Pattern bargaining wasn’t intended to be a straitjacket – here’s how we fix it

Labor relations in New York city between the city and its public-sector workforce are widely regarded as the most complex of any in the nation, with some 100 public-sector unions bargaining with the city over the terms and conditions of employment for approximately 300,000 employees.  The city was an innovator in this space, being the first municipality anywhere in the country to collectively bargain with its workforce, beginning in 1958.

And beginning this autumn, the city and the unions representing its employees will embark on a new round of collective bargaining. 

For many years, ostensibly to help manage the complexity of collective bargaining, New York city has relied on a strategy of “pattern bargaining” to dictate the process for all unions. Under pattern bargaining, in each round of bargaining, the city negotiates with each union individually.

Whichever union agrees to economic terms—particularly the top-line wage percentage increase—establishes a “pattern” that the city treats as binding for the negotiations that come after. That means that when one title’s wages need to be increased by more than the pattern to be competitive, or to address recruitment and retention issues, the city demands that other workers represented by that union make up the difference from their own scheduled increases, so that the increases as a whole fit within the pattern.

This puts the burden of finding the money on the union rather than the city, where it is supposed to be. 

While pattern bargaining is often treated as a law, it isn’t. Rather, it’s a strategy.

A history of pattern bargaining

Originally a private sector approach—the United Auto Workers being its most prominent practitioners in their battles with the Big Three automakers—pattern bargaining was adopted by the city to help keep wage increases predictable. Pattern bargaining was born in New York city during the fiscal crisis of 1975, during which the city’s unions sacrificed heavily to keep the city from budgetary collapse.

During the 1978, 1980, 1982 and 1984 bargaining cycles, most city unions agreed to bargain in coalition (either all together or in two groups, civilian and uniform), setting economic terms centrally while allowing for flexibility on non-economic issues in individual negotiations, and creating mechanisms to deviate from the pattern for specific titles if need was shown. 

After 1984, while no longer bargaining in coalition, the city continued to impose the pattern. There were sound reasons to treat the pattern as a benchmark: the city was still fiscally fragile, and pattern bargaining helped avoid potential “leapfrogging” and “whipsawing” among different unions that could cause unpredictable costs and acrimony among workforces receiving different increases.

But it was intended to be one of many factors to consider next to comparisons with other public and private-sector employees performing similar work, the overall level of inflation, and the need to maintain adequate public services, not a trump card. 

So, while arbitrators maintained that unions had the right to establish why the pattern should not be applied to them, there were—and remain—shockingly few examples of the city being required to deviate from the pattern. This, despite unions regularly seeking to deviate from the pattern with strong justifications, and recruitment and retention issues growing among certain city titles.  

In fact, arbitrators dealing with city labor relations have only required the city to deviate from the pattern on two occasions in the past approximately 40 years.

First, in 1987, for instance, faced with drastic nursing shortages at public hospitals, the city agreed to provide an out-of-pattern increase for registered nurses (RNs). Yet when licensed practical nurses (LPNs) asked for an increase, the city refused.

At impasse, the arbitrator granted the LPNs part of their requested increase, finding that LPNs faced the same recruitment and retention issues as RNs and deserved an out-of-pattern increase. A similar 2008 impasse decision concerning the NYPD workforce granted an out-of-pattern increase, finding that police wages had failed to keep up with other jurisdictions and were causing recruitment and retention issues. 

The system doesn't have to work this way

The city’s approach is unusually rigid.

In other states as diverse as Minnesota, New Jersey, Washington and Ohio, state and local governments also use pattern bargaining to keep their labor costs predictable and prevent destabilizing competition. But these states take a different approach to pattern bargaining, treating it as only one of a variety of factors to consider, along with pay equity, comparisons to external and internal comparators and demonstrated issues with recruitment and retention.

For instance, as New Jersey’s Public Employment Relations Commission had held, it is “improper for an arbitrator to only focus on the internal settlement pattern,” rather than as a “significant factor,” as “no two units are exactly the same.” Likewise, as one Minnesota arbitrator said characterizing that state’s approach, “[w]hile internal comparisons are important, they should not be controlling in every case[,]” as “it would permit employers to dictate wage increases whenever the Union has for some period agreed to employer internal patterns.”

For that reason, although the “pattern” is still where negotiators and arbitrators start, deviation from it is more common. 

