T labor deal yields big wage savings

THE MBTA AND ITS LARGEST UNION announced a new labor agreement on Monday that offers an estimated $22 million a year in savings to the transit authority while putting core operations, particularly bus service, off-limits to privatization.

The contract between the T and Carmen’s Union Local 489 calls for no wage increase in the fiscal year that begins July 1 and a 1.55 percent average increase over the entire four-year contract. Wage increases had averaged 2.7 percent a year over the previous 15 years. New employees will also start at lower salary levels under the new contract.

In return for the wage concessions, the T guaranteed that Carmen’s Union members will continue to operate the T’s core bus and subway system. For bus service, the definition of core was 2.4 million annual revenue hours. Any expansion of T operations beyond those core services would be eligible for privatization, as would repair work done by other unions.

Officials said no privatization initiatives will be taken off the table by the agreement, although some concessions were granted to warehouse employees if their jobs are privatized. Privatization of non-core T services will go on. Privatization possibilities include late-night service, automated fare collection, in-station customer service, and shuttle-bus service when rail lines are temporarily closed for repair work.

Secretary of State Stephanie Pollack said she did not think the labor agreement would have been reached without the Legislature’s approval of a three-year suspension of the so-called Pacheco Law, which regulates and restricts how state services can be privatized. She said the Legislature’s suspension of the law accomplished two goals – it allowed the T to actually privatize some services (the cash collection and counting operation) and prodded the Carmen’s Union to match savings that privatization could offer.

“Without outsourcing on the table, we would not have reached this agreement,” Pollack told reporters. At a meeting of the T’s Fiscal Management and Control Board, where the agreement was approved on a 5-0 vote, Pollack elaborated. “Privatization was never a conversation about ideology,” she said. “It was a conversation about productivity.”

James O’Brien, president of the Carmen’s Union, said he took the T’s threat to privatize bus service very seriously. “We are grateful that we were able to protect our jobs,” he said. He told the T’s oversight board that the negotiations showed “you don’t need to privatize jobs to find cost savings and efficiencies.”

Eileen McAnneny, president of the business-backed Massachusetts Taxpayers Foundation, called the agreement “transformative” and said it puts the T on a clearer path to financial stability. “This contract agreement demonstrates what is achievable when management and labor have a candid dialogue on how to face future challenges without the shackles of the Pacheco Law,” she said.

Pollack and T officials said the contract with the Carmen’s Union is important to the future of the transit agency. They noted wages and benefits account for roughly 73 percent of the agency’s internal operating expenses of slightly more than $1 billion. Pollack said the immediate savings will help the agency close an operating deficit, but she said the agreement will help bend the agency’s cost curve in the long run. “This is a long-term play,” she said.

Conversations with the Carmen’s Union began close to five months ago, when the union approached the T with a proposal about wages and jobs. T officials expanded the conversation to work rules. Conversations intensified in late November and early December, and members of the T board indicated without being specific that there were some big ups and downs during the talks.

The existing contract was scheduled to run through the end of June, but the union agreed to open the contract early and extend it for four years until June 30, 2021. It was the first time in more than 50 years that the Carmen’s Union reopened a contract early.

The agreement covers three key areas: wages, work rules, and the T’s contribution to the union’s health and welfare fund. Wages increased 2.5 percent during the current fiscal year and were scheduled to go up by the same amount in fiscal 2018, which begins in July 2017. Instead, the union agreed to no wage increase in fiscal 2018, a 1.5 percent increase in each of the two following fiscal years, a 2.5 percent increase for the six-month period from June 2020 through December 2020, and a 1.5 percent increase the following year ending June 30, 2021.

The average yearly increase under the contract is 1.55 percent, 40 percent below historic trends and in line with estimated T revenue growth.

The union also agreed to start new employees belonging to the Carmen’s Union at a lower salary level. Currently, workers start at 65 percent of the top salary and move steadily to the top level in five years. Under the new agreement, new workers will start at 55 percent of the top salary level; they will still move to the top level in five years, but in much smaller increments initially, with most of the leap to the top level occurring in the fifth year. The T hires an average of 236 new employees each year who become members of the Carmen’s Union.

T officials said the two wage concessions will yield nearly the bulk of the contract’s savings — $76.1 million of the expected $80.8 million in savings over the first four years. Over 25 years, the total savings are forecast at $754.7 million, with $681.2 million from the two wage concessions.

The Carmen’s Union also agreed to several work rule changes dealing with overtime, the introduction of four-day work weeks, and automating the process for selecting shifts. T officials said the changes represent the first substantive modifications of work rules since 1913.

Employees are currently paid overtime rates after they work eight hours; under the new rules, workers who have an unexcused absence during a week will not receive any overtime until they work 40 hours. T officials estimated the change will help curb absenteeism and save $2.3 million over the first four years of the contract.

Aside from job protections, the other major concession by T management was a $400-per-year donation per union member to the Carmen’s health and welfare fund.

The deal was ratified by roughly 1,300 members of the union on Sunday by a majority vote. O’Brien said he didn’t know the exact tally of the vote.