Reed, Unions Headed for Showdown Over Binding Arbitration Clause

San Jose Mayor Chuck Reed seems to be headed for a showdown with the city’s unions over the way union pay negotiations are settled. In a May 5 San Jose Rotary Club speech, Reed called publicly for a revision of the City Charter in an audacious move to wrest power away from the unions representing the city’s firefighters and police force. Harking back to his days as a labor lawyer, Reed pointed to a clause in the Charter that forces the city into binding arbitration if and when negotiations with the unions break down.

That clause was the result of a ballot fight 30 years back, which the unions won. Reed now seems to be calling for a rematch.

“Voters put it in, and voters can take it out,” he said bluntly.

The provocative comment drew swift response—Police Officers Association president Jim Unland, dialing the rhetoric up a notch, called the mayor’s idea “opportunistic scapegoating” in a post on the POA’s blog. Pointing out that Reed in fact voted for the current contract when he was on the City Council, Unland said, “it takes either a very poor memory or a whole lot of gall to speak so strongly against something you voted for.”

City Hall has gone silent on the subject, no doubt the calm before the storm. Reed-backer Sam Liccardo would only speak in general terms about the idea. Pointing out that his comments have nothing to do with any particular proposal that any particular mayor may or may not be hammering out, he would say only this: “The pace of increase of retirement costs are driving us inevitably to a mutually assured destruction. If we remain chained to the current structure, we can’t avoid ongoing layoffs and service cuts.” C’mon Sam, tell us what you really think.

The Fly is a weekly column written by San Jose Inside staff that provides a behind-the-scenes look at local politics.

31 Comments

  1. Politicians tell one group on “one hand is it this” and another group ” other hand it is that” leaving options   open to vote with winning side

    Called “Political Speak” out of both side of politicians mouth so everyone believes a politician supports their side

    Bill Clinton was the Political Speak Master with his famous phrase “I feel your pain ” until caught in famous ” “I never has sex with that woman!”

    Would take Bill Clinton not Hilary over Bush 1 and 2 worthless Bushes or Obama

    Reed and Liccardo are no Bill Clinton so get caught often

  2. It seems to be clear that the only remaining solution is the termination of about 1000 employees.  That would pretty much solve the existing deficit.  The new lower headcount compliment couldn’t be much lower than that of a decade ago – the City didn’t dry up and blow away.

  3. > “Voters put it in, and voters can take it out,” he said bluntly.

    Well, exactly!

    There were a lot more union voters, and a lot more employed voters 30 years ago when this provision was put in.

    Many of those voters are gone, and many more have seen their economic circumstances reduced by insolent, intransigent union “bargaining” positions:  “We get everything; you get nothing.  And if you don’t give us everything we demand, you’ll never work in this town again.”

    Most of the high tech jobs that went away as a result of the Obama depression are NEVER coming back to the Silicon Valley.  Those days are gone. Done. Finito.

    The “labor ecology” of Silicon Valley is out of balance and unsustainable.

    When an ecological system is too far out of balance for too long, the system collapses.

    The Silicon Valley economy is shackled to a thoroughly obsolete labor union paradigm.

    When Chuck Reed goes to the voters and asks for the needed changes to rekindle some economic vitality in the region, the voters will enthusiastically support him.

    The era of selfish unionism is over.

    • The ironic part is that 30 years ago, when all unions were a much larger part of the workforce, there was much less disparity between the have and have nots, and a much larger middle class. With the erosion of unions, the middle class has shrunk, and those jobs have gradually been shipped overseas. This started way before Obama, but his policies have expedited the process. Everytime one of these good jobs gets shipped overseas we reduce our own standard of living. We now want to take away binding arbitration from police and firemen. I am not sure if it is some big advantadge for them as it has only been used twice in 30 years. Regardless, I think there are unintended consequences everytime we ship a good job overseas or strip pay and benefits. We are in the long run cutting our own throats at our own jobs. I think the demise of unions has not been a good thing. They raised the working standards for everyone. I can see the mayor’s point, but I also think the police and firemen are being used in part as scapegoats to mask spending by past city councils on some very questionable projects.