Pattern bargaing's downsides

The city’s approach has concrete negative effects. Sticking to a flat percentage pattern across disparately paid titles widens the disparity between their salaries over time. For example, if a city title earning $40,000 a year gets a 5 percent salary increase, they get a $2,000 raise, but a title earning $100,000 a year receiving the same percentage increase gets a $5,000 raise.

If this pattern is applied over multiple years and rounds of bargaining, the wage disparity between those two titles rapidly expands. As one Minnesota arbitrator recognized in granting a departure from Saint Paul Public Schools’ wage pattern, the “inflexible determination to limit annual increases [to a specific percentage]…inherently can perpetuate the under compensation of certain employee groups.” 

In New York City, this dynamic has, in agencies with a wide range of unionized titles, caused wage stagnation, with workforces paid barely above minimum wage to perform vital tasks. This in turn has caused serious recruitment and retention issues.

For instance, Department Of Education paraprofessionals are paid a starting salary of approximately $32,000 per year, significantly below a living wage in New York City. Shortages of paraprofessionals in city schools are thus widespread, leaving children without needed services.

Likewise, emergency medical technicians employed by the city face similarly low salaries, with similar recruitment and retention problems. But despite recognizing the need to do something to mitigate these problems, the city has continued to insist that any increase outside of the pattern come out of the pattern package, i.e., from the pockets of other titles represented by that union.    

With no way to deviate from the pattern, the city’s abdication of managerial responsibility has forced other branches of government to address the resulting recruitment and retention crises through the mechanisms available, such as with the recent City Council law providing workforce retention payments to school paraprofessionals. Similarly, municipal unions, such as Communications Workers of America Local 1180 and the Council of School Supervisors, have sought relief through lawsuits targeting inequitable pay practices by the city. 

This rigid approach also undermines the very benefits the city hopes to obtain from its bargaining strategy. While a predictable city budget is a good thing, it falls short when the budget predictably produces a failure to provide adequate public services.

By refusing to budge from the pattern even when city wages are too low to attract and retain vital workers, or ensure that city employees are treated equitably, the city abdicates its managerial and governmental responsibility. 

A change at OLR and a Wage Equity Panel

It does not have to be this way.

Pattern bargaining is a policy choice, not a law of nature, and both a change in approach by the city or broader changes to law could fix pattern bargaining while keeping its benefits. 

One approach would be for the Office of Labor Relations to voluntarily adopt a new approach to bargaining that allowed for such deviations. Similarly, the City Council could amend the city's Administrative Code to add factors for both the city and potential impasse panels to address in determining compensation, such as issues of pay equity and recruitment and retention challenges and instruct impasse panels consider all the factors holistically, returning the pattern to its proper place as an important benchmark rather than the beginning and effective end of the conversation. 

Another approach could be the creation of a permanent Wage Equity Panel with a reserved budget and the authority to adjust wages for city titles that meet prescribed criteria. Such a panel could be created through bargaining or by statute: the 1980, 1982, and 1984 coalition agreement contained similar provisions, as have individual city and state collective bargaining agreements in New York City and other jurisdictions, and the State of Oregon maintains a statutory Pay Equity Adjustment Fund, funded through legislative appropriations.  

Drawing from these examples, New York City’s permanent Wage Equity Panel could be given a mandate to consider both recruitment and retention problems and other inequities facing particular segments of the city workforce, such as the failure of city jobs to pay a living wage. The panel’s baseline budget for equity commitments could be set either through citywide collective bargaining, perhaps led by the Municipal Labor Committee, or as part of the city budget, with either model offering the possibility for the City Council to appropriate funds to the Wage Equity Panel to give the Panel more fiscal bandwidth to meet its objectives.

Such a system would allow the city to respond to rapid changes in labor markets like those faced by nurses in the 1980s, or address labor-force issues as they are emerging rather than waiting until city services begin to suffer or until the workforce hits a recruitment-and-retention crisis point. And at the same time, with a Wage Equity Panel, the city and unions would still be able to rely on pattern bargaining as a starting point for negotiations.  

Pattern bargaining has real benefits, but in the more than half-century since the beginning of its use in the city, the pattern’s strong medicine has repeatedly shown serious side effects. As the city and municipal unions once again prepare to step onto the long road of a new bargaining cycle, policymakers should moderate pattern bargaining’s dose before we get any sicker.