Mike’s Labor Legacy

In his 2006 inaugural address, Mayor Michael R. Bloomberg vowed to avoid “partisanship and prejudice.” Over the next three years, he would leap up a hundred spots on Forbes’s Billionaires List, the single largest increase by any individual in the world. Meanwhile, the same mayor who touted his C.E.O.-style managerial abilities (and also cited his financial expertise as the primary reason to overturn term limits) began to steadily undercut City Hall’s relationships with the city workforce. 

When Bloomberg took office in 2002, he sought to end the hostile labor climate that had prevailed under his predecessor. “You had someone like Mayor Giuliani, who really did not have great relations with the unions and ended his term leaving all the union contracts unsettled,” Maria Doulis of the Citizens Budget Commission (C.B.C.) recalled. “The unions really felt like they didn’t want to deal with [the Giuliani administration] anymore because they had to deal with three years of wage freezes.”

Bloomberg remedied that situation in the early days of his tenure. He offered the city municipal workers a deal straight out of the private sector playbook: wage increases tied to higher productivity. The catch? The unions would be forced to make concessions with their sacred pensions and benefits. 

Remarkably, after eight years of stalemate with the Giuliani administration, few complained. The unions gave in to City Hall, and their paychecks, at last, increased. Through back-and-forth mediation, the businessman had settled a lengthy bargaining war between city government and its workforce.

But the peace didn’t last. The mayor’s second term would become a succession of labor breakdowns; between 2006 and 2010, contracts for the major public sector unions began to expire. In response, the unions would begin to distance themselves from the mayor. Perhaps Bloomberg, a leader originally presumed to be more labor-tolerant than Giuliani, was not so different from his predecessor after all.

To understand how the current gridlock came about, we can highlight the plight of the city’s two largest public sector unions—District Council 37 (D.C. 37) and the United Federation of Teachers (U.F.T.)—as a microcosm of a larger disconnect between Bloomberg’s reputation and his practice over the last several years. By leaving the city’s workforce in contract limbo, Bloomberg is intentionally passing the buck (or lack thereof) to whomever succeeds him on January 1, 2014. 

From maintenance workers and technicians to clerical staff, D.C. 37 is an amalgam of occupational variety. With 121,000 members and 54 local chapters in its ranks, the labor organization is New York City’s largest public employee union. In terms of electoral sway, it’s definitely a major voice at the polls, a power that Bloomberg drew upon in 2005 after gaining the union’s endorsement. “In the beginning, D.C. 37 wanted Bloomberg after Giuliani,” D.C. 37 Vice President Michelle Keller told me.

But let history explain the next part. In the fall of 2008, the major banks on Wall Street tripped over a self-created bubble of mortgage debt in the housing crisis, igniting a Great Recession that was years in the making. As with 9/11 and the economic havoc wreaked soon after, it happened in the city’s backyard. Once again, the city council and the mayor faced a deficit worth hundreds of millions of dollars. 

From the Bloomberg administration’s perspective, the solution was sacrifice. Unions were given yearly wage increases; however, these came at the same time as the “pension problem” began to dominate editorial board discussion. Pension costs continuously ate away at larger chunks of the city’s overall budget, with the conservative Manhattan Institute eventually claiming there to be $76 billion in unfunded liabilities by mid-2008 (before the crash). As these numbers skyrocketed, the wage increases offered to union members dwindled and the concessions asked from them became more and more unappealing. Further concessions, the union argued, were just not feasible. 

Bloomberg disagreed. Because the city controlled the purse, in the mayor’s mind, he could call the shots. The unions, of course, disagreed. “They have the money,” Keller told me. “But we have the workers.” 

Asreported by the New York Times, a closed meeting between the heads of D.C. 37 and the mayor in August 2009 produced heated exchanges and ended in a stalemate. But the message from the mayor, which reporter Michael Barbaro described as “blunt, tough-love, take-it-or-leave-it language,” was more than clear.

“The real world is we have to find ways to do more with less. There is no money,” Bloomberg told the workers. When asked about halting layoffs, the mayor demurred. “I can’t promise something I can’t deliver,” he said. “I just won’t do it.” His mute act further infuriated the workers because, as they watched their wages suffer, the city was spending millions of taxpayer dollars on private consultants. 

