Major Cities Aggressively Cut Labor Costs Due to Recession and Are Bracing for More, Study Finds
Major Cities Aggressively Cut Labor Costs Due to Recession and Are Bracing for More, Study Finds
As cities across the country struggle to cope with revenue shortfalls, mayors of large cities have aggressively pursued reductions in labor costs to balance their budgets, a new study from the Pew Charitable Trusts' Philadelphia Research Initiative finds.
The report, Layoffs, Furloughs, and Union Concessions: The Prolonged and Painful Process of Balancing City Budgets (13 pages, PDF), examined budget decisions made — and yet to be made — in Atlanta, Baltimore, Boston, Chicago, Columbus, Detroit, Los Angeles, New York City, Philadelphia, Phoenix, Pittsburgh, and Seattle.
Among other things, the report found that in several cities leaders of municipal workers' unions have been forced to choose between job losses for some of their members or reduced compensation for all. In large part, their dilemma has been the result of city administrations opting for spending cuts rather than tax increases in order to balance their budgets. Indeed, a common pattern across the country has been for big-city mayors to talk up layoffs and then tell unions that job losses can be averted only through across-the-board concessions, usually including unpaid furlough.
The report follows up on a Philadelphia Research Initiative study which noted that only four of the thirteen cities — Atlanta, Columbus, New York, and Philadelphia — were considering major tax increases as part of their budget-balancing plans for the fiscal year beginning July 1. Ultimately, those cities enacted tax hikes, though the increases were not always sufficient to eliminate the need to reduce spending or consider labor costs as a prime candidate for cuts.
Moreover, most of the city officials surveyed expect to face another round of tough budget choices in 2010. "The budget process in many cities has seemed virtually endless, with constant adjustments needed as the bad news keeps coming," said Larry Eichel, project director of Pew's Philadelphia Research Initiative. "Many hard choices remain — both for city governments trying to balance budgets or keep them balanced, and for unions faced with the possibility of reductions in compensation or jobs."
“Pew Report Examines Budget Decisions in Philadelphia and Other Major Cities.”
Pew Charitable Trusts Press Release
9/22/09.
Primary Subject: Philanthropy and Voluntarism
Secondary Subject(s): Economic Crisis
Location(s): National
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