      • > Regardless, I think there are unintended consequences everytime we ship a good job overseas or strip pay and benefits. We are in the long run cutting our own throats at our own jobs. I think the demise of unions has not been a good thing.

        I think you are a bit unclear on the concept of “cause and effect”.

        CAUSE:  Union monopoly bargaining power raises wages and benefits that are unsustainable for businesses to profitably offer a product or a service.

        EFFECT:  Businesses raise prices to maintain profitability.

        RESPONSE:  Foreign businesses with lower wages and benefits structures offer competing products at a lower price.

        SECONDARY EFFECT:  U.S. businesses fail to make a profit and go out of business.

        NET CAUSE AND EFFECT:  Union monopoly bargaining power forces unsustainable business economics which cause jobs to “move overseas”.

        There are no more business in the private sector for union organizers to organize, because they have ceased to exist.

        It really takes extraordinary powers of self-delusion and denial on the part of union partisans to try to imagine that there might be some OTHER reason that private sector union jobs are going away.

        There isn’t.  Look in the mirror and repeat:  unions are the problem; unions are the problem.

        • There are many jobs, if not most, that were not in a union and were still moved overseas. Talk about cause and effect. Even if all unions ceased to exist, jobs would still be moved overseas to third world countries where wages are a fraction of what they are in the United States. The United States is rapidly moving towards a third world country which is apparently a good thing to you, since wages and working conditions here are being driven downwards, including probably your job.

        • > The United States is rapidly moving towards a third world country which is apparently a good thing to you, since wages and working conditions here are being driven downwards, including probably your job.

          Frank:  I’m sure you’re a nice person, but you’re wrong.

          One of the insidious effects of unions is to reduce the employment and income risks to union members, by pushing that risk onto everyone else.

          Unions create risks for others by promoting high taxes, legal privileges for unions, and government regulations that make it difficult or impossible for non-union businesses to compete with unionized businesses.

          The stupid ObamaCare law has built into it a tax on “cadillac health plans”, but unions are exempted from this tax.  Non-union employers will pay this tax, become less profitable, and be unable to compete with union or foreign competitors.

          The result is that that sector of the U.S. economy will simply be destroyed, and all innovation and growth will be crushed.

          The NON-UNION jobs will move offshore, and it will be because of the stupid, selfish, and unsustainable —repeat after me: UNSUSTAINABLE UNSUSTAINABLE UNSUSTAINABLE UNSUSTAINABLE UNSUSTAINABLE UNSUSTAINABLE —monopoly labor economics imposed by overly powerful labor unions.

          Again, you are unable to accept the reality of the destructive consequences that union monopoly labor has on a competitive market economy in a competitive world.

          Ask any environmentalist to explain to you the consequences of an UNSUSTAINABLE ecological system.

          Unionized labor monopolies upset the supply-demand ecology of labor markets.  The ecosystem will ultimately collapse.  The California and local union dominated labor markets a collapsing RIGHT NOW!

          Haven’t you noticed!  It’s called 13 percent unemployment and 30 percent underemployment.

          THAT’S what a collapse labor market ecosystem looks like.

          Maybe Obama could make a speech, or something, and promise some “hope and change”.  Oh, wait; he already did that.

        • Nevermind,
          I am sure you are a nice guy too.

          I am a moderate, who can see valid points by both sides in this case. Your hatred of unions has blinded you to the point you would not possibly concede that they may a very valid purpose in labor relations and working conditions. You put all the blame of outsourcing our best jobs on the unions, which is foolish since many of these are non union jobs. Greed is the main motivator in the outsourcing of jobs, just as in the collapse of our financial market. Not some blue collar grunt who belongs to a union.

