Jeannette Wicks-Lim: New Haven plans to privatize school custodians cutting pay by 40% - March 25, 2011
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Jeannette Wicks-Lim completed her Ph.D. in economics at the University of Massachusetts Amherst in 2005. Wicks-Lim specializes in labor economics with an emphasis on the low-wage labor market and has an overlapping interest in the political economy of race. Her dissertation, Mandated wage floors and the wage structure: Analyzing the ripple effects of minimum and prevailing wage laws, is a study of the overall impact of mandated wage floors on wages. Specifically, she provides empirical estimates of the extent to which mandated wage floors cause wage changes beyond those required by law, either through wage effects that ripple across the wage distribution or spillover to workers that are not covered by mandated wage floors. Jeannette regularly publishes commentary in Dollars and Sense.
PAUL JAY: Welcome to The Real News Network. I'm Paul Jay in Washington. And across America the battle continues: who's going to pay for the state, municipal, federal deficit crisis? Well, the city of New Haven has a novel idea--maybe not so novel. But at any rate, here's the idea: privatize the custodial services in public schools. The janitors that clean the schools up now make about $20.90 an hour. So how about we privatize it and pay them $12.50 an hour? And that's called efficiency. Jeannette Wicks-Lim is an assistant research professor at the Political Economy Research Institute at the University of Massachusetts in Amherst, and she recently did a study looking at just what these cuts would mean, both in terms of cutting the deficit and what it means to the families involved. Thanks for joining us, Jeannette.WICKS-LIM: Sure.JAY: So what did you find? First of all, what's the plan? Why do they want to do it? And what are the consequences?WICKS-LIM: Well, the idea behind privatizing the custodial services for the New Haven public schools is just as you said in the lead. The city's saying that they want to find ways to cut the budget deficit, and one way to do that is to privatize these services. What's being considered right now is having a private firm, GCA Services Group, take over custodial services that's currently done by city employees. And one of the things that this does is it drastically cuts the pay and basically eliminates the benefits for most of the workers that would be working as custodians in the schools. JAY: So, first of all, what's the size of the municipal deficit? And how much dent would this make in the deficit if they do it?WICKS-LIM: At the time of writing this report, the deficit, the annual deficit for the city, was projected to be about $42 million. This has been revised downward because of--the Connecticut state budget has been announced, and now it's about $22 million. So, you know, in the original report, I note that the savings that the city would expect from going to this private contract for these custodial services would represent about 19 percent of the deficit, so a pretty good chunk of it. Now that the deficit's now estimated at $22 million, it's about 36 percent of the deficit that would be cut back by doing these--moving to this private firm for the services. And this just gives you a sense of how large the cuts are to the pay and benefits of these workers, 'cause, I mean, if you consider the fact that they're coming from lowered-income working households and they're being asked to take about a third--more than a third of the burden of the city's deficit--and this represents about--these workers that are currently doing custodial services is about 186 workers. That represents about--less than 0.5 percent of all the households in New Haven.JAY: So the point here is less than 0.5 percent of all the households in New Haven are paying more than a third of the--taking care of a third of the municipal deficit.WICKS-LIM: Exactly. Exactly.JAY: So lead us through a little more. What do the workers do? And how much are they getting paid? And what will they end up with if this privatization goes through?WICKS-LIM: Sure. Okay. So these are the custodians. You know, anybody who has school-aged children, you know, runs into custodians in their public schools all the time. You know, these are the people who make sure that the hallways are clean, that the cafeterias are, you know, cleaned properly, that maintain the basic quality of the buildings. So you just think of them as the caretakers of the physical learning environment for these kids in school. It also includes, you know, groundskeepers, people who are doing some auto-mechanical work. But again, you know, basically these are the people who are taking care of the physical environment at these learning institutions. So the basic change of that is: The average wage currently, for the custodians, is $20.90. Under the privatized contract, this average wage would fall to $12.50. So it's a cut in wages by about 40 percent. In terms of benefits, one of the really significant changes is that right now the custodians work full-time. The entire workforce is working full-time. Under the privatized contract, about two-thirds of the positions would be part-time. It could be more than that--I had to estimate this a little bit. But at minimum, two-thirds of the positions would be part-time. And all those part-time workers would have no health benefits and no retirement benefits. The current full-time workforce has both of those benefits, health and retirement. So these are not only drastic changes in terms of compensation, but also in terms of the work hours, so the potential earnings, so the amount of--even, you know, at a very much lower pay rate, they're working about half the hours. JAY: A part-time job at $12.50 an hour without benefits one would assume is going to be a much more transient workforce.WICKS-LIM: Absolutely.JAY: People are going to come and go. So how much interaction do these custodians have with the kids? And how stable is the workforce that's there now?WICKS-LIM: Right. Well, you know, these custodians are working through--in the school building throughout the day and during, you know, evening activities. So these custodians interact with the kids all the time. Again, you know, if anybody has a school-aged child knows that when you go into a building you're going to run into custodians. And, you know, I know from my own personal experience that my son, you know, knows some of the custodians in his school by a first-name basis 'cause he interacts with him so frequently. In terms of their tenure, one of the things that I found to be a significant characteristic of the current workforce is that the custodians in the New Haven public schools average about ten years of job tenure. So they've been working at the same job for about ten years on average. If you look at custodians nationally, what their job tenure is, it's four years. So this is a huge difference in terms of the number of years that you can expect a worker to stay at the job, you know, in this custodial occupation. So I think that is something to really raise the concerns of parents of kids in school. You know, do you want to have a workforce that's sort of coming in and out, in and out, who are on a very regular basis interacting with your kids and taking care of their school environment? Do