The New York City general election is still two months away, but one of the city’s largest public-sector unions has already begun preparing for potentially tense labor negotiations with presumptive mayor Eric Adams next year.
District Council 37, which represents about 100,000 city agency employees, has been working without a contract since its previous contract expired in May. That contract, which provided for raises at around $1 billion, was negotiated with the de Blasio administration in 2018.
But DC37 has no plans to negotiate with the de Blasio administration over a contract renewal, executive director Henry Garrido told New York Focus. Instead, the union wants to wait to begin contract negotiations until next year, when a new administration is in City Hall—likely led by Eric Adams, who is heavily favored to win the mayoral election in November.
Adams regularly pitches himself as a fierce ally of unions—and a former union member himself. DC 37 endorsed Adams during the Democratic mayoral primary, along with municipal unions representing high-ranking firefighters, emergency medical service workers, and doctors employed by public hospitals and other city agencies. (The teachers’ union, which endorsed Scott Stringer in the primary, was the biggest holdout.)
“I am you,” Adams has often told union members on the campaign trail.
But Adams will take office with billions of dollars in budget shortfalls, empty labor reserve funds, and close ties to the city’s business community. His policy platform does not address the question of raises for municipal workers, instead proposing a two year hiring freeze to reduce the city’s workforce.
The Adams campaign did not respond to requests for comment for this story.
Settlements are not likely to be cheap. With a full-time municipal workforce of about 300,000 people across city agencies, even small wage increases would come at a big cost.
Labor is the city’s single largest expense. Salaries and wages for city employees are expected to cost more than $31 billion in fiscal year 2022, which began in July. With the cost of pensions, health insurance and other fringe benefits for city workers added in, the total expense grows to nearly $54 billion—more than half of the $98.7 billion budget that the city adopted in June.
In May, the city’s Independent Budget Office estimated that a 1% wage increase would cost $2.4 billion over fiscal years 2023-2025. (Disclosure: this reporter worked at the IBO from 2001 until this July.)
City Hall hasn’t set aside much money in anticipation of future raises. In the past, mayoral administrations have kept a labor reserve fund with enough money to cover 1% annual raises for municipal workers. But Mayor Bloomberg drained the labor reserve to cover budget shortfalls before de Blasio succeeded him in 2013, and now de Blasio has done much the same, cutting $1.6 billion from the reserve and leaving no funding for the first two years of expired contracts.
In August 2020, when the city economy seemed in free fall as the pandemic devastated New York, de Blasio threatened to lay off 22,000 workers if the unions couldn’t come up with $1 billion in savings. A series of deals were reached that provided savings by temporarily deferring roughly $720 million in various payments from the city. Ultimately, the de Blasio administration ended up using about $1.3 billion of federal COVID aid the city received to cover budgeted labor savings that weren’t achieved.
Still, New York City had about 488,000 fewer jobs in June 2021 than it did just before the onset of the pandemic, according to a report by the Center for New York City Affairs. Tourism, a key revenue generator for the city, is hurting, and the delayed return of office workers to their workplaces has led to declines in commercial property values—and, in turn, property taxes—as well as lower tax revenues from restaurants, retail, and other businesses that depend on those office workers.
The de Blasio administration currently projects that the city will face budget shortfalls of roughly $4 billion each year from 2023 through 2025, which the administration believes will be manageable given the size of the city budget and some reserves built into the mayor’s financial plan. But that financial plan also assumes $1 billion in annual labor savings over each of the next three years. If City Hall and the unions cannot reach an agreement on how to achieve the savings, the budget gap could grow by another $1 billion annually, which will put enormous pressure on the next administration to cut labor costs.
There is little doubt that city employees and their unions expect raises, especially after so many workers have been on the front lines throughout the pandemic. Many essential workers expressed frustration with pay and other contractual issues in response to a parade honoring them in July, The New York Times reported.
The median full-time annual salary for all city workers (including staff in the city’s public housing and hospitals) was about $72,000 in 2018, the most recent year for which official numbers are available. That’s higher than New York City’s median household income, which was just under $65,000 that year. But many city workers make significantly less; in 2018, a quarter of the workforce made under $50,000.
The median salary for DC 37 members is about $40,000, Garrido told New York Focus. The union represents some of the highest-paid city workers, including IT staff who earn more than $200,000 a year, as well as some of the lowest-paid workers, such as school aides, custodians, and crossing guards, who can make as little as $15 an hour.
“No longer anti-business”
Union leaders are hopeful that the Adams administration will be more sympathetic to their demands than the de Blasio administration was, but Adams’ political background raises questions about whether he would be a fierce fighter for unions.
Adams certainly has close friends in the labor movement — Garrido called him “the Blue Collar Mayor and friend of labor our workers deserve” when DC 37 endorsed him back in March. But he also has friends who want to cut union benefits. As The New York Times recently reported, Adams spent much of the summer in the Hamptons and Martha’s Vineyard fundraising among well-heeled Republicans and conservative businessmen.