          I was in the grocery clerks union for many years for a major chain which is still thriving. I saw some of the many positives that come out of belonging to a union, but I am not so blind to not see some of the negatives as well. No system is perfect. There is plenty of greed on both sides. But to totally blame one side is just foolish and ignorant.

        • Very well said Frank. I agree with everything you’ve said. Without Unions very few jobs would exist in the US. It is private GREEDY profit driven corporations who are sending jobs over seas and they get a way with it because they are NON Union jobs. They also hire undocumented workers and exploit them to death.

        • > Without Unions very few jobs would exist in the US. It is private GREEDY profit driven corporations who are sending jobs over seas and they get a way with it because they are NON Union jobs.

          So, the corporations are sending all the jobs overseas, but the unions are protecting and creating jobs in the US.

          The logic of that seems to be that inevitably ALL the corporations and their jobs will be overseas, and all the jobs in the US will be union jobs provided by someone or something other than a corporation.

          That would seem to leave:

          A. mom and pop companies (try unionizing THEM!), and

          B. government jobs.

          So, if all the jobs are provided by the government, and the government is all of us, and we would never exploit the workers and always pay them fairly, why do they need a union?  I think you may have re-invented the Soviet Union.

          That worked out well, didn’t it.

        • > Your hatred of unions has blinded you to the point you would not possibly concede that they may a very valid purpose in labor relations and working conditions.

          Instead of trying to dissect and analyze my inner motives and relative visual acuity, why don’t you just take a crack at addressing my essential point.

          Is an economy that is dominated by unaccountable unionized labor monopoly, a sustainable economic ecosystem?  Can it create prosperity for the society as a whole and foster innovation and growth?

          Pray tell, how?

          Have you noticed that San Jose is:

          A. dominated by a monopoly of unionized labor;
          B. experiencing very high unemployment and underemployment;
          C. unable to balance it’s public accounts and running a mammoth and insoluble public deficit

          Hint.  Maybe the labor monopoly dominated economy is unsustaniable.

        • Nevermind,
          You are quite obviously an extremely sharp guy. What are your thoughts on the Social Security system which is running in the red? Social Security has billions in unfunded liablility. Are you at some point going to collect from this unsustainable system which is a huge burden to private employers and contributes to unemployment, or are you willing to give up Social Security?

      • From what I have heard Nevermind, the police typically go straight to binding arbitration.(source: a SJ police officer currently employed with the force)  I am not sure about the fire department.

        And BTW, I believe the proper term is “Fireperson(s)” so that our hardworking female firefighters may also be included.

        Tina

        • Tina,
          The police department and city have gone to binding arbitration just twice in 30 years. If it was such a good thing it would have happened every couple years a new contract is negotiated between the city and police department.

        • Per the SJPOA VP…

          “in the thirty years we’ve had the option of binding arbitration, the San Jose Police Officers’ Association has only used it twice — hardly an abuse by anyone’s standards. The last time the SJPOA went to binding arbitration was over ten years ago, in 1998.”

        • Tina,

          Re “firepersons,” I’m reminded of a curious child who was asked to draw a picture of a chairperson. It had a flat lap and four legs.

        • Of course they’ve only gone to arbitration twice. Their shills on the council roll over on every contract. IIRC, binding arbitration is how the firefighters got 3/90, though.

        • Still, if the council knows the union has the hammer of binding arbitration if things don’t go their way, that would likely influence negotiations, no?

        • > And BTW, I believe the proper term is “Fireperson(s)” so that our hardworking female firefighters may also be included.

          Right on!  I’m all for extinquishing the last vestiges of linguistic gender biases that have historically so limited the potential of the human race.

          Or should I have said, the hu-person race.

          Surely, we must have lived in an idyllic society when our ancestors lived in trees, grunted, and simply referred to everyone as “hey you” or “hey you with the big knockers”.

          But, then, language screwed everything up, and the world has been a mess ever since.  Blame it all on the Tower of Babel.

        • Okay, thanks all who set me straight re: arbitration, I appreciate the learning.