you want it to be a workforce that is, as you put it, transient? Because [inaudible] JAY: So where are we at with the politics of this? Now, we should--just for transparency's sake, we should let it be known that the study you did was partly financed by the union that represents the custodial workers. Is that right?WICKS-LIM: Yes, that's correct. I'm very straightforward about this in the report. I say right up front that this report was done at the request of Council 4 of AFSCME, who's representing the custodians in [inaudible] schools.JAY: And what's your methodology? How do you arrive at your numbers?WICKS-LIM: This is a pretty straightforward report. It's just a matter of comparing the current contract--you know, and so I have a copy of the current contract, and then the contract proposal, the proposal that's been put forth by the GCA Services Group. And it's just a matter of very patiently and conscientiously going through and comparing wages, hours, and benefits, and then looking at some government data sources to see, you know, the difference in workforce characteristics. I'm very careful to document all of my estimates, my data sources, my methodology, what assumptions I needed to make. Those are all documented within the report in the technical appendix, which is [inaudible] JAY: Where are we at with the politics of this? This is a proposal in New Haven.WICKS-LIM: Right.JAY: How does it get decided, and when might it get decided?WICKS-LIM: Well, currently, the negotiations have been at kind of a standstill. Now, there are going to be arbitration hearings coming up in May, and that should determine what the outcome will be. You know, the union and the city have not been able to come to an agreement by themselves, and by the contract of the union, that requires third-party arbitration to decide.JAY: What exactly are they negotiating? If they're privatizing, they're essentially taking this whole sector out of the union.WICKS-LIM: Right. Well, the idea--the negotiation is whether or not the city can actually go forward with this.JAY: But does the union have to agree? Or can the city do this arbitrarily?WICKS-LIM: Well, the union can, with its current contracts, try to negotiate a different contract so that the city does not go through with privatization. Now, I--you know, honestly, I'm not a specialist in how labor relations work, so I don't know, you know, how much is going to be actually negotiated in terms of can the city do it, what the terms are that would allow them to. But I do--what I understand is that the arbitrator does want to have a sense of what the impact would be on the current workforce. So there is--you know, part of the decision is what impact will it have, and therefore, can the city privatize.JAY: As you said, the income levels goes down by about 40 percent. Is there any guarantee that even if they do privatize, the current workers would be offered these jobs?WICKS-LIM: No, there's no guarantee. I mean, this is a private contract that can--that--you know, in their proposal, the GCA Services Group say in their proposal that they'll practice preferential hiring for the current workforce. But, you know, they acknowledge in their proposal that these jobs are not jobs that are going to be desirable to the workforce. I mean, if you think about what [inaudible] having these jobs, you know, currently the average salary of the custodians is about $45,000. They make about another $5,000 in overtime. But when you look at what would happen under the private contracts, they're talking about an annual earnings of about $13,000 for a $12.50 an hour job 20 hours a week. I mean, the size of that loss of income is huge. So, you know, the GCA Services Group recognizes they're going to have to put forth a huge recruiting effort to get a workforce to do these services, 'cause they can't--they assume that they will not be able to retain the current workforce, which I think is--you know, in today's climate, you can imagine that workers will find themselves forced to take these jobs because of the high unemployment rate. On the other hand, these jobs are not going to nearly allow them to meet the basic needs of their families. So, you know, they are really stuck in a really severely difficult situation.JAY: And the reason this is being considered is 'cause they don't want to consider raising taxes in any way.WICKS-LIM: Well, you know, I have to say that I'm not sure what the actual intent of this is, because, again, in the cuts to these wages and benefits, and, again, the hours, I mean, these jobs, is so drastic. And if you think about the fact that it's basically the city saying to about 186 households that you're going to have to take on, you know, 36 percent of the city's budget deficit. It seems to be about something else. You know, this is really turning one set of jobs that basically meets families' needs and turning them into jobs at poverty-level earnings, no benefits, no retirement benefits, and just earnings that a family cannot sustain itself on. So something about the severity of the cuts tells me that there's more politics to it than just trying to balance the budget. But I'm not intimately familiar with the politics in New Haven. I just know that it's striking how severe these cuts are.JAY: Now, one of the other things that you point out in the report is that these people are now going to qualify for food stamps and Medicaid. So in some ways this actually shifts some of the costs over to the state and federal level.WICKS-LIM: Yeah. I mean, if you, again, think about what's going to be happening to these salaries, going from about $50,000 on average down to $13,000 on average, you know, even if you account for other household income sources, which amounts to about $18,000, you're talking about a household making about $31,000. And that qualifies them for major public subsidy programs like, as you mentioned, food stamps, which is now called SNAP, Medicaid, housing assistance, the earned income tax credit program, childcare subsidies. So in effect these subsidy programs will be subsidizing the low earnings that these jobs will be offering under the private contract.JAY: So, just finally, the big argument for doing all this is supposed to be savings through efficiency. So if part-time workers can clean the same amount that full-time workers could, isn't that some efficiency?WICKS-LIM: Right. Yeah. The mayor describes this as providing more productive services under the private contract. But, you know, one of the things I did was I carefully looked through, you know, the number of hours that is required under the current contract with the 186 full-time workers, and then compared that to the number of hours that would be required under the private contract. And in actuality there's basically no difference in the number of service hours. So you're not talking about doing more with fewer resources, that is, fewer labor hours, but rather you're just talking about cutting pay for these workers, so there's no--you know, in terms of the proposal, there's no indication that there's an efficiency gain.JAY: Thanks very much for joining us, Jeannette.WICKS-LIM: Thanks.JAY: And thank you for joining us on The Real News Network. And don't forget the donate buttons here, 'cause if you don't do that, we can't do this.
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