DCEA President Owen Lays Out His Bargaining Unit's Perspective on Layoffs and Budget Cuts
Written by David Greenwald Thursday, 14 June 2012 08:06
The city of Davis acted quickly to fill the hole left by the PERB (Public Employment Relations Board) invalidation of their imposed labor contract on DCEA (Davis City Employees Association) by laying off nine employees and reducing the hours of three more.
The Vanguard spoke with DCEA President Dave Owen on Tuesday afternoon, prior to the city's release of their contract but after the bargaining unit leader had learned of the PERB ruling.
At that point, Dave Owen did not know where contract negotiations stood between the two sides.
"With the new PERB finding, part of their resolution of this is to go back to fact-finding," he said. This is in addition to making the union whole, something that the city estimates will cost them $800,000 to $1 million. "I don't know what that does to our current negotiation - if we have to go back to fact-finding on the last one."
"This is a wrench in the mechanism that did not exist yesterday," he said.
Dave Owen did not want to get into the specifics of an ongoing negotiation and collective bargaining process. So he outlined his concerns in a series of hypotheticals.
"Let's say you have an employer and you sit down at the table with employees, and the employer says we have problems and we need your help financially," he said. "So the employees ask how much help do you need and the employer answers, 'I don't really know, it's complicated.' "
"That leaves the employee wondering, what am I doing here, we're just shooting in the dark," he said. "Not a lot of headway gets made. In that world, what do you do?"
Mr. Owen contends that, while the negotiators for the city have argued that the city needs help, they have not laid out how much help they need, at least not during the negotiating sessions.
"That's kind of where we're at," he said.
In order to understand the place that DCEA finds itself in, it is important to understand that this is not the bargaining group of people making $150,000 in total compensation who got a 36% pay increase in the last decade.
"When you take workers that are making $50,000 to $60,000 and you tell them, 'we need you to contribute 20 percent towards a benefits package but we also need you to do these other things which could mean a hit of anything from zero percent to upward of 20% for some of your employees on top of that other 20,' " he said.
The reference here is to the cafeteria cash-out plan, that currently pays employees as much as $18,000 a year to take a cash-out rather than to receive the city's health care package. But it is an uneven benefit, only going to those employees who are covered under their spouse's health coverage.
The city is looking at this as a way to reduce overall costs by restricting the benefit to $500 per month, which would be $6000 instead of $18,000 over the course of the year.
Given that it is a benefit that perhaps unfairly benefits some employees and not others, it has been targeted for cuts.
But, as Dave Owen explains, it is not that simple from the employees' perspective.
"That's just a position that the hypothetical employee cannot fulfill," he said. "All employees have a lifestyle that they would like to be able to continue. Parents like to know that they can send their children to school. Just simple aspirations to live that, when you start taking huge cuts like that, it's just not doable."
"It's not just something you can say, I can do that," he said. "You need the employer to get more realistic about what they need. As of yet, that's a problem."
Some have argued that the employees should take concessions in order to save jobs. For instance, the city has posited that concessions could save the nine laid off DCEA workers their jobs.
However, Dave Owen has a couple of responses to this.
He believes that those jobs will be gone one way or another, whether or not the bargaining unit grants the city concessions or not.
At the same time, in his mind, taking concessions reduces the compensation to the point where employees would question whether the job remains one worth taking.
"We want to know that the jobs that we save are worth having - that you can feed your family and take care of your household on what's left of what you're being paid, your compensation," he said. "So if you have grown your organization to the point where you can't sustain it, then you probably do need to shrink your organization."
"Having said that, you've got to keep in mind that this is a pie with many segments," he said.
He explained that if you look at the DCEA segment, 1% is around $115,000.
"With the nine layoffs that are being accomplished, and by the way there are reductions in hours for three other employees," he said, noting that two were cut to 75% and one was cut to 50%. "When you are cutting a job back to 50% you're pretty much eliminating it."
"In this, they have actually accomplished over $1 million in savings," he said. "That goes quite a ways towards your seven million for just one [bargaining unit] out of seven bargaining units."
However, the city would argue that was the savings that was supposed to be gleaned from the last bargaining process.
