Workers Seeking Raises Find Open Ears, Empty Pockets

City officials had hoped a strong economy and stock market would cushion the blowing of the city’s coming pension cliff. A couple of years of strong market returns could boost the value of the funds in the pension system and thereby reduce the number of positions that need to be eliminated starting in 2023.

And that’s happened. Budget director Dennis Yaccarino said Wednesday that the city is looking at needing to come up with $130 million annually starting next year to fully fund its pension.  That would be a nearly $50 million increase from current levels, but down from $74 million expected to be needed as of late 2021. “We’ve been helped by a great market,” said Yaccarino. It’s enough of a reduction to significantly cut the number of positions to be eliminated, estimated to be as high as 24% by 2026.

Only now the city is getting squeezed from the other end.

A tight labor market is driving up wages, making the cash-strapped city’s fiscal issues even more difficult. It needs to find more money to recruit and retain workers while being prevented from raising property, sales or income taxes and staring down a pension cliff.

General city employees have taken notice of the disparities in their salaries versus those in other municipalities and the private sector. More than two dozen took vacation time on Wednesday to appear before the Finance & Personnel Committee in an attempt to draw attention to the growing issue.

“I think we should be compensated fair market value for what we do,” said Milwaukee Water Works employee Jeffrey Smith. “We don’t come here just with grievances. We come with solutions.”

He said because of the growing number of vacancies, the water utility is contracting out an increasing amount of work which costs more than doing it with city employees. “Take care of family first,” said Smith. “We are losing valuable talent.”

Acting MWW superintendent Patrick Pauly confirmed more contractors are being used. “We have slowly lost those long-tenured employees over these ten years, which has led to a significant amount of instability,” he said. “I don’t want to be dramatic about this, but we are reaching a tipping point.”

“We have become a training ground,” said acting Department of Public Works Commissioner Karen Dettmer. Employees get hired, trained and then leave, often for surrounding municipalities.

Daniel Schultz, a journeyman electrician with DPW, said those in private-sector unions are seeing steady raises. “Essentially they are getting paid about 30% more than we are,” he said. The city has awarded few raises since 2008, while requiring greater pension and healthcare contributions. Milwaukee suspended its pay progression program in 2019 in favor of awarding all city resident employees a 3% raise. This year all general city employees were given a 2% raise, the first across-the-board raise since 2008.

Act 10, signed into law by Governor Scott Walker in 2011, stripped collective bargaining rights for general government employees and reduced state aid to cities, but left protections in place for public safety employees. The result has been raises for union-protected police and fire personnel and a growing share of the budget going to their departments, while general workers have seen their wages held nearly flat for a decade. The public safety departments haven’t been immune to cuts, but the remaining employees have seen wage increases.

“I have never seen a fire truck with a plow blade on it or a police cruiser with a plow blade on it,” said Judson Franklin, a DPW employee. “What I’m simply saying is it seems like we are all in this together, but when it comes to money it seems like it is being funneled to other people.” A number of other employees testified from different areas of DPW, including parking enforcement and sewer services.

“I could see this coming. It positioned employee against employee,” said Alderman Michael Murphy of Act 10. “The math is pretty simple. We have fewer and fewer resources and the result is you get squeezed.”

The city has taken a whack-a-mole approach to dealing with the issue, evaluating compensation on a job-by-job basis. That system is now breaking down. Outgoing human relations director Makda Fessahaye said the Department of Employee Relations did 88 reclassification studies in 2018 affecting 343 positions. In 2021 that grew to 220 studies affecting 1,600 positions. “We have 514 pending studies,” she said. Its number of special recruitment rate letters has also tripled.

“Some of these classification and market studies have been going on for some time now and we haven’t been able to keep up with the workflow with the three or four people we have in that division,” said Fessahaye.

Murphy summarized a dizzying situation where a study started in 2017 and was completed in 2021 but relied on 2019 numbers. Essentially, by the time it was completed it was already out of date.

The other issue is the primary effect of the study is to boost only the lowest pay figure in the range, leaving every employee already being paid above the new minimum unchanged. Sometimes the pay increase is so great and the vacancies so numerous that it effects virtually every employee, such as a 26% increase recently approved for 911 dispatchers.

“I think it is important that we consider bringing back some form of pay progression for our staff, especially for those that have been here for so long,” said Fessahaye. The HR director received praise from Murphy, Alderwoman JoCasta Zamarripa and others, but will leave for an associate chancellor job and a pay increase at UW-Milwaukee next month.

Yaccarino said another across-the-board pay increase could be built into the budget. “We will build something into the budget, but it comes at a price,” he said. “It costs about $3.5 million for a 2% increase.”

Another increase must also be built into the budget: healthcare costs. Yaccarino said the city averages a 4% increase per year on what is currently $115 million in costs.

Acting Mayor Cavalier Johnson is investing political capital in developing a solution with the state for the city’s revenue and pension issues. He has pledged to get a cot in the State Capitol if needed. While council president in 2021 he negotiated using a portion of the city’s American Rescue Plan Act funds to shift an additional $30 million into a pension reserve fund. A 2021 estimate has $82 million available in the fund, enough to delay the layoffs for at least one year while negotiations are underway with the Republican-controlled Legislature.

Murphy encouraged the employees to contact Sen. Alberta Darling (R-River Hills) and Dale Kooyenga (R-Brookfield) to advocate for revenue sources or pension relief for the city.

“We are not throwing in the towel. We want to be transparent and let you know what the math is,” said Murphy.

Dettmer praised the employees for seeking to elevate the issue. “What I appreciate most is they are willing to come to the table and be part of the discussion before they look to leave,” she said.