Taking On the Unions
I was inaugurated as the 121st mayor of Philadelphia on January 6, 1992. After being sworn in, I gave an inaugural speech in which I laid out a road map that I believed Philadelphia had to follow if it was to escape bankruptcy and turn its future around. At the time, we believed the city faced at least a $250 million cumulative deficit. These days, with federal talk of billions and trillions coming and going, that doesn’t sound like much. But back then, that was more than 10 percent of the city’s annual budget of $2.3 billion. Worse still, the city had raised taxes 19 times in the 10 years before I was sworn in, so increasing tax rates wasn’t an option. I knew that our only choice was to radically cut the cost of running our government. But I believed we could do so without dramatically reducing services. I had a plan, but to execute it meant radically changing the way the city operated.
As the kids would say, “Game on.” Our plan to eliminate our deficit was relatively simple—first, we needed to cut out every nickel of waste, save money by increasing productivity and efficiency, and generate more revenue without raising taxes; and second, we needed to substantially change our contracts with our four public-employee unions.
The first part turned out to be easier to achieve than most observers believed. Led by our brilliant chief of staff, David L. Cohen, and our newly created Office of Management and Productivity (OMP), led by a creative entrepreneur, Tom Knox, we were able to eliminate more than $2.2 billion in management cost savings and additional revenue (without raising taxes) over the eight years I was mayor.
All those initiatives were vital to our success in balancing our budget, but I knew that the mother lode was still renegotiation of contracts with Philadelphia’s municipal unions. We had to freeze wages, reduce benefits, and change costly work rules.
From the day I started my campaign to my first day in office, I went everywhere, used every media outlet, to get across to the public how out of whack things were, how absurd some of our work rules were, and how the benefit structure our workers had was so much richer than they, the public working in the private sector, had. And everywhere I went, I stressed the reality that we were out of money and that we couldn’t raise taxes any more.
Some of the benefits were simply absurd. In addition to negotiated vacation time, our workforce received 14 paid holidays. This was extremely expensive, not only in lost productivity but also because those city workers who had to work on holidays (police, fire, EMTs, prison guards) received double-time pay. So each holiday cost us an additional $7 million per year. I talked about this everywhere I went—“So for the emotional trauma of being away from their families on Flag Day, our workers get paid double time”—and in the end, the new contract we negotiated reduced the holidays from 14 to 10. Bingo: a yearly savings of $28 million.
I knew the campaign we were waging would be successful one night in May when I was watching Jesse’s Little League team play in the East Falls League playoffs. I was standing with the dads of our team’s players when the father of one of the other team’s kids came over. He worked in the Philadelphia Water Department, and he started giving me grief about being too hard on city workers. The last thing I wanted was to get into an argument over this at my son’s baseball game. I didn’t have to. The other dads, who were mostly building tradesmen, started yelling at the city worker about how they only get seven paid holidays, and how they didn’t get their pensions when they turned 55. My God, I thought: They are reciting chapter and verse what I have been saying for months. I knew at that moment that we would win. I knew there would be a strike, but that with no public support, the union would fold. There was a strike. It lasted less than 17 hours, the union folded, and we negotiated and signed the most concessionary contract in city history.