Dave Owen does not see it that way, however,, reminding the Vanguard that these are ongoing and annualized cuts, whereas the $800,000 the city lost was one-time money paid back to the bargaining unit.
"You're capturing what you imposed, but you're also capturing that million dollars in the future," he said. "So you got $6 million to pick up and other bargaining units to talk to."
Mr. Owen acknowledged that he now believes that the city has realized their savings with DCEA and should move on to the next bargaining unit to get their share of the pie.
"We have taken a hit," he said. "Granted the other bargaining units gave concessions up., so basically we're all pretty much on a level footing apparently. So it's a matter of looking further and getting down to what you really need and presenting that to your employees."
"There's got to be someone at city hall that can give you an exact figure that they need to accomplish with these bargaining units to get to where they need to be," he said.
"What I'm afraid of," he added, "is that you're never going to get there."
He pointed out that we have taken the size of city government from 445 to 376 in terms of number of employees. DCEA correspondingly has dropped from a high of 118 to now 87 with the new layoffs.
"How low do you need to go to get to where you can sustain what you're doing?" he asked.
The city's market survey found the DCEA bargaining unit to be about five percent low in terms of compensation. The unit ranks even lower than that in terms of salary. However, the benefits package makes it more competitive.
"You get to the point where the employee needs clarification on what does the future look like," he said.
He said that he has heard the term "unsustainable" floating around the last several years, but there has been little discussion as to what sustainable looks like, "so that the employees know what to look forward to so that the employees can make their own decisions on is this where I want to be, do I need to look elsewhere or does this look like something that, yeah, I can live with."
"If you're looking to move forward, that's where we need to get down to is a honest discussion of what the future looks like for us," he said. "As of yet we haven't had that."
Mr. Owen last year asked for the council to have a member or two to sit in on the labor negotiations. He wanted to ensure that the council was accurately informed as to what was being said during negotiations.
The employees back in 2010 claimed that the council was not be accurately informed about what was being said during negotiations, however, the council never took up Mr. Owen's invitation.
"I saw Councilmember Greenwald make a statement that they have been told not to be involved," he said. "That causes a disconnect and I don't think that it's helpful."
Their ultimate goal is a multi-year contract that they can live with.
"To get there we need some honesty and we need some real target, a hard solid target that we can work towards, not just darkness and take shots," he said.
The other day, City Manager Steve Pinkerton presented his side of the story in the article, "City Reduces Staff to Stabilize Budget."
---David M. Greenwald reporting
Some of the statements by Mr. Owens I find very troubling:
Some have argued that the employees should take concessions in order to save jobs, for instance, the city has posited that concessions could save the nine laid off DCEA workers their jobs.
However, Dave Owen has a couple of responses to this.
He believes that those jobs will be gone one way or another, whether or not the bargaining unit grants the city concessions or not.
At the same time in his mind, taking concessions reduce the compensation to the point where employees would question whether the job remains one worth taking.
"We want to know that the jobs that we save are worth having - that you can feed your family and take care of your household on what's left of what you're being paid, your compensation," he said. "So if you have grown your organization to the point where you can't sustain it, then you probably do need to shrink your organization."
You want to know if the jobs saved by making concessions are "worth having"? Really? Tell that to the 9 people from DCEA that just got let go, or the myriads of people out of work. In today's tough economic climate, to have any kind of a job is a wonderful thing.
Mr. Owen acknowledged that he now believes that the city has realized their savings with DCEA and should move on to the next bargaining unit to get their share of the pie.
"We have taken a hit," he said. "Granted the other bargaining units gave concessions up., so basically we're all pretty much on a level footing apparently. So it's a matter of looking further and getting down to what you really need and presenting that to your employees."
In other words, it sounds as if what is being conceded is that DCEA should have taken the concessions every other bargaining unit took - just to be fair.
He said that he has heard the term "unsustainable" floating around the last several years, but there has been little discussion as to what sustainable looks like "so that the employees know what to look forward to so that the employees can make their own decisions on is this where I want to be, do I need to look elsewhere or does this look like something that, yeah I can live with."
