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Issue Brief

No. 26 January 2014


Pre-Retroactive Pay Raises

How New York City teachers’ salaries have grown since their union contract expired in 2009


E.J. McMahon, Senior Fellow

Manhattan Institute.
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IN THE NEWS
Mike Mulgrew’s whopper, New York Post, Editorial, 2-19-14
Teachers union head says getting retroactive pay raises a big issue, New York Post, 2-18-14
Unjust ‘Back Pay’, National Review Online, 2-6-14

 

Executive Summary

Mayor Bill de Blasio said the city’s current round of collective bargaining “may be the hardest assignment that anyone in the history of labor relations in this city has taken on.”

The new mayor will have to reach contract agreement with 152 different unions representing nearly 300,000 municipal employees (see Appendix for a breakdown of unions and average salaries). The budgetary stakes will be highest for the largest of those unions, the 116,000-member United Federation of Teachers (UFT). While the city’s contracts with its other major unions expired in 2010 and 2011, the UFT agreement expired in October 2009, and the last base salary increase for teachers took effect in May 2008.

In a union catchphrase widely echoed by the news media, UFT members—including more than 80,000 teachers—have been "working without a contract" longer than any other city employees. A contract giving teachers the same 4 percent annual raises granted to other unions in the 2008-10 round of collective bargaining would add $3.5 billion to the 2014 budget, the Citizens Budget Commission estimated.[1] Billions more would flow from giving UFT and other unions additional "retro" pay for subsequent years, broadening the expense base for additional raises going forward. Going forward, each additional percentage point increase for all city workers would cost about $300 million a year, according to an estimate issued by the Office of Management and Budget before Mayor Bloomberg left office.

But for teachers, in particular, working without a contract doesn’t amount to working without any pay raises. Thanks to the Triborough Amendment, a state law requiring all contract provisions to remain in effect until a new agreement is reached, a sizable majority of teachers received salary increases during the first four years after the last UFT contract expired.[2]

This paper draws on five years of actual city payrolls to calculate the fiscal impact of Triborough-driven pay hikes for teachers continuously employed by the city from 2009 to 2013, as well as teachers hired since 2009 but continuously employed since then. Key findings:

  • Salary increases during the period totaled $1.2 billion, adding $469 million to city operating costs for 2013 alone.
  • For the 57,983 teachers who had not already risen to the top of the pay scale by 2009, average salaries rose over the next four years by an average of $8,086—or nearly 12 percent. The average annual raise of 2.8 percent outpaced the local inflation rate, which averaged 2 percent during the same period.
  • Including pension contributions and payroll taxes, total compensation for teachers continuously employed during this period increased by $932 million a year, with a cumulative four-year increase of $2.1 billion.

For most current teachers, a retroactive increase won’t end a pay raise drought. Rather, it will compound the value of step and longevity increases already paid by the city.

In the coming months, Mayor de Blasio will need to bargain complex trade-offs with the UFT and other city unions to hold compensation costs at a level the city can afford. But in all cases, the city should insist on contractual provisions suspending further pay increases after the next collective bargaining agreements expire. This will give unions greater incentive to come to the table and avoid working without a contract in the future.


Climbing the Teacher Pay Ladder

Civil servants in New York—virtually all of whom belong to labor unions—generally are paid according to salary schedules providing for periodic pay raises based on job title and longevity. These salary schedule are incorporated in the city’s collective bargaining agreements.

Police, firefighters, sanitation workers and correction officers have steeply graduated pay scales, entitling them to base pay hikes of up to 100 percent during the first six years of working. Uniformed employees can further supplement their salaries by earning night shift differentials, holiday pay, "longevity increments" for hitting additional experience levels, and overtime. Most non-uniformed employees, including clerical workers, also have relatively truncated salary schedules that allow them to reach the top base pay for their titles within a few years of hiring.

By comparison with other city employees, teachers have a more extensive salary schedule, which starts with eight experienced-based salary "steps" followed by periodic longevity increments. As shown in Table 1, teachers receive nine annual pay increases during their first 10 years on the job (including an added longevity increment in year five), and a total of 14 pay hikes during their first 22 years. For each basic pay level, there also are six columns or "lanes" of progressively higher salaries linked to educational attainment, ranging from bachelor’s degree to master’s degree.

The impact of steps, lanes and longevity increments on teacher pay in the absence of a base pay raise is illustrated in Figure 1. A new contract could revise the salary schedule by increasing or decreasing the number of steps, lanes and longevity increments, or by distributing a larger share of any overall increase to teachers based on seniority. In general, however, the expectation of union members is that an average base salary increase—of, say, 1.25 percent, the amount budgeted in former Mayor Michael Bloomberg’s $2 billion collective bargaining reserve for the next three years—will be applied equally to every box on the schedule.

In the meantime, however, the state’s Triborough Amendment required the city to continue paying all increases required under the salary schedule even though the contract expired.

The result has been a salary increase, usually repeated salary increases, for a sizable majority of teachers. The following details are based on salary data supplied annually by the city and posted at www.SeeThroughNY.net, an independent government transparency website maintained by the Empire Center for Public Policy.

