Monday, July 14, 2014
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Layoffs still a possibility if unions play hardball

Facing a continuing demand to cut city spending - and with labor costs the obvious target - Mayor Nutter could still find himself sifting through the ashes for pink slips.

Layoffs still a possibility if unions play hardball

Mayor Nutter, speaking recently at an older-adult center after the Legislature OK´d budget relief, has said that he still needs concessions from city workers to balance the budget. (LAURENCE KESTERSON / Staff photographer)
Mayor Nutter, speaking recently at an older-adult center after the Legislature OK'd budget relief, has said that he still needs concessions from city workers to balance the budget. (LAURENCE KESTERSON / Staff photographer) LAURENCE KESTERSON / Staff photographer

Maybe it wasn’t such good theater when Mayor Nutter had city firefighters burn 3,000 layoff notices the other week, once the firings were averted due to the state budget deal.

Facing a continuing demand to cut city spending — and with labor costs the obvious target — Nutter could find himself sifting through the ashes for those pink slips.
 
As he turns his attention to renewing labor pacts with the city’s main unions, the mayor’s spokesman says Nutter subscribes to the “general agreement that there will be no need for massive layoffs.”
 
But a new report out last week on budget-balancing strategies used by other financially strapped cities indicates that Nutter — unlike some big-city peers — has unilaterally disarmed too soon.
 
According to the Pew Charitable Trusts’ Philadelphia Research Initiative, mayors in New York, Chicago, Boston and elsewhere have given municipal workers an unwelcome but necessary choice: accept across-the-board, often temporary concessions on pay and benefits, or face layoffs.
 
It’s not a question of bluffing, either. Boston’s mayor went ahead with nearly 500 layoffs and Chicago’s cut 431 jobs after some unions rejected concessions. But New York and Los Angeles officials were able to avert layoffs after their unions agreed to other cuts.
 
These trade-offs are being debated at a time when, as Pew notes, cities’ revenue estimates are being revised downward, forcing “major, midcourse adjustments.”
 
Given the fiscal problems faced by most big cities, including Philadelphia, the only realistic way out is to reduce employee costs either through staff cuts or savings on pension and health benefits.
 
While Nutter emerged from the Harrisburg budget debacle armed with a temporary penny-on-the-dollar  sales-tax hike and savings from deferred pension-fund payments, he’s still smart to push to hold the line on wages for five years and trim benefits by $25 million a year.
 
As the Pew report predicts: “If the administration holds to those positions, the non-uniformed unions may wind up in the same situation as unions elsewhere — forced to make concessions or face job losses.”
 
For municipal union leaders, the demand for concessions versus layoffs may appear to be a Hobson’s choice. But isn’t it better to limit the number of jobs lost, even if it means short-term setbacks on pay and benefits?
 
So far, though, there has been little sign that the municipal unions grasp the dire fiscal situation. Even with the threat of massive layoffs, union leaders worked to scuttle a reasonable state Senate proposal to tame runaway pension costs.
 
With that brinkmanship, in effect, union leaders risked layoffs and cuts in basic city services.
 
Now the question is whether the city and union leaders gathered around the bargaining table — and those working on contract arbitrations for police and firefighters — expect a return to the good old days.
 
That would mean labor contracts that rely on Band-Aids and tax hikes to muddle through. Worse, it would pass up a recession-driven opportunity to right-size government through careful review.
 
Taxpayers and everyone who looks to essential city services have to hope Nutter hangs tough on his demands, and that union leaders remember those smoldering layoff notices could be reprinted.
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