February 3, 2014

Razzle Dazzle

Know When to Fold ’em: Hanley Smells the Coffee


INSULTS ROLLED OFF MORE EASILY THAN YEARS: Jim Hanley half a lifetime ago was a portrait of the negotiator as a young man in 1980, while a more-recent photo suggests the toll taken by the grind of countless late negotiating sessions and the struggles to persuade stubborn labor leaders and, sometimes, stubborn Mayors that there’s a deal both sides can abide. A hint of deadpan humor in his voice, he said, ‘The unions aren’t always wrong, and if you work at it, you can find some common ground.’  

A week after ending his 41-year career with the Office of Labor Relations, with most of the last 24 years spent as its Commissioner, Jim Hanley was not experiencing any withdrawal pains.

“I’m enjoying retirement,” he said in a Jan. 29 phone interview, although some of its manifestations, from shoveling snow in front of his Staten Island home to dealing with Social Security and Medicare issues, are generally not described as a day at the beach, and his buying a car was not an indulgence but a necessity now that he no longer gets one from the city as one of the perks of being its chief negotiator.

On the other hand, the headaches caused by the Daily News and Governor Cuomo pouncing on what should have been a no-big-deal comment by Mayor de Blasio that he needed the city budget surplus to deal with union contracts were now the province of Bob Linn, Mr. Hanley’s former boss during the Koch administration who has now succeeded him.

A Bloomberg Hangover

What Mr. de Blasio meant was that two pending contract arbitrations left over from the Bloomberg administration concerning Teachers and Registered Nurses were virtually certain to consume most if not all of the city budget surplus, and there was little he could do about it, given that the awards figure to be based on a pattern of 4-percent raises Michael Bloomberg created with more than half the city workforce before he ceased bargaining in mid-round late in 2008.

Mr. Hanley, who served as chief negotiator for three very different Mayors in David Dinkins, Rudy Giuliani and Mr. Bloomberg, speaking generally remarked, “It’s always frustrating to bring new Mayors around to the understanding that arbitrators have more power than they do.”

It was why he usually counseled them to respond to bargaining impasses where conventional arguments weren’t succeeding by considering alternative ways to work out a solution rather than leaving a contract to be decided by a third party. “You try another angle, you can come up with some pretty creative settlements,” he said.

He sidestepped a question about whether it had been frustrating to spend the final five years of his career unable to bridge the gap between Mr. Bloomberg and the unions — which also bled into the Mayor’s unsuccessful attempt to work out a plan to reduce health-care costs with the Municipal Labor Committee. Most of Mr. Hanley’s energies over the past year or so were devoted to making the city’s cases in the arbitrations with the United Federation of Teachers and the New York State Nursing Association that should produce awards this spring, as well as another arbitration with Local 1199 of the Service Employees International Union concerning Licensed Practical Nurses that is not as far along.

His departure brought tributes from a number of veteran union officials, with Harry Nespoli, who heads both the MLC and the Uniformed Sanitationmen’s Association, saying in mid-December that one of his best qualities was that he served as a “buffer” between the unions and an unreasonable Mayor, because it was clear that while he was representing management, “he really, really cares for the municipal workers.”

Mr. Hanley didn’t exactly embrace the “buffer” description. In contrast to the man he succeeded in the job in the Dinkins administration, the late Eric Schmertz, he never viewed himself as a kind of honest broker between labor and management — he knew his job was to advocate on the city’s behalf as strongly as possible and to bring back the cheapest deals feasible without harming its ability to recruit qualified individuals. At the same time, he added, “The unions aren’t always wrong, and if you work at it, you can find some common ground.”

Uncommon Mess With PBA

He didn’t bring it up, but Exhibit A of the perils of not negotiating a deal was the 2005 arbitration battle with the Patrolmen’s Benevolent Association. The proceeding was chaired by Mr. Schmertz, who made clear he did not regard a miserly contract Mr. Bloomberg persuaded District Council 37’s Lillian Roberts to accept as a valid bargaining pattern and proclaimed his intention to give Police Officers annual raises of 5 percent. Mr. Hanley and other city officials furiously countered that this would do immeasurable harm to the city’s finances, and Mr. Schmertz responded by producing an award that offset a significant portion of the cost by reducing starting salary for cops to $25,100—the lowest it had been since the mid-1980s.

