Nutter sets tone for labor with a raise and benefit concessions

Everett A. Gillison: City is sympathetic but low on cash.
Everett A. Gillison: City is sympathetic but low on cash.
Posted: September 27, 2012

The Nutter administration is giving pay increases of at least 2.5 percent to some 5,500 nonunion and supervisory employees, but paying for it with benefit concessions that the city has been unable to achieve in bargaining with the city's unionized work force.

The compensation package, unveiled publicly Wednesday after private briefings for elected officials, union leaders and the news media, apparently has a two-pronged purpose - to provide a raise for nonunion personnel who have gone without a pay increase for up to five years, and to show the administration's commitment to the basic principle that the cost of any employee wage increases must be covered by equivalent concessions in work rules and benefits.

Contract negotiations with the city's non-uniformed employees - some 9,100 members of AFSCME District Council 33 and 3,300 members of District Council 47 - have been stalled over that principle for three years, with union leaders saying the concessions would more than undo the benefits of any pay increases.

Nutter took a shot at the union leaders Wednesday morning while announcing the new compensation package for nonunion workers.

"It is unfair to deny compensation improvements to one group," Nutter said at a news conference, "simply because union leaders representing non-uniformed employees decline to act in the interests of current and future employees and taxpayers."

Bob Bedard, a spokesman for DC 47, shot back quickly, describing the nonunion package as "a pay cut for everyone - a massive pay cut for some."

Only police officers, city prison guards, probation officers and deputy sheriffs are now working under current contracts. They are all the result of arbitrations, and all require bigger pension contributions from current workers.

The prison guard contract forces new employees into a hybrid pension plan, with a smaller defined benefit and an investment account that will vary with investment performance, like a 401-K plan.

For the second time, the city is appealing an arbitrator's ruling giving a pay increase to city firefighters, on grounds that the arbitrator paid inadequate attention to the city's still-precarious finances.

With that backdrop, the administration announced Wednesday the city will provide a 2.5 percent pay boost, effective October 1, to some 5,500 nonunion and supervisory personnel. Step increases and longevity pay, provided to most city employees for each of their first five years on the job and every five years thereafter, will give an additional salary bump, averaging $2,100, to about half the group, according to city budget director Rebecca Rhynhart.

Overall, the 5,500 workers include 1,127 civil-service personnel who are not represented by unions, 1,840 employees of the city court system, 1,689 exempt employees serving the mayor, City Council and other elective positions, and about 840 first-level supervisors throughout city government, members of DC 47 but not covered by collective bargaining.

Historically, the city has provided wage increases to these employees to match whatever it negotiates with the non-uniformed employees in DC 33 and 47.

But because of the prolonged stalemate with the unions, said Mayor Nutter's chief of staff, Everett A. Gillison, the administration decided to move ahead on its own and impose a new wage package that essentially pays for itself with benefit concessions, requiring workers to make higher co-pays for health insurance and contribute more money to their pensions.

"The traditional way of waiting . . . until we actually get the deal with 33 and 47 just doesn't seem to be going where we want . . . so we're just going to move these folks up. . . . We're just not going to wait anymore," Gillison said.

Rhynhart described additional details of the package, including:

No retroactive pay for the four or five years that the nonunion group has gone without a pay increase.

Increased employee contributions to the city's pension fund, averaging about 1.5 percent of pay, depending on which pension plan the employee is enrolled in.

Creation of a hybrid pension plan - a combination of smaller defined benefits with an investment vehicle like a 401-K - in which all new employees will be required to enroll.

Changing Civil Service rules to permit the city to furlough employees without pay for unspecified periods.

Increased co-pays for city workers who've opted for health insurance coverage in HMOs. For individual coverage, a city employee's payment would go from $14 to $49 a month - still only 8 percent of the city's costs, according to city benefit experts - while for families the cost would go from $42 to $141 a month, the same 8 percent of costs.

The overall cost of the plan to the city, with benefit reductions covering the bulk of the pay increases, would be just $17 million over the next five years, Rhynhart said - about one-tenth of one percent of what the city is likely to spend over the five-year period.


Contact Bob Warner at 215-854-5885 or warnerb@phillynews.com.

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