By Jim Cline and Kate Kremer
This is the fourth part of our early 2021 wages series. In the last article in our 2021 wage series, we looked at all Washington public safety settlements from 2019 to 2021. That report showed a downward trend in 2021 settlements.
Was that trend due to COVID or other factors? We do note that the CPI was down during 2020, which led to a predictable and direct decrease in the settlement averages, across the board. So with or without a “COVID” related recession, a reduction in 2021 settlements was fully predictable. But did the downturn in the economy impact the settlement trend?
During bargaining after the outbreak of COVID, many employers and mediators began pressing unions to scale back their demands, claiming settlements would necessarily be reduced. But was COVID the driving force in the lower settlement trend? Or was it simply the reduced CPI?
Due to the unprecedented issues with the COVID 19 pandemic and the speculation as to how this should impact contract settlements, we have prepared charts for 2020 and 2021 that include only contracts settled since March 2020.
Our initial assessment of these pandemic era settlements does not support employer arguments that settlements should be reduced to zero or 1% due to the pandemic. While there may be unique “ability to pay” issues facing some employers that would impact a given settlement, our data provides a surprising conclusion that so far, 2020 pandemic era settlements are up overall, not down. And all but a few of the 2021 settlements are averaging over 2%
The number of contracts settled during this time is low and so these numbers may change as more settlements come in for 2021. In other words, as more settlements occur, those may be the “tougher” contracts and these numbers may subside.
Below is a table with the 2020 “pandemic” settlements:
2020 Washington Pandemic Law Enforcement and Fire Wage Settlements* Averages and Medians
Below is a chart of the 2021 “COVID Settlements”:
2021 Washington Pandemic Law Enforcement and Fire Wage Settlements* Averages and Medians
During the “Great Recession” period of 2009-2013, there were typically one or more years with 0% settlements across a wide range of bargaining units. Anyone with an expectation that the trend would reoccur here is proven wrong by the numbers so far. The table below shows – even in the midst of the pandemic – there are few 0% settlements.
It is true that many of the contracts were settled prior to the pandemic. Note that the percentages are of “settled” contracts and for 2021 this is 50-68% of the public safety contracts. In some classifications, the number of 0% settlements has gone down since 2019. In fact, these numbers do not show a growing trend in 0% settlements for 2020 or 2021. (Note: A deeper look at the data reveals that often a one-off 0% is a reflection of a higher wage increase in a contiguous year rather than a true wage freeze as had been occurring in previous years.) This data shows very few contracts are settling at less than 1%:
But the rate of wage increases that lie between 1% to 1.99% has increased in 2021. There is a reason for that, not necessarily related to the pandemic slowdown. A close examination of the data reveals, that this is likely the result of the 2020 June Seattle CPI numbers (0.9% Seattle June CPI-U and 1% Seattle June CPI-W), heavily relied upon for those wage settlements that rely on a CPI formula.
The rate of 2% to 2.99% wage increases represents a substantial portion of the 2021 settlements with 40-50% of the 2021 wages settled in this range. In 2020, a year in which the CPI was higher heading into that year, more of the settlements were above 3%.
But a real sign of a more robust contract negotiations climate, and which we found somewhat surprising, is the number of wage increases at 3% or above.
Police Officers, Deputies, Firefighters, Dispatch, and Corrections Officers all saw 40-59% of their wage settlements at 3%+ in 2020. This percentage has gone down for all but Deputies in 2021 and yet over 40% of commissioned law enforcement officer contracts thus far for 2021 exceed 3%.
Many of the contracts settling in the second half of 2020 and the first part of 2021 are in the form of contract extensions with wage increases in the 1-3% range. If the economy picks up as anticipated, we should expect the number of wage increases 3% or greater to increase in 2022.
In the next article in this series, we’ll discuss current economic conditions that may affect your bargaining outlook. Certainly, overall economic conditions are a relevant factor in negotiations, especially as they impact employers’ ability to pay.