The reduced starting rate — and a sharp cut in the entire pay scale that cost officers hired starting in 2006 nearly $50,000 over their first five years of service compared to those who joined the NYPD the previous year — prompted Police Commissioner Ray Kelly to blame the award for difficulties in recruiting top candidates. A 2008 arbitration process involving the PBA was devoted largely to repairing the damage done by bringing maximum salary back close to the old level.

Police-union contracts have always been a challenge; Mr. Hanley said the most satisfying moment he had in city service involved a 1975 PBA arbitration award that he was heavily involved in despite being a junior staffer at what was then the Office of Municipal Labor Relations.

Big Responsibility Early

He was hired as an Assistant Personnel Examiner in late 1972, but his boss and mentor, the late Harry Karetzky, “wouldn’t put me on the payroll until Jan. 2 [in 1973] so he didn’t have to pay me for the holiday.” He and a colleague, Ray Horton — who would later make his mark as head of the Citizens Budget Commission, which reflexively criticizes most city contract deals as either too generous or defective for not getting productivity concessions from the unions — were assigned to do cost analyses of labor deals that were required by the U.S. Wage and Price Control Board.

His being assigned to focus on NYPD cases, Mr. Hanley said, “was done on a rational basis: Harry Karetzky said to me, ‘You’re a tall Irish guy; I’m gonna give you the police.’”

Later that year, he said, the PBA launched a public campaign for more generous treatment than other uniformed unions built on the slogan, “Don’t treat us like garbage.” With the union’s characteristic light touch during that era, it was taking aim at the Lindsay administration’s paying Sanitation Workers nearly as much as cops. Beyond the gratuitous insult aimed at another uniformed union, Mr. Hanley said, the ultimate goal was to break the longtime parity relationship between Police Officers and Firefighters.

‘Gonna Lose This, Kid’

There had been a series of cases in the late 1960s and early 1970s in which the unions representing superior officers in the Police and Fire Departments had taken their contracts into arbitration and upended the parity relationships for supervisors, only to have the union that wound up on the short end press its own arbitration case and reverse the imbalance. So when the PBA dispute moved into arbitration, Mr. Hanley said that he and Mr. Horton were given key roles in presenting the city’s case but that Mr. Karetzky told him, “You’re gonna lose this, kid — we always lose these.”

Mr. Hanley, who is six-foot five, used to play high school basketball, and on one occasion he was asked to guard the opposing center for Power Memorial, Lew Alcindor, who was even more dominant at that level than he would become later in the NBA as Kareem Abdul Jabbar. There wasn’t an eight-inch height disadvantage to go with a discernible difference in skills in the PBA case, and so Mr. Hanley  bet Mr. Karetzky a nickel that he could bring back an award that preserved police/fire parity.

“Ray Horton and I worked for one whole year of Saturdays and Sundays” on the case in addition to their normal weekday schedules, he recalled. “We prevailed on the pattern,” under an arbitration award handed up in the summer of 1975.

‘A Nickel on My Desk’

When he came into his office the next day, he said, “I had a nickel on my desk.”

He also had a new assignment: “We sat down and worked on the deferral of the 6-percent raises they had just gotten,” a key element of the give-and-take of the fiscal crisis that included tens of thousands of layoffs of city workers and the deal under which the unions used their pension funds to buy municipal bonds and reel the city back from the brink of bankruptcy.

By this time, Mr. Hanley had already stayed longer than he anticipated. He had been an electrician in his early 20s who did some work during the construction of the World Trade Center, and when he joined city government, “I thought I would work for a year” and then move on.

He explained that to Mr. Karetzky when he had been on the job for less than six months and the older man came to him and advised him to join the city pension system before the pending change under which new members would fall under the just-created (and less generous) Tier 2. Mr. Hanley protested, explaining he didn’t plan to stay long term; he said Mr. Karetzky replied, “That’s what I thought, too, back in the 1930s.”

Not Regretting It Now

“So,” Mr. Hanley said, just before the less-generous pension tier took effect, “On June 30, 1973, I joined the pension system for all the wrong reasons: Harry Karetzky was an incredible gentleman, and I didn’t want to get on his bad side.” He’s reaping the benefits now of a Tier 1 pension whose fractional payout was greatly improved by 41 years of service time.

