net “tax relief” that we ended up with after the repeal was a net of 4.5%, not 5%, or “the 045” (as it is also affectionately referred).

Next, in order to distribute the funds accordingly, BT examined the books of Broadway shows to determine what percentage of gross payrolls was attributed to the actors, what was attributed to the musicians, the stagehands, and so on.  These percentages make up the guts of the “Award”.

A complex chart was created which awarded different percentages of “the 045” to the various unions, depending on a few factors, like whether it was a play or a musical, and even how many musicians a show had.

Confused yet?

Let me use a specific example, using modern day numbers:

A production grosses $1,000,000 for a week.

4.5% or .045 of $1,000,000 is $45,000.

$45,000 is then allocated towards the pension of our various unions.

In a musical with over 16 musicians, The BT Award allocates Actors’ Equity 50% of the $45,000 or $22,500.  Local One gets 15% or $6,750.  Local 751, the Treasurers, got 1.88% or $846.00 and so on, until the entire $45,000 is distributed.

This happens every week on Broadway to this day!

Now, IF on your show, your 045 monies don’t pay for pension that you are responsible for, you still have to make up the difference (if the Treasurers actual pension on the salaries was supposed to be $1000, then you got billed another $154).  The .045 only contributes towards the pension due, but it doesn’t necessarily cover all of the pension due.

Why is this history lesson relevant?

The wise Mr. Turkus, who ended one of the most bitter disputes our industry has seen, and is known as a hero in certain circles, created this chart using the payroll allocation formulas that were in front of him at the time . . . that are now almost 50 years old.

Back then, the Actors made up the bulk of the payroll, which is why they got the bulk of the 045.  Things have shifted just a teensy bit over the years, and salaries for some of the other unions have increased dramatically . . . which has thrown the whole 045 off its axis.

It’s very common now that the amount due to Actors’ Equity greatly exceeds that amount that is actually due.  So you could “overpay” by thousands of dollars . . . and the 045 ain’t a Discover card.  There’s no cash back.

At the same time, shows can often have a “deficiency” to Local 1, meaning that their 045 contribution fails to pay for the entire pension due, which then means that the show has to make up the difference.

So, while you’re overpaying to one union, you’re underpaying to another, and you cannot apply the overpayment from one to the other.  You gotta make good on the underpayment, and the overpayment stays with the union.  (I remember Show Boat having a million-dollar overage at one time!)

Now, Actors’ Equity, recognized the issue over the years and created opportunities for Producers to use their “overages” on National Tours of a show after they play on Broadway .  They’ve even used that overage for a reduction to their health payments at one time.

And that’s all good . . . but I don’t think it’s enough.

I’ve got another idea.

It’s time for a Burton Turkus, Jr. to come in, toss out the archaic old formulas and come up with something new.  And maybe this one can also handle the annuities that shows also pay to the unions.

I know, I know, the unions that are getting the overages aren’t going to take to this very well.  (I think my phone has started ringing already)  Why would they?  I wouldn’t want to . . .

But it is the right thing to do.

With all due respect to the great Mr. T, the 045 has to be readjusted, reconfigured, or simply trashed sooner or later.  These aren’t the days of  the original Promises, Promises anymore.  Our economics are vastly different now, and we can’t rely on economic formulas designed in the days when a brand new Ford Mustang cost $2,495.

Mr. Turkus deserves to be in the Broadway Hall of Fame.  But his Award needs to be retired.

If you would like to read the actual Burton Turkus decision from 1963 (it’s quite fascinating) and see the percentage distribution charts, click here.

A health insurance crisis in our country? How about in our industry?!?

Health insurance, health insurance, health insur-blech.

Just thinking about the health insurance crisis in our country makes me want to throw up.  In case you need an urge to purge, here’s a quote from a NY Times editorial piece:

Health care costs are far higher in the United States than in any other advanced nation, whether measured in total dollars spent, as a percentage of the economy, or on a per capita basis.  And health care costs here have been rising significantly faster than the overall economy or personal incomes for more than 40 years, a trend that cannot continue forever.  It is the worst long-term fiscal crisis facing the nation . . .

