Daley not backing off 'prevailing wage' pact; Ten-year deal placates organized labor, but skirts issue of funding pensions, health care, budget gap

For a mayor whose re-election bid got the cold shoulder from allbut one major union, Richard M. Daley sure is cozying up toorganized labor these days.

But at what cost?

On Tuesday, Daley defended his decision to lock in the costly"prevailing wage" for the next decade for 8,000 members of thebuilding trades at a time when Chicagoans are bracing for a barrageof post-election tax increases to close a $217 million budget gap.

The new deal also includes no immediate solution to the city'slooming pension crisis. That hot potato was handed off to a newlycreated Labor Management Cooperation Committee also charged withholding the line on skyrocketing health care expenses.

Whenever those annual costs are projected to rise by 8 percent ormore, the committee would make changes to accommodate it -- eitherby raising employee deductibles and co-pays, or changingprescription drug plans.

The prevailing wage agreement has no monitor.

"I believe in the prevailing wage.," the mayor said. " . . .That's the foundation of the City of Chicago. . . . There's nothingwrong with men and women earning a decent salary and prevailingwages."

Civic Federation President Laurence Msall applauded the city fortaking other cost-saving steps: reduced overtime, broader use of"break-in pay" for newly hired employees, and implementing agroundbreaking incentive plan to encourage employees to undergo"health risk assessments," lose weight, and lower their bloodpressure and cholesterol.

The wellness program is expected to save the city $6.3 million in2008 alone.

But Msall said the prevailing wage should also be part of the mixto avoid "unnecessary taxes."

"City pensions, health care and vacations are much more generousthan the private sector. There are good reasons the city should benegotiating lesser wages, rather than the prevailing wage," he said.

The 10-year contract with 8,000 members of the building tradesguarantees labor peace through June 30, 2017, the year after

Daley hopes to play host to the Summer Olympic Games. Every year,the 33 unions have agreed to enroll at least 100 graduates ofChicago Public Schools and City Colleges in their apprenticeshipprograms.

Unions representing 10,000 non-teaching employees alsotentatively agreed with the Chicago Public Schools to accept payraises totaling 15.75 percent over the next five years. The divide-and-conquer strategy puts pressure on the Chicago Teachers Union,which has not yet come to terms and must if schools are to open ontime.

WHAT IS THE PREVAILING WAGE?

The "prevailing wage" is established by the U.S. Department ofLabor and is based on the hourly wage, usual benefits and overtimepaid in the largest city in each county to the majority of workers,laborers and mechanics. Prevailing wages are established for eachtrade and occupation employed in the performance of public work.

In Chicago, the prevailing wage dates back to the mayor's father,former Mayor Richard J. Daley. In exchange for handshake agreements,the elder Daley paid city trades the same hourly rate as theirprivate sector counterparts -- even though city trades work year-round with generous benefits while private sector work is seasonalwith fewer fringes.