In other words the DCEA should be the one to decide what they think the city should call "sustainable"? It doesn't work that way. The employer tells the employee what salary it can afford to pay, and the employee decides whether it is enough. If the employee doesn't think its enough, they can feel free to go elsewhere, but elsewhere there are no jobs...
Their ultimate goal is a multi-year contract that they can live with.
The city's ultimate goal is a multi-year contract that it can afford!
To dmg: And what I am telling Mr. Owen (and your attempts to present his side) is that his arguments are not particularly compelling...
1) Do you honestly think the laid off employees prefer to be laid off than for DCEA to have made concessions so that all could have stayed employed? Really?
2) If layoffs puts DCEA "even" w the other units concessions, then that IMO concedes it was the fair thing to have done for DCEA to have made concessions like all the other bargaining units did...
3) The city I assume has made quite clear what it considers "sustainable" by asking the DCEA to make certain concessions or else 9 of your members will have to be laid off...
4) It sounded to me as if Mr. Owen does not fully understand that DCEA is not in a good bargaining position in the current abysmal economic climate...
"4. "The employer tells the employee what salary it can afford to pay, and the employee decides whether it is enough. If the employee doesn't think its enough, they can feel free to go elsewhere, but elsewhere there are no jobs... "
It is not that there are no jobs, it is that there are no jobs that would pay these employees, given their job skills and experience in their role, anything close to what they are making today. Which is illustrative of the problem and evidence that they are over-compensated for what they do.
What does an arborist tree trimmer make in the private sector?
Yes, but if the contribution made by the position has little value, particularly compared to others, isn't that "welfare"?
Good question hpierce. There are many things the government spends money on that I think qualifies as welfare. Farm subsidies come to mind.
With respect to public-sector employees, I think over-compensation (paying more than market rates) and overstaffing (supporting services not valued by the public, or having more employees than required for the current best-practice efficiency), I can see that as a form of welfare also.
However, the bigger problem I see is the political connection and the corruption it causes the democratic process. Public employee unions directly sit at the public negotiating table to determine spending priorities. Union employees ARE government, and hence government is sitting on both sides of the negotiating table. Non-union citizens do not have a seat at the table... and hence do not have direct influence. Neither do farmers... they most lobby to indirectly influence and hope for a favored decision on the legislative floor.
So, not only is this, public employee unions, a potential form of welfare (over-paying and over-hiring), it is a form of political corruption.
David, why does it fall to you to argue the case about what Dave Owen REALLY means? If he wants to talk in riddles, don't try to favorably translate when Elaine responds with logical and legitimate comments and questions. You reported what he said; you should let us decide (unless you realize you didn't accurately and completely report).
Obviously, both Pinkerton and Owen are using the Vanguard to help play out their negotiating positions. Both of them can sign up and respond to Vanguard readers' comments, and it would be great if they would.
We should be able to evaluate their positions based on their words as you accurately report them. We should not have to keep analyzing whether the words you put in their mouths more accurately reflect their positions than the words that come out of their mouths.
The Davis Teachers voted against concessions as layoffs wouldn't have a direct impact on the large majority of the employees. The majority will always vote in their own personal interests. The difference here is that the recent City layoffs did not allow bumping - the action of employees facing layoff taking the jobs from more recent hires. Not allowing bumping means that anyone could lose their job and might make an agreement for concessions the safer of the two options for individual employees.
"What does an arborist tree trimmer make in the private sector?"
"The top paid arborists (likely those certified versus uncertified) earned a wage of $23.01 or more per hour, or about $47,870 per year....The prevailing wage for certified arborists can also vary based on whom the arborist works for. According to the BLS, the highest number of arborists worked for companies that provided services for buildings and dwellings. The average wage of those working in this field was $14.85 per hour. The second largest group worked for state government agencies and earned an average of $20.24 per hour....According to the BLS, the largest number of arborists worked in the state of California and earned an average hourly wage of $15.94, as of 2010."
One can conclude that eliminating the $30,000 cafeteria payout bonus would put our Urban Forest Section tree trimmers right about where certified government arborists fit in the average pay scales.