There were 88,822 classroom teachers on the Department of Education payroll for all or part of the fiscal year ending June 30, 2009, according to city records. By fiscal 2013, the total had dipped to 84,631.

Out of that total, 62,628 teachers were on the payroll continuously from 2009 to 2013, including 4,645 who already were earning the top base salary of $100,049 when the period began.

The remaining 57,983 continuously employed teachers[3] received base pay increases averaging 11.6 percent from fiscal 2009 to 2013. This equated to an annual pay bump averaging 2.8 percent a year during a period when the consumer price index in the New York metro area was rising by about 1 percent a year. The average base salary for this group, including teachers who attained the top step before the end of the period, rose from $69,590 to $77,676. Their total salary increases over the four-year period came to $1.1 billion, adding $469 million to operating costs in 2013.

Total teacher salaries paid by the city between 2009 and 2013 actually dropped slightly, reflecting both staff cuts due to attrition and the replacement of more senior, highly paid teachers with less experienced, lower-paid newcomers. However, these new teachers also received pay increases. For those hired since 2009 and continuously employed through 2013, raises totaled $58 million, or $34 million in 2013 alone.

While it has a significant impact on the budget, this aspect of the teacher’s contract is not well understood by the public—or the news media. For example, a May 2013 Daily News article on the status of municipal collective bargaining agreements began this way:

The president of the city teachers union, Michael Mulgrew, has two words for the next mayor: Pay up.

The … members of his union have not had a raise in 4 1/2 years, he says, since the last teachers contract expired in 2009. A teacher earning $54,000 in 2009 might now be pulling down an additional $7,000 annually if the city had signed a new labor pact.[4]

In fact, teachers earning around $54,000 did receive a pay increase of about $7,000 during the four years following their last official raise. Specifically, as of 2008-09, there were 2,620 teachers with salaries between $54,000 and $55,000, averaging of $54,552, according to payroll records. As of 2013, for continuously employed teachers in this group, average pay had increased to $61,567—up $7,015, or about 13 percent, over the 2009 average of $54,552.


Fully Loaded Compensation Costs

Salaries also drive the cost of two additional elements of compensation costs: the employer share of federal Social Security and Medicare payroll tax, which comes to 7.65 percent of salaries, and required contributions to the New York City Teachers’ Retirement System, which increased from 30.8 percent of teacher salaries in 2009 to 36.5 percent of salaries in 2013.

Figure 2 illustrates average total salaries, payroll taxes and pension contributions for all teachers continuously employed between 2009 and 2013. As shown, this measure of compensation rose from $99,434 to $114,324 per teacher, excluding employer-paid health insurance premiums.

Paraprofessionals—teaching assistants working mainly in special education and early childhood education—comprise the second largest group of UFT members. They receive lower pay and are covered by a different salary scale with fewer step increments than are available to teachers. However, most paraprofessionals have also received pay hikes since the last UFT contract expired.

The 17,893 paraprofessionals continuously employed by the city from 2009 to 2013 saw their average pay increase by 12.7 percent, from $27,056 to $30,454 as a result of Triborough-required step increases. Those raises added $61 million to the city budget as of 2013.


Modifying Contract Language

The promise of regularly scheduled pay increases based on experience, especially early in an employee’s career, is intended to serve as a recruitment and retention tool. But preserving automatic pay hikes even after the expiration of a contract also provides significant added negotiating leverage for unions—particularly the UFT, since the teacher salary schedule calls for frequent annual raises for the majority of the union’s members.

The challenge this poses to management is not limited to New York City. Municipal and school officials throughout New York state opposed enactment of the Triborough Amendment of 1983 and have been calling for its repeal or modification ever since.

Even assuming that Gov. Andrew Cuomo and the legislature remain unwilling to change the law, New York City is no t without options. Whatever other concessions are traded in municipal collective bargaining talks, De Blasio can bolster the city’s position in future negotiations by insisting on provisions suspending salary schedules once contracts expire. This will give the UFT and other unions a stronger incentive not to spend years "working without a contract."


Endnotes

  1. Citizens Budget Commission, 7 Things New Yorkers Should Know About Municipal Labor Contracts in New York City, May 2013.
  2. The provision known as the Triborough amendment is N.Y.S. Civil Service Law, Section 209-a(1)e. For more on the law and its impact, see Empire Center, Triborough Trouble: How an obscure state law guarantees pay hikes for government employees, January 2012, at http://www.empirecenter.org/special-reports/2012/01/triboroughtrouble011112.cfm#_edn1
  3. The count consists of Department of Education employees in the “pedagogical” category who had “teacher” titles, including regular substitutes, in general, special and adult education. Calculations for teachers continuously employed during the periods in question are based on the “agency hire date” for each named employee, as provided by the city Office of Payroll Administration.
  4. “UFT, PBA bosses say billions owed in back pay for union members,” Daily News, May 28, 2013, http://www.nydailynews.com/new-york/uft-pba-union-bosses-billions-owed-back-pay-article-1.1357100#ixzz2qlmnjjCX

 

 

 
 

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