At a time of rising unemployment and overstretched public funding, the city is facing a serious challenge in trying to engage the workforce and balance its budget. The largest public sector municipal labor union in the city is advocating for an approach it claims would mitigate both problems – helping people to get employed and off welfare, and saving the city money at the same time.
District Council 37 called on the Human Resources Administration (HRA) to expand its Job Training Participant model, a temporary employment program for those on welfare to help them back into the workforce. Those accepted into the “JTP” program work four days a week at either the Parks Department, the Sanitation Department, or within HRA itself. One day a week is allotted to training, career, or educational advancement. JTPs are hired by the city as temporary staff and, going into effect this March, are paid a union negotiated salary of $9.22 per hour for all five days.
In tandem with the release of a new report condemning $9 billion in contracting for personnel and professional services (out of the city’s total procurement expenditure of $16.5 billion), DC37 leaders told City Council last month that the city could save much of that contract budget by reassigning a wide variety of tasks across agencies to city residents enrolled in a much larger JTP program. DC37 Executive Director Lillian Roberts said she hopes the report will “spur public officials and the media to shine light on the ‘shadow government,’ work with us to identify and cut the waste, and save the taxpayers hundreds of millions of dollars.”
City Council General Welfare Committee Chairman Bill de Blasio, who chaired a hearing on these issues Feb. 25, signaled his interest in DC37’s recipe for workforce and budget betterment by issuing follow-up questions to HRA Commissioner Robert Doar. De Blasio asked Doar – who seemed generally open to the possibility of expanding JTP at the hearing – how the progress of JTP was being measured, how federal stimulus funding might be used to expand it, and how HRA could take the lead in broadening the initiative.
Doar testified at the hearing that there were financial considerations in expanding JTP programs and that other city agencies did not make JTP expansion a priority, drawing a laugh when he noted “in a bureaucracy, there is a tendency to resist change.” However, the commissioner agreed to de Blasio’s suggestion of further discussion about whether HRA might advocate this program at a citywide level.
Some participants in JTP testified in favor of the program. Gladys Perez, 52 and a resident of the Bronx, completed the Parks Opportunity Program and supports her family through a job at the Parks Department. Perez said at the hearing that the program provided her with “the opportunity to be independent and self-sufficient.”
But others, like Jacqueline Estrada, 31 and also a resident of the Bronx, who worked as a JTP for the Sanitation Department said that after her six months in the program, a permanent job eluded her. She had “no employment opportunities in sight” had to reapply for public assistance.
According to HRA, 40 percent of Parks Opportunity Program participants are placed in permanent jobs; Doar noted the rate depends on workers’ completion of the program and motivation along with other factors.
While Doar voiced concerns over the costs of expanding JTP, some workforce analysts say the expense is worth it over the long term. A 2008 report by the Fiscal Policy Institute analyzed the return on investment of a transitional jobs program model of 4,000 participants, using the same four-day-work, one-day-training design as JTP. They found that for every $17 million invested in this kind of model, there was a $60 million savings for state and local costs—a 300 percent cost savings within three years of implementation.
HRA’s larger and longer-running Back to Work model is a workfare program serving an average of 13,000 people every month. An unpaid “work experience” job placement model, welfare recipients work three days a week and go to training or job search services the remaining days but do not earn wages for their work hours. Because participants are not earning wages as they are in the JTP, the per-person cost of Back to Work is lower. However, this ignores both that the wages are subsidized by “grant diversion,” which uses welfare’s cash assistance to pay part of the wage and that if the JTP is more successful at getting participants off of welfare faster, in the long run it will prove less expensive to the city.
Critics of Back to Work took the opportunity at the hearing to advocate for JTP expansion, arguing that the latter program’s level of pay and work experience is more effective at getting participants off welfare.
Roberts and the union’s assistant associate director, Henry Garrido, said after the hearing that JTP placements were subject to union-negotiated collective bargaining agreements, while those filling temporary positions through workfare were still doing city jobs – but without pay or representation. They argued that expansion of JTP into other city agencies could cut costs, citing a similar case a few years ago when the city converted contracts back to unionized jobs, reducing contracting fees from $8 billion to $5 billion in FY2005.
Garrido also critiqued the transparency of contracts at the hearing, bringing up violations of the city’s living wage law by contractors as a concern in his testimony. DC37’s report raised questions about “permanent” temporary contract workers being underpaid, unable to get promotions or raises despite continuous years of service to the city. One DC37 member alleged after the hearing that she had been working as temporary staff at a city agency for three years for $9 an hour, not knowing that the appropriate wage for her position was defined by city guidelines to be a minimum of $12 an hour. Because she was instructed by the agency not to talk about her pay, it was only by accident that she discovered she was being underpaid. Whenever she sought a full-time position, she said, “It was always, ‘there is a hiring freeze’ or ‘we can’t really do anything right now.’” (Her persistence finally earned her a full-time union job, but because it’s within the same agency, she did not want to be named.) Because the city was paying the agency for her contract, DC37 asserts that in situations like this, her work was actually more expensive than union labor despite her substandard wage.
DC37’s report asserts that often the total costs of contracted labor end up outweighing the cost of the same position filled by union labor. For clerical contracts, for instance, the profit margin afforded a private vendor plus the cost of statutory benefits for health insurance required under the living wage law exceeds the cost of filling the same positions with city workers. In another example, some contracted nurses cost an average hourly rate of $56.60, while DC37 nurses cost an hourly rate of $38.28. Furthermore, contract companies extract additional money from the city for performing background checks and fingerprinting, while with union nurses, the union itself covers these expenses.
Positions like these are how DC37 estimates it can save $130 million in just 10 examples of contracts that could be changed. In their clerical worker example, DC37 identified HRA itself as one of the largest users of temporary clerical contracts at $6.4 million and said interviews with some of these “temporary” clerical workers revealed they had been working in their positions for 15 years.
HRA’s own JTP pilot within the agency, currently in the design phase, would attempt to address this problem by offering up temporary clerical positions to JTPs. Other clerical contracts are even larger, though, like the Department of Education’s $20 million. Since the contracts are spread out across many city agencies and positions, DC37’s strategy is equally far-reaching: Why not convert all of these positions and expand the JTP program to agencies beyond just Parks, Sanitation, and HRA?
Roberts said of the other agencies, “I have every intention of contacting them and seeing what they are able to accomplish. We’re not going to let this rest.”