Given the retirement and other benefits that probably make the city jobs more attractive than work at private companies, I'd guess our folks would be pleased to give up cafeteria payouts rather than giving up the jobs themselves.
On the other hand, will those not targeted for elimination even consider accepting less to allow the city to keep more people on the job--at reduced salaries? Or, will current employees hold firm while watching their colleagues keep dropping out of the city workforce in order to continue premium salary and benefits packages for those who get to stay?
Finally, if the city keeps just struggling along, continuing to live on the edge, what about the lost opportunities for those we might have hired when we got back to a healthy, "sustainable" municipal economy?
JustSaying,
Thanks for the information.
Points of clarification...
If the DCEA arborist tree/trimmer makes $50,000 per year, that is $24.04 per hour, correct ($50,000 / 2080)?
Then we would need to include the value of all benefits including healthcare, pension, paid days off, etc. I thought the value of the benefits less the value of the paid days off was about $50,000 per year.
The paid days off are a big deal also, because city workers get 14 paid holiday days compared to the private-sector average of 6 paid days. Also, the vacation and sick days provided are much greater than the private sector.
So, we are really talking about total compensation in the $50-60 per hour range, right?
"The reference here is to the cafeteria cash-out plan, that currently pays employees as much as $18,000 a year to take a cash-out rather than to receive the city's health care package. But it is an uneven benefit, only going to those employees who are covered under their spouse's health coverage."
That is incorrect, David. Almost all City of Davis employees get a cafeteria cash-out.
Only those who take no health coverage from the City--because they get covered by a spouse or by another job--get the full $18,000 cash-out (which is 90% of the $20,000 basis*.) However, everyone whose policy costs less than $20,000, which again is most City employees, gets some cash-out.
(*Yesterday, CalPERS announced that it is raising the cost of medical premiums by another 9.6%. That will increase the basis to about $22,000 on January 1, 2013.)
Take almost any unmarried employee with no children. His coverage will cost around $6,000 this year. His cash-out basis is thus $14,000, and his cash-out is 90% of that or $12,600. Another person, say she gets coverage for herself and her domestic partner, and it costs $12,000, then her cash-out would be $5,400 (90% x $6,000).
"So, we are really talking about total compensation in the $50-60 per hour range, right?"
I would guess it is probably closer to $45/hour worked. However, I would also guess that a tree trimmer who owns his own business and sells his service to private parties is a lot more productive per hour. And that is not due to experience or skills. It is due to incentives.
Many, many years ago, when I was working at 3 AM in a fish factory in Petersburg, Alaska, after having started that shift at 6 AM the previous day, I heard a great line by a guy who was working extremely slowly (gutting and trimming lingcods), despite the fact that the rest of us were going as fast as possible, in an effort to catch a few hours of sleep before we had to start work again. When the supervisor told him to speed up, he said (in a thick Southern drawl): "You payin' me by the hour? Or you payin' me by the fish?"
In effect, the public employee tree trimmer is being paid by the hour, and he gets more hours by going slowly. The self-employed tree trimmer is being paid by the branch, and he gets more money by going fast.
"In effect, the public employee tree trimmer is being paid by the hour, and he gets more hours by going slowly. The self-employed tree trimmer is being paid by the branch, and he gets more money by going fast"
Ah yes, the "what gets measured gets done" principle.
The way to offset that natural motivation of the hourly employee to be less efficient, and/or less productive, is to say "you get to keep your job if you gut and trim enough fish, or trim enough branches, and you get a bonus if you exceed the base performance exectations." Can't really deliver that message to a union employee.
Rich: Do you include the value of paid time off in the $45 per hour estimate?
Rich, are you saying that the city essentially gives every employee $20,000 above his or her salary, labeling it a "health insurance benefit"? And, that almost no city employee pays out the majority of this payment for health insurance? If so, why would the "basis" be so high?
And, if so, I guess I've never really understood the health insurance concept as it ties into CalPERS employment. If California wants to encourage its employees to be covered by quality health programs, giving them more money if they choose low-end coverage seems counter productive. Why not just call the money "salary" and let employees track down their own coverage if they want any?
