Could Limit Pay Deals
Key Unions Dragged By Economic Tide

By MEREDITH KOLODNER

Unions representing more than 200,000 city and state workers in the midst of contract negotiations are hoping that the gloomy economic forecast won't mean members' pocketbooks are further pinched by reduced raises and benefits.

STANLEY ARONOWITZ: Need quick action.

Unions such as District Council 37, DC 1707, the Patrolmen's Benevolent Association, the Professional Staff Congress and the Public Employees Federation are facing a much more uncertain economic situation than those that settled just a few months ago.

'Fight or Settle Quick'

"It's not too late to fight," said PSC executive board member Stanley Aronowitz, "but it would have to be waged using unconventional means of resistance. In the absence of that, I would settle as fast as possible."

Projections of reduced revenues from Wall Street and the real estate industry have convinced the Mayor and Governor to propose budget cuts. The city set aside hundreds of millions of dollars when it was running surpluses, ensuring the financial safety of retirees' health benefits. And this year's budget includes funding for outstanding contracts, such as DC 37's, to be "consistent with other agreements," according to mayoral spokesman Jason Post.

BILL HENNING: Paying for banks' excesses.

DC 37 leaders declined to comment, due to ongoing negotiations, but union officials who spoke conditioned on anonymity said that the financial woes of the city were having an impact and making a speedy settlement even more desirable.

DC 37, which has traditionally set the pattern for other unions, is looking for a four-year contract with raises of 4 percent per year to match what other unions have received. The city countered with a two-year contract at 4 percent per year at the last bargaining session Dec. 4. The union is trying to schedule another meeting. The contract expires March 2.

No Break for 'Unborn?'

DC 37 leaders were hoping to make up for past concessions in the next contract, including a 15-percent decrease in the starting pay for new hires for two years and a loss in annual leave days, when they began negotiations in October under a rosier economic outlook.

ED KOCH: Unwise to scale back pattern.

Some economists believe that the downturn will be relatively brief, predicting a recovery by the end of the year. Recent recessions have lasted an average of nine months, according to James Parrott of the Fiscal Policy Institute, who noted that most union contracts extend far beyond that. "A current outlook for a weak economy over the short run shouldn't inhibit regular collective-bargaining negotiations," said Mr. Parrot.

Some union officials also argue that workers should not be made to shoulder the burden for mistakes by financial institutions, such as the sub-prime mortgage crisis. "I've never gone to the bargaining table when the employers say they are flush with cash," said Communication Workers of America Local 1180 Vice President Bill Henning, whose union will begin bargaining in the next few months for a contract to replace the one that expires in October.

But some advocates argue that the pattern should not be extended indiscriminately.

"It's not going break the bank," said Charles Brecher, the research director at the business-funded Citizen's Budget Commission, "but part of why the city is in a mess is because they set up a pretty generous pattern."

BARBARA BOWEN: Ambitious demands undercut.

Mr. Brecher believes that raises should depend upon how tight the labor market is in the private sector for particular job titles and that raises in general should be tied to productivity enhancements.

A Familiar Strategy

Historically, city officials have pushed for wage and benefit cuts from the workforce when they faced deficits, the fiscal crisis in the mid-1970s being the most-extreme example. But in 1987, Mayor Koch settled a contract with DC 37 containing above-inflation raises, only to face a massive stock-market crash two weeks later. There were several unions waiting to settle in the wake of DC 37, suddenly immersed in a dramatically altered economic scene. Mr. Koch decided to give them the same raises as DC 37. "Not to give the other unions the same pattern would have produced a workforce that would have been so angry," he said in a Jan. 30 phone interview, "that it would have been impossible in my judgment to provide city services on a regular basis without frequent interruption. It just wasn't worth it."

Whether city unions in 2008 are willing or currently able to produce that kind of disruption is an open question, and Mr. Koch made it clear that he was not advising Mayor Bloomberg in any specific direction.

The Value of Stretching

One option utilized by several unions has been to stretch out the contract by several months while keeping the same total raises. That saves the city money, since the annual value of the raises is reduced, and frees up cash to go towards welfare funds or other demands, such as increasing starting salaries.

State unions are facing a cloudier picture than those paid by the city. Raises obtained by the largest state union, the Civil Service Employees' Association, were less generous than for many city unions, averaging about 3.25 percent per year. The state does not have the same cushion as the city, which rolled over portions of the huge surpluses over the past few years.

Governor Spitzer included $708 million in his proposed budget for all potential or outstanding labor agreements, but Division of Budget spokesman Matt Anderson would not comment on what that would mean for specific contracts.

PSC officials face a difficult battle, having declared in October, after their contract expired Sept. 19, that they intended to fight for raises "measurably" above the rate of inflation. They are looking to make up for what they have calculated as a 25- to 50-percent drop in real dollars compared to salary levels in 1971. Most of the funding for their contract comes from the state.

'Urgent to Invest'

PSC President Barbara Bowen has repeatedly argued that the economy would benefit from a major investment in higher education "It's a wise and urgently needed investment no matter what the economic climate," said PSC spokeswoman Dorothee Benz.

The debate in the PSC is over what kind of pressure can be brought to bear on the state and the city to make significant progress under a new contract, even as the union lobbies for more state funding to hire additional full-time professors.

Mr. Aronowitz said he was up for a serious fight but that the union had to grapple with what it would take to mount such a struggle. "Realism is not a virtue," he said, "but in this case I think it has to be."