Ok, so after I finished puking, I thought, “everyone says how expensive it is, but just how expensive is health insurance in this country?”

According to this 2008 report on employer health benefits by the Kaiser Foundation, also referenced by the National Coalition on Health Care, the average annual premium for single coverage in 2008 is $4,704.

$4,704 to cover one person per year.

Or, to break it down weekly, the average cost for an employer to provide health insurance to an employee is $90.47/week.

Yikes.

$4,704 per year.
$90.47 per week.

Steep, right?

You know what’s coming next, right?  Yep!  Let’s do what we do best and compare those figures to the costs on Broadway, shall we?

If you’re an employee working backstage on a Broadway show, then you’re part of a union (unless you’re an assistant company manager or a child wrangler or the Houdini Double in Ragtime).  If you’re in a union, you’re eligible for health insurance because your employer (The Producer) is paying a premium on your behalf.

So, how much is that Producer paying on a weekly basis for health insurance?  Here are some examples from four major unions:

Actors (AEA)$159/week or $8,268/year(76% above national average)

Company/House Managers
Press Agents (ATPAM)$175.83 or $9,143.16/year(94% above national average)

Musicians (Local 802)$218/week or $11,336/year(141% above national average)

Local Stagehands (Local 1)14.5% of gross earnings(115%/176% above national average)
$195/week or $10,140.40/year for Assts.
$250.07/week or $13,003.71/years for Heads
(Assumes NO work calls, OT, holidays, etc.)

These four unions alone charge an average of 106.5% ABOVE the national average for health insurance premiums, and that’s using the assistant rate for the stagehands, and not including any overtime, weekly maintenance, etc.  I recently asked a Company Manager of a long running musical what the average health insurance premium was for their local stagehands.  The answer?  $372/person!  (Oh, and don’t even get me started on paying a health insurance premium on a percentage and not on a flat fee.  Do you think the insurance company charges more for the policy just because the employee is working on a holiday and therefore gets paid more?  No.  And if health insurance is paid on a percentage, then when the plan gets a rate increase in a new contract year, and the wages also get increased, the plan gets a double-raise?  Color me confused).

So, if you’re like me, you’re saying, “What in the health is going on?”

Just wait.  There’s more.

If these unbelievably high premiums got all of our employees health insurance on the day they started work and they kept it for a considerable period of time, I might understand where the money was going.

But that’s not what happens.

If you’re an actor, you do not qualify for health insurance unless you work a minimum of 12 weeks in 6 months or 20 weeks in one year.

Yep, you could have worked for 11 weeks on a Broadway show, and your employer could have paid $1,749 into a health plan for you (almost 40% of the national average) and you can’t go to the doctor.

Oh, AND on top of the premiums the employee pays for you, you also have to pay $100 every quarter or an additional $400/year to keep your coverage.

So, if you’re keeping score, a Broadway actor working for one year has self and employer contributions 84% higher than the national average.

Read more about AEA’s plan here.

Musician?  They offer more immediate access to some sort of plan, but to get the best you have to work almost 20 weeks.

Read more about 802’s plan here.

And how about the richest plan out there . . . the stagehands, at a whopping 14.5% of gross wages earned. Surely they get killer coverage right?  You be the judge.

If you’re a Local 1 Stagehand, there are three tiers of heatlh insurance, and the quality of coverage depends on how much earn.  If you earn less than $35K (which is the equivalent of 26 weeks (!) at the lowest rate), you aren’t covered.  So, if you came up just short and made $34, you get nothing, despite the employer paying in $4,903.  And remember, the $35K threshold is for the lowest plan. To get the big boy plan, you have to earn $70k.

Read more about Local 1’s plan here.