          And, I’ve enjoyed reading the opinions about my comment re:“Firepersons.” Hm…I wonder how the men felt waaaay back in the day when this was not a patriarchal society, and women were “on top” so to speak with the language reflective of that fact. I guess we’ve come a long way since then, or not, depending on one’s perspective.  wink

          Tina

      • Public Employee unions became the new base of the national labor movement starting in the 1960’s.  The decline of America as an industrial power accelerated at the same time that President Kennedy opened up organizing federal workers.

        Previously it was thought that government was a model employer and that workers needed no extra (or special protections/rights) as the government was already doing more than private industry.  The problems, if any, were in politicizing the civil service and making public servants beholden to political leaders.

        With term limits and the importance of money, political leaders became beholden to public servants through the role of organized labor in national, state and local politics.  Only developer money competes for attention in City Hall with the labor voice.  With a slow economy, there’s not as much developer cash as why pay to play when you don’t have any zoning or other issues coming down the pike?  That leaves the unions as the sole organized lobby in power.

  4. Chill, Fly.

    I think Sam is saying what he really thinks if he was quoted as saying it. Sounds to me* like he is concerned that if we continue to spend money we don’t have or spend more money than we take in (or lose—don’t forget those coffer raids by the State!) then we won’t have any money left. What then? The City will have to lay even more people off. Maybe we will have to do what Vallejo did. Why should city workers have to lose their jobs? Why should residents have to face even more service cuts? The way San Jose has done business obviously needs to change. Change is painful and awful and I wish we didn’t have to do it. I simply don’t see what else can be done.

    As for Mayor Reeds comments about binding arbitration, well, perhaps that needs to be looked at too.

    My .02.

    Tina

    * These are interpretations only; I do NOT work for Sam Liccardo nor am I a spokesperson for Sam.

    • So Tina.
      Are you referring to the city’s “wasting of money” on projects like city hall which was over-budgeted by tens of millions of what was originally projected? Or wastefully stashing away well over $100 million on attempting to “acquire” a major league baseball team that will probably NEVER come here thanks to our wonderful city officials’ botched attempt. The San Francisco Giants have the territorial rights to this area and it takes a 3/4 vote by the major league owners to strip baseball’s territorial rights to the South Bay from the Giants. It really doesn’t seem to me like very good judgement to anger MLB by putting the vote on this November’s ballot before even receiving MLB’s approval. Causing commissioner Bud Selig to blast San Jose’s city officials stating that the stadium referendum was a “premature” move and that “a panel of experts are continuing to study whether the A’s should even consider the move to San Jose or stay in Oakland”. Why the hurry? Why not put it on a special ballot that would probably attract more stadium backer votes anyway? The list of poor financial decisions goes on and on. The city officials need to be held more accountable for very poor financial decision making policies. As a resident of this city I’m fed up!

  5. Binding arbitration – I’m not sure if that’s the real problem.  The whole system from retirements to protectionist charter amendments and short-view councils seems broken.

    Police and Fire are together lumped into public safety with the best of all possible retirements.  Some still seek more and a common practice is to either develop a stress disability (or other disability that a friendly doctor will document) and leave with a disability check plus a retirement check.

    Another dishonest practice is spiking pay in the last year.  CalPERS operates like the city pension fund where the last years wages are used for all retirement calculations (rather than averaging wages over all years worked.)  So cash out vacation and sick time and work a ton of overtime in that last year to spike the final years salary for retirement calculation purposes.

    On one level, I think this is dishonorable, but this is the system we set up and people have lived under for years.  Obviously its unsustainable, but to take it away for only new hires would create a real inequality.

    As far as binding arbitration, that makes sense as I wouldn’t want to be stuck in town when the police and/or firefighters go on strike.  Same as Air Traffic Controllers, we as a society just can’t afford for them to walk off the job.  If you do that in the Army, its dealt with as desertion, and you get a Court Martial and dishonorable discharge.

