The Palo Alto City Council swiftly and unanimously approved on Monday night a new contract with the city's largest labor union -- a deal that stabilizes the city's contribution toward health care costs and gives about 580 workers their first raise since 2008.
The deal between the council and the Service Employees International Union, Local 521, will give all the workers a 4.5 percent salary increase over two years, with the first 2 percent kicking in in the first year and the remaining 2.5 percent in the second. In addition, employee salaries would be realigned to reflect the median salaries paid by comparable cities for similar positions. This will result in about 320 employees getting additional raises, generally ranging from 2 to 10 percent, to bring them to market levels.
Some workers in the the Public Works and Utilities departments will see even greater increases to their salaries as a result of the city's recent troubles in recruiting and retaining employees for highly specialized positions. A utilities system operator will receive a 19.5 percent raise, while a maintenance mechanic at the wastewater treatment plant will see a raise of 14.5 percent.
The contract also shifts some of the risk of rising health care premiums from the city to employees. Traditionally, the city has footed the entire bill for health care. That changed with the economic downturn, when the council began instituting benefit reforms most notably, requirements that employees chip in for pension and health care costs. The new deal will shift from an arrangement in which the city pays 90 percent of the perpetually rising health care costs to one in which the city's contribution is a flat amount. For instance, for a employee with an individual plan, the contribution would go from a maximum of $688 in 2014 to a maximum of $708 in 2015.
While the contract negotiations have stretched since last fall and had to overcome a city-imposed impasse in January, on Monday the deal was approved with haste. Councilman Larry Klein called it "a very good settlement, for our city and for our workers." He also rejected potential criticism about the salary raises.
"I must say, it's unfortunate in the extreme when I see comments from time to time, 'Let them leave if we're not paying them enough,'" Klein said. "There's a significant cost both in financial terms and human terms. These are people who work hard for the city and deserve to be paid appropriately."
The deal represents a compensation increase (which includes salary and benefits) of about 6.3 percent over the two year term, a bump that will cost the city about $7.6 million. The union voted to accept it earlier this month.