Hanging Out to Dry

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By May it’s already hot inside the Brooklyn Central Laundry. Scorched air shoots from vents in the ceiling, and there are more fans than people between the rows of dusty machines. “If it’s 90 degrees out there,” says shop steward Hulie White, “it’s 120 in here.”

White has worked in the laundry since 1973. Standing beside a machine with mechanical arms called a spreader-feeder, White explains what the gleaming behemoth means: two fewer workers required to hold the edges of every sheet.

Paradoxically, it also means that White and approximately 149 others at the laundry, who daily wash hundreds of pounds of bloodied and soiled linen from nine city-owned hospitals, may be able to hold on to their jobs. The spreader-feeder is part of an agreement to keep the city’s Health and Hospitals Corporation from shutting down the facility and giving the work to Angelica, a private laundry company.

In 1998, HHC announced it had found the Brooklyn facility too outdated to be efficient and too expensive to upgrade. “We had a pivotal question that faced us,” says Frank Cirillo, head of operations at HHC. “Could we afford to invest $8 million into the plant to make it efficient? The answer was no.”

White’s union, Local 420, fought all last year to keep the laundry open. It held candlelight vigils and marched to Gracie Mansion. It appealed to City Council members. Finally, the local’s parent union, District Council 37, sued the city and got an injunction to keep the laundry open. In February, the union reached an agreement with HHC that would let the laundry’s machines keep spinning.

According to the union’s Public Employee Press, it was a “Victory at Brooklyn Laundry!” The deal certainly looked decent. It gave the plant $1.6 million to spend on new equipment. And instead of laying off workers, HHC agreed to transfer one-third of the laundry staff to other jobs in the hospital system. “The magnificent part about all this was, no pink slips,” says Local 420 president Jim Butler. “They shouted for joy after the victory was announced.”

But the deal came with an unusual condition, one that may leave the workers out of their jobs after all. As an alternative to giving the contract to Angelica outright, the city insisted that the union participate in a year-long competition that will start this summer. Half of the laundry load is staying in the Brooklyn facility. The other half is now being handled at Angelica plants in New Jersey and upstate New York. One year after the contest begins, a multilateral panel will decide which one–the unionized city workers or the nonunionized private ones–has washed the most clothes for the least money. If the Brooklyn group loses, HHC will shut the city laundry and give the contract to Angelica.

Laundry workers hope their new equipment and years of experience will carry them through. Failing that, the union is counting on the political winds to shift in its favor. “We’re hoping that we can string this out until there’s a new mayor, in which case there will be a new head of HHC,” says DC 37’s head negotiator, Dennis Sullivan. “We’re going to try to milk this for all it’s worth. And I think we probably will be successful.”

The agreement, however, suggests otherwise. To stay alive, the Brooklyn shop must cut the cost of doing laundry from 68 cents per pound down to somewhere closer to Angelica’s rate of 28 cents per pound–a price the laundry’s own shop steward believes it can’t match. The local has bought its workers a year. But despite union leaders’ public confidence, the terms they have agreed to for the competition appear to leave the laundry workers in a mess even they won’t be able to clean up.

Whether the Brooklyn Central Laundry wins or loses, its deal with the city sets a troubling precedent for unions. For them, the phenomenon known as “managed competition” is something to be feared. “It’s a terrible situation,” says Dan Ratner of Service Employees International Union Local 1199, which lost a hospital laundry contract to Angelica in the mid 1990s. “You’re competing to continue to do your own work. And you’re competing, often, with workers who are making less. You’re competing for your livelihood.”

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Pitting public and private sector workers against each other is a relatively new experiment–particuarly in New York City, where municipal unions have traditionally had clout. Though the Giuliani administration has made some tentative forays into managed competition, the Brooklyn laundry agreement is its largest experiment yet.

Other cities have gone much further. First introduced by Phoenix in the midst of a 1979 fiscal crisis, managed competition was a hit with the Clinton White House and the architects of managed care. It found a new set of champions in city and state governments during the early-1990s recession, as local economies crumbled and governments desperately sought ways to cut their budgets.

But it’s Indianapolis mayor Stephen Goldsmith who has turned managed competition into a near-religion. As author of The Twenty-First Century City, he literally wrote the book on it. Since taking office in 1991, Goldsmith has forced over 75 city contractors to sing for their supper, making them match private sector bids as a condition for keeping their contracts. The mayor estimates the practice has saved the city around $500 million.

Goldsmith was fortunate to have an unlikely ally: AFSCME, the national government workers’ union. While most city unions fight privatization tooth and nail, AFSCME welcomes managed competition as a chance to prove that public employees do better work. AFSCME says that when city workers compete against private contractors, unions are usually able to stave off the privatization of public jobs. That has been borne out, contends AFSCME spokesperson Cate Alexander, “in locality after locality, jurisdiction after jurisdiction.”

Elliot Sclar, an expert on public-sector privatization, agrees with Alexander that it can work. In his new book, You Don’t Always Get What You Pay For, Sclar examined a contest to manage a public garage in Indianapolis as a case study in managed competition. In the end, the union won, by doing the same work more cheaply than a private company.

Sclar concluded that with careful monitoring and strict terms, such a contest isn’t necessarily a free ride for a private bidder. Indeed, the garage union fought from a position of strength: it demanded the right to choose who to hire or fire and to choose its own referees for the contest. And when the competition was over, it demanded a share of the savings.

“They took a risk with Goldsmith,” says Sclar. “Because let’s say they did all this, and he still took the work away from them–they would have implicitly bought into quote-unquote privatization.” They won, and did so because of savvy negotiation. But had they lost, they would have been called traitors to organized labor–and their workers would have been out of their jobs.

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New York’s agreement is much weaker than the Indianapolis deal. If they win, the only thing Brooklyn’s laundry workers will get to keep is their jobs. And what if they lose? Hulie White is loath to consider the possibility. But he concedes that with their $7.55-an-hour wages, Angelica workers can beat Local 420’s price. “We already know who can do it cheaper,” says White. “Any way you look at it, they do it cheaper.”

White isn’t worried, but perhaps he should be. At the end of the competition, a committee consisting of the union and the city will decide which laundry did the best job. White insists the panel will be looking only at cleanliness and turnaround time, not the cost of the work. But the agreement itself puts price per pound at the top of the list of factors the panel will examine. HHC’s Cirillo, who will also serve on the panel, concurs that the main thing he’ll be looking at is cost. Unless the laundry’s productivity goes way up, or Angelica’s plummets, the union is in trouble.

The clock is already ticking. So far, Cirillo says, everything is going well: “The employees are all happy, the laundry has been functioning as well as it has been. Angelica has proved to be a vendor that’s delivering. And we’re able to now pump $60,000 a week in savings back into health care.”

For Jannie Ogilvie, who has been working at the laundry for 28 years, the view is not so spectacular. She says she’s never seen the place look so empty. “To be honest with you, I hope I’m one of those 12 that gets redeployed,” she says. “‘Cause now, looking at the future?” She sighs. “It doesn’t really look all that great.”