The city and the Service Employees International Union, Local 521, last week exchanged "last, best and final" offers, each of which includes salary raises and cost-of-living adjustments. The workers rejected a proposal by the city that would raise the average salary by 7 percent, prompting the city to declare an impasse following four months of negotiations.
In response, more than 100 workers rallied at City Hall prior to the City Council's closed session on labor negotiations Monday night, with many warning that the city's salaries are no longer competitive and are creating crises for recruitment and retention.
"Although the city is recovering, we are and will continue to have difficulty attracting and retaining experienced and skilled employees if we don't achieve a solution now," chapter Chair Margaret Adkins said Monday. "Palo Alto is allowing competition to steal our valuable resources."
The city is proposing to realign employee salaries based on a recent survey of 12 comparable jurisdictions. Workers who are making less than the market median for their positions would see their salaries raised to market level under the city's offer, with 50 percent of the increase coming immediately after the contract ratification and the other 50 percent taking effect in the first period of 2015. The current contract expired on Dec. 1, 2013.
In addition, the city would give every worker a 4 percent cost-of-living adjustment, according to the offer, which the city released Tuesday.
The union, which represents half the city's workforce, objects to the salary realignment. But the union has not disclosed its final offer, which includes unspecified raises for all employees along with a 6 percent cost-of-living adjustment for all workers.
SEIU also objects to the city's proposal to eliminate an existing contract provision that guarantees health benefits for retirees based on tenure, according to union officials. Labor leaders say they have offered numerous proposals to the city, while the city hasn't budged from the offer it presented to the union in October.
City officials estimate that the union's proposal would cost the city about $6.7 million, while the city's totals $3.8 million.
In explaining their opposition to the city's offer, SEIU workers on Monday argued that their ranks are being depleted because insufficient salaries are driving employees to more lucrative employers, including PG&E and Santa Clara, which like Palo Alto operates its own municipal utilities.
Jesse Cruz, who addressed the council before the Monday closed session, said he is the last electric operator remaining in the city's Utility Department, which used to have six operators. Four have recently left the city for jobs in Santa Clara, he said. Three have left within the past six months, largely because of a salary difference.
"Since the city isn't paying competitive wages, we're unable to attract real talent as our salaries are below industry standards," Cruz said.
Aaron Miller, an operator at the wastewater plant, said there is a "hiring and retention crisis" happening in his department.
"We're getting serious job offers that take our skills and experiences elsewhere," Miller said.
The city rejected this characterization. City Manager James Keene said in a statement Tuesday that the city is "committed to attracting and retaining excellent, quality employees, and maintaining competitiveness in the market." The city's offer, he said, makes "upward adjustments to all positions needed to keep our pay competitive."
According to the city's survey, a utility locator makes about 10 percent less in Palo Alto than in other jurisdictions. The city's proposal would grant utility locators a 10 percent raise in addition to a 4 percent cost-of-living adjustment, for a total raise of 14 percent over two years.
Palo Alto employees who make more than their counterparts in other jurisdictions would not see salary decreases. They would, however, receive the 4 percent cost-of-living adjustment.
"The fact is that under this proposal, there are many individual employees who will receive sizable salary boosts over the next two years," Keene said. "While we understand the union may want all of its employees to receive a larger cost-of-living increase, we have a proposal on the table that would give everyone a pay raise and low-to-no-cost health insurance, as well as competitive increases to those out-of-market positions."
The jurisdictions that the city surveyed are Alameda, Berkeley, Daly City, Fremont, Hayward, Mountain View, Redwood City, San Jose, San Mateo, Santa Clara, South San Francisco and Sunnyvale.
The SEIU now has until Feb. 7 to request a nonbinding recommendation from a fact-finding panel. Both sides in the negotiations said this week they are committed to reaching an agreement. Adkins told the Weekly on Monday that the union has yet to discuss the prospect of going on strike and remains hopeful that the city will resume its negotiations with the workers.
"Hopefully, we'll get back to the table," Adkins said.
Nicholas Raisch, an SEIU organizer who addressed the workers Monday, was more forceful in his comments. The union's next steps, he said, will be "substantially higher than just showing up at a City Council meeting.
"And I think we all know what we're talking about," Raisch said.