Obviously this is a big problem on Broadway . . . and not specific to one union (although some are obviously more reasonable than others), so there have to be some serious underlying issues.

Some people will say, “But Ken, NY is an expensive place to get insured!  Of course it’s going to be more.”  Yes, it’s true.  NY is a more expensive place to be insured . . . but 176% more?  I don’t think so.  Take a look at this list of average health insurance premiums by state.  NY is not the most expensive and in ’07, the average premium in New York was $4,734/year.  Increasing that b
y a whopping 10% to account for inflation would put it at $5,207.40/year compared to our union figures above.  Still cheaper.

Another common argument is that because Broadway shows aren’t guaranteed lengths of employment, the unions need to charge for “portability,” or the ability of the employee to take the plan from job to job.  Ok, ok, I get it . . . but you know what?  If I were producing a big Broadway musical tomorrow, I would rather guarantee the cast and crew 6 months of health insurance or maybe even a year’s worth if I could do it on my own plan.  I bet I could save money AND give them all coverage starting almost immediately with no waiting period!

Employees win.  Employer wins.  Who loses?

Or what about this?  What about not paying for health insurance premiums at all (stay with me, now).

What about giving the employee CASH in lieu of the premium.

We could pay them a set figure – even 50% above the national average – and they could do with it as they please.  Producers would save money, they could get a plan of their choosing, and if they did it right, maybe even have a few bucks left over (I know they would if they were on my office plan, which costs me about $300 a MONTH for each of my employees, and we’re very happy with our coverage.)  I bet the Musicians would love this sort of arrangement, especially since during the last negotiation they had to give up a raise for two years of their new contract, in order to increase the premiums (yep, they gave up money to increase their premiums to 141% of the national average).

And if we paid out cash, we’d get to avoid all the red-tape and administration involved with these funds in the first place.

But maybe that’s where the problem is? Is there too much fat in these funds?  Does it cost too much to run them?  Or maybe the brokers are wise to how much money the funds have so they try and milk them?  Or more likely, is it because insuring one person is really paying for the medical issues of the others in the organization?

It’s obviously a very complicated issue, and this entry is without doubt a surface analysis, since I don’t pretend to know the internal workings of the health insurance industry.

But I do know this . . . what’s happening right now is not working for anyone.

The costs for the Employer are out of whack with what the rest of the WORLD is paying, never mind the country, and the Employees are not getting the coverage they deserve.

Maybe Obama’s health care reform will solve this issue, as I hoped for here.

But something has to be done because as that ipecac syrup of a NY Times article said, this is “a trend that cannot continue forever.”

And maybe the answer is not paying cash or having each show provide their own insurance, but the answer is certainly not building on top of the flimsy foundation of funds we have now.

We have to do what we do best.

We have to do something more . . . dramatic.

– – – – –

Only 8 Days until the 1st Theater Bloggers Social!
Thursday, April 23rd.
6 PM
Planet Hollywood
For more info and to RSVP, click here.

Special Saturday Post: We are proceeding with arbitration.

The official statement:

The grievance went as expected yesterday. The grievance committee (made
up of League and Equity representatives) did not rule for either side,
and we will be filing for arbitration as provided by our contract.

Read more here.

BREAKING NEWS: The official statement re: the Jeremy Piven grievance proceeding.

Many of you have been calling, emailing and stopping me on the street asking about the results of today’s proceedings.  Our official statement is below.  Unfortunately, I can’t comment any further at this time . . . although I’d sure like to.  🙂

A grievance hearing was held today in accordance with the Equity-League Production Contract regarding the matter of Jeremy Piven and Speed-the-Plow.  Following the terms of the collective-bargaining agreement, a panel of five League representatives and five Equity representatives met and heard the positions of the parties.  The League and Equity representatives were unable to reach a unanimous decision.  The Producers have the rights, as a  next step, to proceed to arbitration.

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