Last night, the Newspaper's Guild, a union of Boston Globe reporters, voted 277-to-265 against a contract that would have cut their pay by 8.4 percent and forced a five day furlough to help the Globe save $20 million. Following the vote, the Globe's parent, The New York Times (NYT), said it will cut their pay by 23 percent starting next week. Hey, Boston Globe reporters, 23 percent is worse than 8.4 percent!
The details of the package the Guild rejected were indeed onerous. In addition to the 8.4 percent pay, the one-week unpaid furlough is equivalent to a pay cut of 1.9 percent. The deal also included the elimination of company contributions to retirement plans.
But the Globe is a money loser with operating losses of $50 million last year and a projected $85 million loss this year. And of course, the Globe's parent company is in trouble as well, posting a net loss of $57.8 million for 2008, and a $74.5 million loss in the first quarter of 2009.
I have no doubt that the Globe reporters are suffering, but it looks like too many of them lack basic math skills. If they somehow thought that voting down the contract would lead to a less painful deal they were obviously completely mistaken. Now it looks like their pay cut will be three times worse than it would have been had they gone along with the deal on the table.
I like the Globe's reporting but I would not want those reporters looking out for my financial well-being. To be fair, neither union nor management appears to be taking this situation seriously -- I proposed that the company scrap its unprofitable dead-tree version and charge for online access.
This is the only way I can see of creating a viable reporting -- not newspaper -- business here.
Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College. His eighth book is You Can't Order Change: Lessons from Jim McNerney's Turnaround at Boeing. He has no financial interest in the securities mentioned.