After five contentious years, Mayor Nutter has reached a tentative agreement with the city's white-collar workers that strikes a balance between fairness to employees and cost control for taxpayers.
Nutter stuck to his plan to begin stabilizing pension and health-care funds by requiring increased contributions from workers. The employees' new costs would be partly offset by a bonus and modest raises.
Both the administration and the 4,000-member American Federation of State, County, and Municipal Employees District Council 47 can claim victory on an agreement that should serve as a model for other city labor deals.
Now the 10,000-member AFSCME District Council 33 must make a deal. D.C. 33, representing blue-collar workers, has hesitated to allow the city to furlough its members, but it may see a path to a contract in the D.C. 47 deal.
Nutter gave ground on furloughs for the agreement, trading them for changes in the contract's language on temporary layoffs. Time will tell if that achieves the flexibility the city hoped to gain from furloughs. While furloughs cost workers paychecks, they protect base salaries and may prevent job losses.
Beginning to solve the pension problem is among the biggest achievements of the D.C. 47 deal, and it reflects earlier changes in the city's police and fire contracts. (The city is currently in arbitration with the firefighters, and it's about to enter arbitration with the police.) The city's pension liability is only 48 percent funded, and pension payments make up more than 16 percent of the budget, taking scarce resources away from city services.
As of 2016, the deal requires employees to contribute another 1 percent of their pay to the pension fund, for a total of 3 percent. New employees who opt for the old pension plan would pay 4 percent. Those selecting a hybrid plan with a lower payout would contribute about 2 percent of their incomes, a figure that could change. That would include a voluntary, 401(k)-like retirement plan requiring employee contributions and providing a small city match.
The deal also addresses health-care costs. The city agreed to make a one-time $5 million contribution to the health fund and raise monthly contributions from $975 to $1,100 per employee. Starting in 2015, meanwhile, employees would cover at least 9 percent of total costs. That should save the city money over time.
If the union's membership agrees to the tentative deal, workers will receive a $2,000 ratification bonus and raises of 3.5 percent this year, 2.5 percent in 2015, and 3 percent in 2016. The contract ends in June 2017, 18 months after Nutter leaves office, giving the next mayor a breather before labor talks resume.
Nutter expressed gratitude to the workers, who will pay more for benefits after going without raises for five years and shouldering more work during the recession. But at a time when many middle-class workers have endured effectively flat wages for more than four decades while losing their pensions and paying more for health care, this is a good deal for employees. It should set a better tone between the mayor and city workers for the rest of his tenure.