06-28-10, E-Mail from Herbert Molano to Glendale City Council Members Laura Friedman and
John Drayman, “CPI and labor negotiations”
Council members
For too many years the employee's MOU have had a CPI
clause that allows them to have their pay adjusted at or above inflation. But there is a huge problem with that CPI
adjustment.
The key elements of the CPI that show increases are usually housing, Health and
education.
A few years ago I did an informal sample of home ownership of Fire and Police
and it seems as if over 90% own their own homes. That means that as interest rates have dropped
in the past few years, so would have their home payments. (only
1/3 of
Health: Though health prices have risen each year, the city employees have had
a significant protection from rising health prices. The city pays most of it.
Education: Though college education has risen, the
employee costs for getting a degree is subsidized to about 50% annually by the
city. Then once they get the degree,
they are being paid a bonus from $200 - $300 per month.
The conclusion is that by getting the full CPi each year, compounding their benefits, the city
has overcompensated city employees because the large portion of the CPI is
already a city benefit provided to its employees.
More problems with current practices: The MOU for many city employee
organizations have a minimum increase despite the CPI. The current 2.5% minimum increase is
unjustified when there is a deflation factor such as
it was last year.
Because the median employee city salaries and wages are so much higher than the
median family income of city residents, as a share of their income, food
and fuel prices make up a smaller proportion of their income than the
population as a whole who have to pay the taxes.
The conclusion is that the CPI does not erode their net earnings as the MOU
seems to establish. We need to correct
for past errors in overcompensation.
Suggestion: 2% maximum CPI increase or 33% below actual CPI. I'd also suggest no minimum. If the economy collapses again, we should not
be subject to a pay increase demand by city employee safety and management
organizations. Their membership already
benefit from not losing their jobs as often as the rest of the population. That alone is a large percentage in income
above the non-public sector and should be considered.
Herbert Molano