Unjust ‘Back Pay’

by Jillian Kay Melchior
In NYC, the teachers’ union tries to grab some more taxpayer money.

The New York United Federation of Teachers (UFT) is demanding up to $3.5 billion in “back pay” for a raise the union says teachers should have received five years ago. If the teachers’ union succeeds, the repercussions will be felt in other labor negotiations at a time of precarious city finances.

With nearly 300,000 workers (almost all of them union members), the municipal government is the biggest employer in New York City. UFT is the largest union in the city, representing 116,000 people, or almost 40 percent of New York’s government employees.

The teachers’ union enjoyed extraordinarily plump years during the 2000s. In the last round of contract negotiations, the UFT secured a pay hike of 5 percent for 2008. In contrast, uniformed and civilian unions got a 4 percent increase. Combined with the two previous Bloomberg contracts, the Village Voice reported in 2009, this was “a 43 percent cumulative salary hike, a record for city teachers that tops every other major urban system in the country since 2002.”

But while other unions were able to finalize their contracts before Michael Bloomberg’s third term began, the teachers’ union did not. Its last contract expired October 31 — “three days before [the 2009] mayoral election,” Sol Stern pointed out in City Journal.

“The timing is no coincidence,” Stern wrote. “During the 2007 negotiation, UFT president Randi Weingarten pressed for an unusually early expiration for the contract, assuming that the 2009 election would send a fresh face to City Hall, someone with whom she might quickly conclude a new agreement.”

Shortly before the contract expired, the Daily News reported that the union was pushing for another “substantial” pay raise.

As teachers demanded even more generous compensation in 2009, ​the unemployment rate was 10.2 percent and millions of Americans were losing their jobs in what was then called the worst economic crisis since the Great Depression. The post-recession jobs recovery since then has been the worst in the history of the United States.

Against the teachers’ union’s expectations, Bloomberg got his third term. As New York struggled out of the recession, tax revenue was low, and state funds had diminished. Bloomberg first offered the teachers’ union a 2 percent hike, then rescinded that offer to avoid layoffs.

Still, teachers enjoyed pay increases even in the years when they didn’t have a new contract. As E. J. McMahon, a senior fellow at the Manhattan Institute, recently noted, teachers cumulatively saw a $2.1 billion increase in compensation between 2009 and 2013. Among the 58,000 teachers who were not already earning maximum salary, pay rose almost 12 percent over these four years, adding $8,086 on average to their individual annual wages. Performance-based bonuses added another $27 million in teacher pay in 2009 alone.

The union is nonetheless calling foul, complaining that it should get the same 4 percent raise as other unions because of “pattern bargaining,” in which raises are usually given equally among unions. And because the UFT didn’t get that same deal in 2009, its leaders want that 4 percent increase paid retroactively.

Such back pay is “in no way the norm in contract negotiations,” says J. Justin Wilson, managing director at the Center for Union Facts. And James Sherk, senior policy analyst in labor economics at the Heritage Foundation, says, “Never did the city agree to pay them that, and in no legal sense are they entitled to it.”

But Mayor Bill de Blasio may be more conflicted, given the political heft of the teachers’ union. In the last election cycle alone, the UFT spent $3.465 million — surpassed in prodigality only by the Real Estate Board of New York, and three times the sum put forth by the next highest spender. Though de Blasio was not the teachers’ union’s first pick, it nonetheless partnered with two other labor groups to pay for $1 million in ads targeting Republican opponent Joseph Lhota.

If the teachers’ union succeeds in getting its back pay, it will affect other negotiations. As many as 152 public-sector unions face expired contracts, and many want similar retroactive payments. It would be tough for the mayor to justify granting retroactive pay hikes for teachers and not, for example, sanitation workers.

Altogether, the tab for such dubiously claimed back pay could add up to as much as $7.8 billion, the Daily News reports. Furthermore, the Citizens Budget Commission, a New York watchdog group, has reported that back pay would strain the current budget, also cautioning that “as contract end dates become increasingly distant, the financial risk of awarding retroactive pay grows substantially.” Granting the unions’ wishes will inevitably strain the budget and will most likely lead to tax increases.

Pundits are already predicting that the teachers’-union negotiations will present de Blasio with his biggest challenge of the year. The mayor has set up a “fact-finding panel,” consisting of city officials and union representatives, that will meet next week.

— Jillian Kay Melchior is a Thomas L. Rhodes Fellow for the Franklin Center for Government and Public Integrity.