A Deal is a Deal
Settled Contracts Should Remain Settled
Today, Mayor Bill de Blasio will announce wage increases to $15 an hour for public employees and employees of nonprofits that are contracted by the City of New York to provide social services. This increase will be fully effective by the end of 2018. The costs will reportedly total $238 million through fiscal year 2020—$36 million for public employees, mostly represented by District Council 37 and the Communication Workers of America (CWA), and $202 million for nonprofit employees.1
The announcement is concerning for two reasons. First, the added costs to New York City taxpayers will come without any additional service or productivity improvement in return. (CBC warned of this in an op-ed published Monday.) Second, it establishes a troubling pattern of making contracts more costly mid-stream: it is second enhancement of DC37’s settled labor contract and the latest alteration of existing contracts with vendors to make them more costly.
Sweetening the Deal for DC37
The City reached a labor agreement with DC37, the largest municipal union representing about 100,000 employees, in July 2014. The deal followed the seven-year “pattern” of wage increases totaling a compounded 10.4 percent over seven years, and covered the period from March 3, 2010 to July 2, 2017.2
Less than a year after it was approved, the contract was modified. In March 2015, the wages of approximately 4,500 workers in three job titles were raised to $11.50 per hour, an amount deemed to be a “living wage.”3 No offsetting savings were identified to keep costs to the City within the pattern.
The contract is now being amended for a second time to increase wages even further – again, no offsetting savings or productivity improvements have been identified. These amendments effectively break the pattern—providing DC37 with larger pay bumps than those provided to other civilian employees for this time period.
The deal is particularly striking in light of the Mayor’s recent actions to improve parental leave for non-unionized employees—however, these employees “paid” for the enhanced benefit by forgoing a part of their salary increases and vacation time.4
Sweetening Other City Contracts
The Mayor also will be increasing the wages of 30,000 nonprofit employees providing city-contracted services. This will require amending contracts that were competitively bid—with low costs being a determining factor in awarding them— to provide services.
It is also the second time the Mayor has made such a change. Last year, grants were approved to pay higher wages and benefits to certain school transportation service employees working under private bus companies employed by the City. Such revisions undermine the integrity and validity of the City’s contracting practices, and will encourage other city vendors to seek similar de facto contract enhancements.5
Unforeseen or changing circumstances may require reopening contracts, but such occasions should be limited and the negotiations should not be a one-way street in which taxpayers give but receive nothing in return. At a minimum, these changes should wait until contracts expire and are up for renewal or renegotiation. At best, the costs will be offset with increased productivity or efficiencies to improve service delivery.
- Jennifer Fermino, “Exclusive: Mayor de Blasio will raise wages for 50,000 city employees to $15 an hour by 2018,” New York Daily News (January 5, 2016). Our analysis indicates the costs of these increases will likely be higher than reported.
- DC37 employees received a $1,000 one-time payment. Subsequent salary increases were 1 percent each in 2011, 2012, and 2013; 1.5 percent in 2014; 2.5 percent in 2015; and 3.0 percent in 2016.
- District Council 37, “DC 37 and City reach agreement on a living wage for thousands of city workers” (press release, March 31, 2015), www.dc37.net/news/newsreleases/2015/nr3_31.html.
- Brigid Bergin, “Exclusive: De Blasio To Offer Six Weeks Paid Parental Leave For Non-Union City Workers,” WNYC (December 22, 2015), www.wnyc.org/story/exclusive-de-blasio-mandates-six-weeks-paid-parental-leave-non-union-city-workers.
- Citizens Budget Commission, “CBC Statement Urging City Council to Reject Proposed Grants for Certain School Transportation Service Employees” (statement, August 20, 2014).