City restores wage concessions for managers

July 15, 2011
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Following a discussion that could be described as brutally spirited, Grand Rapids city commissioners narrowly reversed a salary concession for its nonunionized top managers last week. The reversal gave back those managers a wage concession of 1.4 percent, which was part of a 2.5 percent pay cut they agreed to early last year.

It snuck through by a 4-3 vote, as city commissioners James White, David Schaffer and Walt Gutowski opposed reinstating the concession and wanted to maintain the current pay level for the city manager, attorney, clerk and others.

Gutowski pointed out that some of these managers are involved in negotiating with the city’s unionized workers and he saw the reversal as a conflict of interest on their part.

“We have to consider what is going on in the private sector, as they’re paying for this,” said Gutowski of the undisclosed cost to taxpayers to restore a portion of their salaries.

But Mayor George Heartwell disagreed and said the wage reversal was a matter of equity and fairness because the city’s unionized work force had agreed to total concessions of 8.2 percent for the fiscal year, while the non-unionized top managers and clerical workers gave back 9.5 percent.

“I do believe we need to bring everyone to parity,” said City Commissioner Ruth Kelly.

Commissioners also approved the same wage reversal for the city’s non-represented clerical workers, following a much less contentious discussion.

“This action before us is about equity and being fair,” said Heartwell.

The higher wages go into effect next week.

Also, clerical workers’ contribution rate to the pension system dropped to 2.1 percent last week, which brought their overall concession to the union level of 8.2 percent.

Even so, Gutowski noted that the commission’s goal was to get employee concessions totaling 10 percent, and commissioners fell short of that goal. He also said the city has to be aware of the pay and benefit levels in the private sector when it makes decisions on those issues for its employees regardless of position and union affiliation. He cited U.S. Labor Department statistics for the area that showed the 75th percentile of private-sector workers earn $48,000 annually, while the average yearly pay for city employees in $49,000.

But City Director of Human Resources Mari Beth Jelks said his comparison was flawed and incomplete, and it was time for the city to undertake a review of pay and benefits in both sectors to get a better handle on those issues. “It’s been 17 or 18 years since we had one and it’s overdue,” said Jelks.

Heartwell said he vividly remembers the last one, which was done in 1992 when he represented the 3rd Ward. “I was around for that one and, boy, was that bloody,” he said.

No “blood” was shed when commissioners agreed unanimously to amend the general pension system. Starting next year, all members of the Grand Rapids Employee Independent Union will have a pension multiplier of 1.8 percent unless they want to increase their contribution rate to get a higher multiplier. At the minimum multiplier, their contribution rate will be 3.89 percent, but they can go as high as 9.16 percent for a multiplier of 2.7 percent. The change offers GREIU employees four different multipliers and contribution rates to choose from above the minimum and workers have to pick one by April 30.

Gutowski said the 1.8 percent multiplier was better but is still higher than the 1.5 percent members of the teachers union have. However, the mayor looked at the issue from another angle. “That’s a dramatic reduction in a single contract,” said Heartwell of going from 2.7 to 1.8 percent in one swoop.

“They’re paying the full cost above 1.8 percent,” added City Manager Greg Sundstrom.

In addition, the city is closing the general retirement system to all future GREIU hires. They will be placed in a defined contribution plan where they’ll contribute 6 percent, and the city will match that rate. Commissioners are expected to take the same action for all future non-union hires next week.

“Twenty years from now, commissioners will thank us,” said Commissioner Rosalynn Bliss.

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