    The binding arbitration may have slotted negotiations into a pro-union outcome (look what cops and firefighters in LA and San Diego are making, we deserve the same.

    I think the problem we have right now is the same as property taxes.  Everyone always appeals when they think their assessment is too high, no one says anything about sweat-heart deal low-ball assessments.  With collective bargaining, in the good years all ranks of city workers did very well, and police and fire did very, very well, and now that its imploding, no one is saying we probably got too much, and can give some back.

    The key to everything is the pension system and how much is contributed by the employee, who is the greatest beneficiary of a defined benefit retirement system.  With costs going up (investment losses, health care increases) the city is stuck subsidizing people’s retirement and they don’t have enough left to run the city today.

    Also, the retirement system very generously gives regular increases to base retirements so someone 20-30 years ago who retired with a $20k pension could now be making $60-80k.  That’s great, humane and fair for all the folks who get it, but very expensive.

    I agree with both the council member and mayor who realize that this isn’t going to get better by just borrowing and trimming our way through one more budget year.  Since the charter’s been used as a vehicle to lock in preferred benefits, its the place to go to fix some of the overly generous, unsustainable practices.  1 to 1 employee-employer contributions for retirements would be a huge reform.

  6. Does anyone find it interesting that Reed spent 38 grand for a community outreach consultant who lives in Nebraska and who talks residency isssues while he never came to the community he was supposed work with for Reed?  Rules for Radicals from Omaha?

  7. The saddest part of this whole mess is the lack of factual information being produced. Having lived in this valley many a year, I have seen the ups and downs and we shall survive one more. While this down turn is a big one we shall come out of it intact. What the valley will look like when its all done and said who knows. I find it peculiar that people are so at ease to toss rocks. I know of people that retired at very early ages due to upstart company benefits and or huge salaries that I for one as a Paramedic in the private sector never received. My wife works in fire and I as a retired Paramedic and both of us have broken bodies and visions of things far less than sugar plums and stuff. I have many a friend who without a thought put on a bullet proof vest and leave their families home to ponder the idea, will my loved one come home tonight? There has to be a dollar amount and benefit those that do this kind of work. That is not to even discuss the high divorce rate and early death we all experience. When most folks sit in the safety of their homes we stand guard and run to your aid when 911 is called.
    Now the alarming news… we are not allowed to strike or basically do anything else when whomever we are negotiating with says no. The net result, years ago the public and many of our current politicians, voted in binding arbitration. So what is this beast if it is one? First of all binding arbitration is ONLY USED WHEN EVERYONE CAN’T AGREE. I am old and can’t remember everything but I believe it has only been used a few times and the last I believe was 1998. So that makes me thing, for whatever reason, the general population thinks it is used every single time and its not. That means that for the most part everyone agrees and its not used.
    If the folks that are trying to push this through and get binding arbitration on the ballot, and rile up the troops with false information, every single job type that has only binding arbitration to settle there woes… will have nothing. Is that fair? Everyone else can strike and strikes cost companies and cities often times more than wage changes.
    The city is in trouble as are all other cities. While I understand the plight and wish I could wave a magic wand and solve the problem I cannot. I do however wish truths can be spoken and people honestly weigh all the facts before speaking and/or voting.
    I even understand the expense of life safety jobs such as PD and Fire… but I also know that part of this picture is uncontrolled spending by the city, buildings sitting empty that we as citizens heard they were to be sold, a City hall that was built beyond budget with the promise everyone would fit in it, (and they don’t even with layoffs), and more. That being said, I feel sorry for our city leaders as it is not entirely their fault as they inherit the mistakes of others. So when you fall a sleep tonight safely in your Silicon Valley house (90% of FIRE and PD live other places cause they can’t afford to live here), remember when times were good and the other government agencies like State, Federal and county weren’t stealing our money as they too made some poor choices, those of us in the Public Safety world were not complaining, we love our work, chose the occupation, serve the community and only accepted what WAS OFFERED TO US TO GET THE JOB. So who’s fault is that.

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