"Do you have evidence that he worked in an inefficient manner? And if you do, that's a supervisory and oversight problem"
One of the common tricks in a union shop is to make sure the newbies get adequately indoctrinated into the status quo level of worker productivity. Since management tends to have come up through the ranks, some of them do not know any better. Once an organization of workers develops a standard level of performance mediocrity, it becomes endemic to the work culture and it is difficult to change. Workers actually feel like they are working as hard as they can. They develop a “can’t do attitude” with respect to taking on greater responsibility or increased productivity. This is one of the most challenging jobs for management… organizational change that requires a shift it work culture norms to do more with less. But for most companies in the private sector, it has HAD to be done. You can tell the companies that failed to get it done because most of them no longer exist.
Throw in the power of unions to disrupt and block that change, and it becomes almost impossible. In that case the organization will fail unless it is a protected public-sector business, or is bailed out before it fails.
I don't have a problem with a cash-out cafeteria benefit as long as:
1.The base covered is close to the median for all coverage options.
2.The cash-out is 50-60% of the premium savings.
The lower percentage cash-out reduces the incentive for employees to skimp on coverage and have it impact their care… while still allowing the option for more premium coverage. Basing the full amount on the median for all coverage options means that some employees will pay out of pocket to get the premium coverage.
Except he's not in a union.
Now I'm confused. I thought the Davis city tree trimmers were covered under collective bargaining?
David: Ok, thanks for explaining that.
I think "a bargaining unit" comes close enough to union to make the point. I assume the agreement includes most or all of the same job protections that unions collectively bargain for.
It is interesting to me, because I'm sure people working for a union cannot comprehend a working life without a union. I have never worked for a union (except a few months working for Court Galvanizing when I was 18), and I cannot fathom why people are confused about this when 90% of the rest of the working US is non-union.
Ok... some facts... the basic Kaiser (nominally lowest cost health plan) is $1590/mo. (~ $19,100/yr) for an employee + 2 or more dependents. Mr Boone's idea of making the basis the median coverage would up that significantly. His idea of having the cash-out be 50-60% of the avoided cost of the premium, would increase the amount currently available to those hired since 2010.
$19,100/yr for a Kaiser plan?!!! What is that a zero-deductible plan?
Based on this, then I would add to my list of options to decrease the level of plans offered. Geeze...
50-60% cash out for all employees... so the newbies get a better deal, and the existing employees have to pitch in more.
But first, drop the high cost plans. $19,100 per year for a Kaiser plan is ridiculous. I have a Blue Shield PPO, HSA plan for my 17 employees. I pay 100% of premiums make an annual contribution in their personal HSA account every year to help cover their deductible and out of pocket, and give them a $250 per month wellness benefit… and I spend a bit more than half of what this Kaiser plan costs. The Kaiser HSA plan would have saved me even more money, but I have a few employees still afraid of Kaiser.
Who the hell is negotiating these plans… the union (or the bargaining group that flies under the union label radar)?
Calpers sets the prices of the health plans. And DCEA is not even close to a union if they were the 9 jobs would have been able to have been saved. In speaking with some of the DCEA employees they feel as if they are 'at will' employees. Since the city can just do whatever they want with them. There is no protection for them.
Regarding the PERB hearings the city did wrong and they punish the employees for it. I am still unclear how and why that is. Who is responsible?? DCEA didn't do anything wrong.
Some of the 9 if not all of them I am sure would have rather given some concessions rather than being layed off.
Rifkin: "In effect, the public employee tree trimmer is being paid by the hour, and he gets more hours by going slowly."
Greenwald: "This is actually not true. In fact, he gets paid the same no matter how he quickly he works."
I need to explain why it is true in effect. Regardless of the person's productivity, he gets the same wages and the same benefits and other considerations. So his incentive, as long as no one fires him, is to go slow, to take it easy.
And what is the result of his going slowly? It means the City (or rather, the taxpayers) need to pay for more hours to get those trees trimmed.
So when I say, "he gets more hours by going slowly," I mean that if the trees are going to be trimmed, this one tree trimmer will either get overtime to get the job done or someone else (maybe full-time, maybe part-time) will get those extra hours that are the result of the incentive structure in place.