From day one, Bloomberg believed that downsizing and privatizing the public sector would boost results and cut costs. And his hostility in 2009 toward one of his largest union supporters from four years earlier showed that the mayor had no fear of electoral blowback. It was no surprise that Bloomberg’s dismissal of the union’s importance to his future electoral prospects infuriated the workforce. “Hebleeds the unions. You cannot believe he’s that mean-spirited,” Keller said in an interview. “There’s a serious threat of privatization. Corporations and consultants are milking us until he’s gone.”

After that showdown with Bloomberg, D.C. 37 handed its endorsement to the Democratic challenger Bill Thompson, who went on to lose in November (though in a closer race than had been predicted). As Professor Mitchell Moss of N.Y.U.’s Wagner School of Public Service argues, the union’s inability to sit down with City Hall and bang out a deal worked in Bloomberg’s favor. “Money doesn’t just appear,” Moss said. “Union leaders are overrating the powers of the mayor; they’ve chosen not to work with him—and it affects them much more.” The bottom line is that March 2009 marked the last time D.C. 37 obtained a wage increase during Bloomberg’s tenure. 

In Bloomberg’s relations with the U.F.T., a different kind of friction has developed. The demonstrable success of his efforts to make the Department of Education (D.O.E.), what Doug Turetsky of the Independent Budget Office (I.B.O.) calls, “a test of his mayoralty” has come at the expense of relations with the teachers union.

The D.O.E.’s website tells the story from the administration’s standpoint. Since Bloomberg came to office, a total of 528 schools have been built; the graduation rate has increased 20 percent; classroom size from K-to-12 may have fluctuated a bit but, over the long term, has decreased; and test scores in math and English language arts have shown very substantial gains.

In 2002, the mayor’s first year in office, the D.O.E. budget was $12.71 billion. In the current fiscal year of 2013, it has more than doubled to $24.4 billion, a combination of city, state, and federal funds. Overall, the city’s education budget under Bloomberg is up 91.9 percent in spending over the 12 years he has been in office. The D.O.E. remains the most expensive city office to date, eating up a little more than a third of the mayor’s entire budget for 2013.

“The budgets for agencies are important interims or guide posts, but they don’t tell the whole story,” says Harvey Robins, the budget officer under former Mayor Dinkins. Drawing the ire of the city’s largest teachers union has left a blight on that otherwise impressive education legacy. The relationship went bad over budgetary threats from the mayor’s office, and a shared inability to negotiate has left the union without a contract for almost seven years. 

To understand how relations could get to such a low point, one must focus first on Bloomberg, this time in his dedication to overhauling the education system. “We’ve brought a sense of excitement and possibility to teachers, to parents, and to children,” he declared in his 2006 inaugural address. “We’ve given the schools an arts curriculum that is worthy of the nation’s cultural capital. We’ve begun to ensure all our students the first-rate education that is their fundamental civil right.”

The recession that would take hold during his second term threatened all that “excitement and possibility.” Facing deficits, Bloomberg demanded reductions through teacher layoffs and attrition. However, because of federal stimulus funds that injected $1 billion into the city’s budget to avoid education cutbacks, the city council thwarted the mayor’s plans. Restorations were made for the teachers and reductions in the budget were slipped in somewhere else.

By doing so, Amanda Doulis of the C.B.C. told me, the mayor flaunts his executive discretion in budgetary talks. This back-and-forth process would characterize budget talks across all the departments for the remainder of Bloomberg’s time in office (2013 notwithstanding). “Every year, we get this one thing that is like the symbol of why not to cut services,” she said. “One year, it was teachers’ layoffs; next year, it was the firehouses; last year, it was child day care slots.” 

Cutbacks in the education budget are a more visceral issue for teachers than they are for most members of most other city unions because pension and fringe benefits like health insurance are partially included in the figures. But, despite the firings and attrition of the past six years, 2013 will see new hiring. In addition, an Albany-issued report entitled “New York City Public School Improvement Before and After Mayoral Control” pointed out that the mayor initially delivered on wages between 2002 and 2007: “from a spending perspective, Mayor Bloomberg’s main contribution [has] substantially increased teacher compensation.”

But in 2007, the negotiations stopped. And three years later, the mayor moved to save some 44,000 teacher positions by enacting a pay freeze. Again, a familiar tactic: the mayor sought fresh avenues in the private sector. “Charter schools and special education have both been fast-growing parts of the education budget in recent years,” explains Courtney Wolf, a policy associate at the Citizens’ Committee for Children of New York. 

