NYC’s labor contracts set to expire amid fiscal crisis

When New York City Mayor Bill de Blasio took office in 2014, every municipal collective bargaining agreement had expired, and union leaders were demanding $7 billion in retroactive pay. Though only one municipal union had endorsed him during the primary, de Blasio was seen as a friend of organized labor and, five months after taking office, the mayor reached a nine-year $5.5 billion contract with the United Federation of Teachers, which set the pattern for pay raises for all of the city’s 300,000 workers. As de Blasio’s second term winds down, the most recent round of contracts negotiated under his administration is set to expire at a moment when the city is facing its worst fiscal crisis in years. Since personnel costs account for more than half of the budget, the outcome of the next round of collective bargaining will have a considerable impact on New York’s finances in the coming years.

When the next round of bargaining begins, and which union sets the pattern for the others, will come down to strategic decisions on the part of both the unions and the city – either the current administration or the one that succeeds it.

In 2014, the UFT set the pattern and, in 2018, it was District Council 37, the largest municipal workers union, which settled with the city first. DC 37’s contract expires in mid-May, while the UFT contract does not expire until next September.

“We are the first one in line in terms of expiration of the contract, so yes, we have an expectation that we probably would be one of the likely candidates to set the pattern,” said Henry Garrido, executive director of DC 37.

Garrido told City & State that he did not want to “negotiate on a back heel” and would probably seek to initiate negotiations before the expiration of his contract, but after the state completes its budget. “Even if we don’t get to sign a contract with this administration, we could start getting the groundwork going,” he said.

Garrido added that many factors are in play, including that the union has around 10,000 workers without a contract whose negotiations the city put on hold due to “COVID and economic conditions.”

But not everybody is sure that the city will be willing to engage in negotiations over the next round of contracts. “Some unions would love to start now, but I don’t think this administration is ready to sit down and discuss that right now,” said Harry Nespoli, chair of the Municipal Labor Committee, a group representing municipal unions.

Nespoli criticized the de Blasio administration for not moving to settle with unions that are ready to accept the current round’s pattern, claiming the city didn’t “want to wrap it up.” Nespoli said he believed that the next round of bargaining would fall to the administration that comes into office in 2022.

“It’s not that DC 37 can’t start talking with somebody, but who are they going to talk with?” he said. “I don’t think this administration is going to be sitting down with them to discuss the next round.”

The deputy press secretary for de Blasio, Laura Feyer, told City & State in an email that the administration had settled “virtually 100% of contracts in the first round of bargaining” in 2014 and 84% in the second in 2018.

“This has resulted in settled contracts spanning for over 10 years for most city employees,” she said. “We will continue to work with unions on the best path forward in light of the changing fiscal picture.”

The Police Benevolent Association, one of the unions with an unsettled contract right now, is currently in arbitration, and some other uniformed unions – including the Uniformed Firefighters Association and the Detectives Endowment Association – are awaiting the outcome of that proceeding. In response to the fiscal strain brought on by the pandemic, the city emptied most of its labor reserve, which now has just enough to fund the current pattern for the still-unsettled contracts. There is no money available for raises beyond this current round, and the city’s 2021 adopted budget, moreover, included $1 billion in unspecified labor savings.

“I don’t know where they’re going to find it,” Nespoli said.

Nespoli, who is president of the Uniformed Sanitationmen’s Association, said that he was always discussing ways to lower costs with the city, and pointed to health care savings that the Municipal Labor Committee negotiated during previous rounds of collective bargaining. “Two contracts ago, we saved $2.5 billion for the city of New York, and the last contract, we saved two-point-something billion dollars, and then got sick, and died, and everything,” he said. “Whoever takes over this administration has to recognize what the city workers have done.”

The Citizens Budget Commission, a nonpartisan fiscal monitor, has put out recommendations, including standardizing work rules and creating more flexibility with job assignments, which could generate savings for the city. According to its President Andrew Rein, the city should be looking to increase the efficiency of government in light of the fiscal stress it is under. “Therein lies the potential win-win here, which is that when you change work rules and increase productivity you can actually save the city money, be more efficient and, to some degree, self-fund raises for workers,” he said.

According to the Citizens Budget Commission, health insurance premium costs grew at an annual average rate of 7% between 2009-2019, and 95% of New York City employees choose health plans with no contribution, which means that one avenue to generate savings could be through new premium-sharing arrangements.

Garrido said DC 37 had been working with the MLC and the de Blasio administration on achieving savings through changes to prescription drug and health care benefits, as well as the actuarial assumptions of pensions.

“We’re working on that billion-dollar hole,” he said.

DC 37 would also be seeking new work rules around telecommuting, Garrido said, as well as health and safety provisions related to the pandemic, which could include hazard pay.

March’s $1.9 trillion federal stimulus bill included more than $5 billion in unrestricted aid that New York City can use to fill budget gaps, which raises the possibility that unions could ask for a portion of that sum to fund salary raises. But Rein said applying that funding to recurring expenses could create a future budget hole, which he likened to “finding a $100 bill on the sidewalk and renting a bigger apartment.” 

“Two of the most consequential decisions that this administration will make for the next administration’s fiscal future will be how it uses federal funds and whether, and how, it might settle this labor contract,” Rein said.