Saturday, December 21, 2013

There Is Money For Municipal Worker Raises In NYC

Every time the subject of all those expired municipal union contracts comes up at the NY Post and other right wing media outlets, we hear how the city is broke, the city cannot afford raises for workers, employee benefit packages are turning NYC into Detroit blah blah blah.

But the reality is this:

Mayor-elect Bill de Blasio may be inheriting a city in better financial shape than he had expected.
New York will end the current fiscal year with a surplus of $2.4 billion — “$581 million more than projected by the Bloomberg administration,” according to a new fiscal forecast from the city Independent Budget Office released Thursday.

The budget office also projects a surplus of $1.9 billion for fiscal year 2015.

The extra money should ease the financial pressures faced by de Blasio, including a demand by the city’s unions — which have been working without contracts for as long as four years — for $7 billion in retroactive pay.

In addition, we learned the following about the national economy this week:

Boosting optimism for the new year ahead, the government announced Friday that the economy in the third quarter grew at its fastest rate in nearly two years and much better than previously estimated.
Higher consumer spending was largely responsible for the economy's annual growth rate of 4.1% from July through September, the Commerce Department said. Last month, it estimated a 3.6% rate.

In the second quarter the economy grew at a 2.5% annual pace.

The latest estimate of last quarter's gross domestic product — that's the value of all goods and services produced in the U.S. -- marked the first time since late 2011 that quarterly GDP growth exceeded 4%.

Last quarter's better-than-expected performance was spurred by consumers spending more over the summer on health care, recreation and other services.

The government says consumer spending grew at an annual rate of 2.0%, up from 1.6% in its previous estimate last month.

"The consumer is back in the game," exulted Chris Rupkey, chief financial economist of Bank of Tokyo-Mitsubishi UFJ, in a client note Friday. "Is this economic growth fast enough to put America back to work? The answer is, yes. The wheels of the economy are turning fast enough to bring down the unemployment rate further. "

Business investment also increased, growing at a 4.8% annual rate, 1.3 percentage points better than the government's earlier estimate.

The report sparked a rally on Wall Street, driving the Dow Jones industrial average up 0.3% and the Standard & Poor's 500 index 0.5% to new records.

Many economists predict fourth-quarter growth will not match last quarter's because the third quarter's large increase in business stockpiles won't be repeated in this period. But they're also optimistic about next year.

Friday's GDP report suggests that the U.S. economy entered the fourth quarter "with more momentum than had previously been thought to be the case," said Richard Moody, chief economist of Regions Financial Corp. "And we expect that momentum to build further in 2014."

A larger than expected budget surplus for NYC in 2014, a budget surplus for 2015 as well and the economy looking like it finally has started to turn around, with consumers and businesses both spending (which may mean even higher revenues than forecast)  - these are good signs for NYC, for the de Blasio administration and for municipal workers.

The Posties and other benefits scolds may say NYC is heading the way of Detroit because of municipal worker contracts and benefits, but it's just not true.

And if the economy continues at a 3%-4% growth pace for the next few quarters, as some analysts say it might, there will be money for workers' raises, no matter how sad that will make Bloomberg or Murdoch or the pension trolls at Gotham Schools.


  1. Diane Ravitch posted an insider essay on her blog showing how bad the Klein/Black/Walcott education policies were