Earlier this month, Adams promised a group of business leaders that he would be more supportive of their interests than de Blasio was. “New York will no longer be anti-business,” he said. “This is going to be a place where we welcome business and not turn into the dysfunctional city that we have been for so many years.”
The business community wants Adams to take a hard line in union negotiations. The Citizens Budget Commission, a fiscal watchdog with trustees from major New York City real estate, finance, and other corporations, has called on Adams to offset any potential raises for city employees with cutbacks in union benefits or other city savings.
“We think this is a very big issue,” Ana Champeny, CBC’s director of city studies, said of the upcoming contract negotiations with municipal unions.
Harvey Robins, who served as director of operations under Mayor David Dinkins, said that the Adams administration could pursue a variety of different policies to cut labor costs. “Historically, there’s been a menu of options that have been promulgated to generate quantifiable savings,” he said.
One of CBC’s proposals is a requirement that municipal employees pay out of pocket for their health insurance premiums. Currently, more than 90% of city workers enroll in health insurance plans that don’t require them to pay a monthly premium.
Another option, Robins suggested, would be to increase the number of hours that city employees are required to work each week. Currently, many city employees only work 35-hour weeks. The IBO estimates that the city could cut its workforce by 12% without any loss of productivity if it required all municipal employees to work 40-hour workweeks.
If accomplished through attrition rather than layoffs, that 12% staff cut could save the city more than $750 million annually by 2025, according to the IBO, which could be used to offset the cost of municipal employees’ raises.
“I want people to work a full day,” Robins said. “I want people to be able to support their families.”
But unions may view ideas like extending the workday and requiring health insurance premiums as non-starters, given that they have already made numerous concessions to the de Blasio administration as part of deals to save the city billions in health care spending in exchange for modest raises.
The first such deal, covering fiscal years 2015-2018, aimed to save the city nearly $3.5 billion through a range of actions such as reducing city employee use of emergency room care by raising co-pays, removing dependents who city employees improperly kept on their insurance plans, and ratcheting down prescription drug costs through competitive bidding.
A second deal, signed in June 2018, was expected to save $1.1 billion over fiscal years 2019-2021. As part of that agreement, the de Blasio administration and the unions recently agreed to shift thousands of retired city workers to a privately-managed Medicare Advantage plan for outpatient services. The contract has not been finalized yet, but the switch from publicly-funded benefits to a private health insurance plan is expected to save $550 million over five years, according to DC 37 director of communications Freddi Goldstein.
Labor leaders and budget analysts are left guessing where the presumptive “Blue Collar Mayor” will fall on these tradeoffs.
“I don’t know that he’s articulated a very clear picture,” CBC’s Champeny said.
On the campaign trail, Adams has advocated raises for certain municipal employees. In June, he joined a rally in support of raises for emergency medical workers shortly after their union endorsed him.
“They need more than a hand clap at 7:00 p.m.,” he said, according the New York Post. “They need pay equity.”
But Adams’ campaign policy book, “100+ Steps Forward for New York City,” doesn’t include anything about raises for municipal employees. Instead, it calls for saving $1.5 billion by not replacing any city workers who resign or retire over two years. More than 32,200 workers left their municipal jobs in fiscal year 2020, the Department of Citywide Administrative Services told New York Focus.
Cutting that many jobs comes with risks to city services. If too many people with key skills or experience depart and aren’t replaced, the efficient and effective delivery of city services can be disrupted. Adams could choose to follow the example of the de Blasio administration, whose own recent effort to reduce the workforce through attrition allowed agencies to fill one out of three vacancies..
Union leaders have already begun sounding the alarm about the potential “brain drain” from city government caused by the pandemic. “A lot of experienced workers are leaving in droves,” Garrido told New York Focus, noting that about 5,000 DC 37 members have retired in the past year. He pointed to particular losses among health care workers.
“I think we have to be more creative after COVID to be more responsive to health care,” Garrido said, pointing to additional Medicaid dollars made available as part of federal pandemic aid that could be used for recruitment and retention needs, at least through the end of 2024. He also noted new questions raised by the pandemic that are not necessarily related to salaries. “How do we arrange for telecommuting for some people to work remotely?” he asked.
DC 37 will likely be the first major municipal union to negotiate with the Adams administration, and its new contract is likely to influence all subsequent municipal union contracts. Traditionally, the city’s settlement with one of the big unions has set the pattern for agreements with other unions during that round of contract negotiations. Under the de Blasio administration, settlements with the teachers’ union have established the pattern. But Joshua Freeman, noted labor historian and CUNY professor, believes that this dynamic is likely to change.
From now on, Freeman said, “DC 37 has positioned itself as the pattern-setter.”