How fast? Excluding special education programs, data from the I.B.O. shows an increase in funding of 205.4 percent from the Bloomberg administration to New York City charter schools. As of last year, $1.5 billion of the total education budget was headed towards the private sector-managed classrooms while the funds for the central administration of public schooling dropped 25.9 percent.

For the unions, the 2013 mayoral campaign is about filling a power vacuum in City Hall. It presents a moment to undo the past, a window of opportunity where the public employees of New York City can receive new contracts and compensation that’s several years overdue. 

D.C. 37 Executive Director Lillian Roberts has demanded retroactive raises worth nearly $3 billion for the unionized municipal workers. On U.F.T. President Michael Mulgrew’s calculator, the city owes its teachers upward of $3.2 billion—an amount that, if spread accordingly to employees, would add $7,000 to teachers’ starting salaries, which are now frozen at $54,000. Together, that’s a $7 billion request, an amount that Bloomberg insists is financially impossible to ask of City Hall.

Come November, Mulgrew has promised to bring over 200,000 voters to the polls. And, for a September primary that’s expecting to see around 600,000 Democrats come to the polls, the U.F.T. is planning to flex its muscles. “We’re not about picking a mayor,” Mulgrew told the Observer’s Jill Colvin. “We’re about making a mayor, making the winner. And that’s what we’re gonna do.”

This time around, the “winner” that the U.F.T.’s delegate assembly went with in mid-June is Bill Thompson, the former Board of Education president and comptroller. In 2009, the U.F.T. sat out the race; given the closeness of the race, the teachers union support could have been the difference. 

At the end of May, D.C. 37 gave its backing to current comptroller John Liu—who had an integral role in uncovering CityTime, the worst private contractor scandal of the Bloomberg years and a frequent target of union outcry. 

The support for both candidates seems a bit strange when one takes a look at poll numbers: two of the most prominent union players in the Democratic Party have endorsed candidates who have ranked no higher than third in the most recent polls. 

Of course, it’s only late June; things can and will change. If the sway at the polls proves true in September’s primaries, the Democratic contender will be forced to respond positively to the unions’ demands. None of the candidates are self-financing their campaign like Bloomberg did (three times); therefore, they need all the support and money they can get, but at the same time they are presumably aware of blowback should they not deliver on their promises.

As of now, both Thompson and Liu have not publicly explained to their respective endorsees exactly how they plan to finance nearly $7 billion in back wages. Thompson has mentioned that he would open new revenue sources by cutting back on the use of consultants, but the total amount of savings there is unclear. Liu, on the other hand, has proposed $15 billion in savings and new revenue in his “People’s Budget,” but it’s not clear how quickly all those gains would be realized. 

Where else do the labor forces expect this money to come from?

Unexpected surpluses. While the mayor has crystal-balled deficits left and right, the guessing game for surpluses is a plague of city politics. The I.B.O’s predictions fluctuate monthly, along with those provided by comptrollers of the city and state. Regardless, one thing is true: New York City has had a surplus for some time now.

Richard Riley, chief spokesperson for the teachers’ union, highlighted a piece to me by President Mulgrew published in late May in the U.F.T. newsletter and then repackaged as a Daily News op-ed a month later. As Mulgrew insists, “Bottom line: despite unneeded tax breaks and disastrous outsourcing mistakes, New York’s underlying economic strength and rolling budget surpluses show that the city can afford to make a fair agreement with the people who keep it going. But City Hall has to have the willingness to do so.”

And, if this pattern described by Mulgrew continues, the bad news of an $811 million shortfall this year will probably be met with good news worth billions. If those totals from the back wages match up, then his members may indeed see that retroactive pay materialize. But that’s still a big “if.”

As Bloomberg and his acolytes promote his achievements as mayor, his increasingly hostile relationship with the city workforce won’t be mentioned. “The workforce in the city is becoming more lower-wage because the people have fewer benefits and fewer resources,” Harvey Robins said. “But Bloomberg’s legacy is going to be out there in the lights on Broadway.”

Add to that the negative impact of functioning without contracts for a prolonged period. According to the Fiscal Policy Institute economist James Parrott, “It’s not good for the morale of city workers and, at some point, that’s going to have an effect on the quality of delivery. I think it’s a very risky strategy to have.” 

Without contracts, Bloomberg’s legacy left over from D.C. 37 and the U.F.T. stands as an absolute zero in intrametropolitan diplomacy, widening the reality gap between the internal and external views of New York City’s success in the post 9/11 period. It’s up to the next mayor, whoever that may be, to balance the urban playing field.