His sense of humor runs from self-deprecating to sly — he used to do a dead-on impersonation of the late Jack Bigel, the brilliant but irascible municipal union consultant who was a prominent figure in the city’s labor history, particularly during the mid-1970s fiscal crisis. Labor leaders often appreciated him more, though, for his awareness of the jobs their members did, a knowledge he acquired in part by doing ride-alongs in patrol cars and visiting jails during his first decade with the city.

He moved up in the ranks of OMLR, becoming First Deputy Director when Mr. Karetzky retired in 1987 after nearly a half-century of city service. But when Mr. Dinkins became Mayor in 1990 and opted not to reappoint Mr. Linn as the city’s chief negotiator, Mr. Hanley was passed over for the job in favor of Mr. Schmertz, who was a well-regarded mediator and arbitrator who had never actually negotiated a contract.

A combination of a vacation the new Labor Commissioner took at the start of the administration and a heart attack he suffered soon after returning left Mr. Hanley running the office for several months. And then in early fall, Mr. Schmertz made one of the cardinal errors for a negotiator: then-United Federation of Teachers President Sandy Feldman, unhappy about his contract offer, demanded a meeting with the Mayor her union had helped elect less than a year earlier, and Mr. Schmertz agreed to arrange it.

Wrong Room, Bad Timing

“You never put the principal in the room” until there’s a deal in hand for him to approve, Mr. Hanley said last week. Doing so takes away what he called “plausible deniability,” under which the Mayor can dispute any claim that a union was offered a particular deal, as well as that he knew of any allegedly unreasonable positions being taken by his negotiators in the interest of settling on terms that made fiscal sense.

At the meeting between the Mayor and the UFT leader, Ms. Feldman upbraided him for not making a wage offer that by her standards was consistent with the emphasis Mr. Dinkins placed on improving education during his campaign. Though he was waiting to hear back from Teamsters Local 237 President Barry Feinstein on a city offer of a one-year contract with a 4.5-percent raise that would have set a pattern for the rest of the workforce, Ms. Feldman pressured him to give her members a full point more than that. The initial uproar over the relatively generous settlement was magnified when, just three days after it was announced, Mr. Dinkins disclosed that a new police class was being postponed because of the city’s financial troubles. Shortly after that, Mr. Schmertz resigned under pressure and Mr. Hanley stepped into the job.

Election-Year Cross-Fire

After a tangled continuation of that round of bargaining in which the Mayor gave him a mandate to bring in other municipal contracts at a cost below the UFT’s, he was able in the next bargaining cycle to reach a 39-month deal in which wages were frozen for the first 18 months, after which hikes totaling 7 percent were granted. Mr. Hanley got high marks from labor-relations professionals for the pattern he had set, but Mr. Dinkins found himself caught in a cross-fire during his re-election year. His Republican opponent, Rudy Giuliani, insisted the city couldn’t afford even those modest raises, while Ms. Feldman, who refused to accept the terms, spent the summer running commercials attacking Mr. Dinkins for not giving Teachers sufficient respect. The union’s refusal to endorse him a second time, and the way the ads worked to heighten his negative image, played a role in Mr. Giuliani’s narrow victory in November 1993.

The new Mayor brought in a friend and former Justice Department colleague, Randy Levine, to be Labor Commissioner. Mr. Levine and Deputy Mayor Randy Mastro both asked Mr. Hanley to stay on in his old role of First Deputy Commissioner, and he consented. Before Mr. Giuliani’s first term was over, Mr. Levine had left for a job with Major League Baseball (he later became president of the Yankees) and Mr. Hanley moved back into the Commissioner’s chair.

Before that happened, however, there were two separate contract deals that began with a two-year wage freeze that became mired first in controversy and then scandal. The first one was reached with Ms. Feldman and the UFT, and word was that she was worried that DC 37, which had been threatened with thousands of layoffs unless it agreed to that kind of deal, would agree to terms even worse than she accepted.

Wearing the Gloat Horns

Mr. Hanley, emphasizing that he was not speaking about any particular situation, said that when the city got a favorable contract deal, it was always best to underplay its happiness until the deal was actually ratified, since union members might otherwise suspect their leaders had settled too cheaply. “I would tell Deputy Mayors about a tentative settlement: whatever you do, don’t kvell. But some of them kvelled, and those settlements died.”

That was what happened following that UFT deal, and matters weren’t helped by Mayor Giuliani granting raises to top staffers shortly before rank-and-file Teachers were to vote on accepting the two-year freeze followed by raises totaling 10.75 percent in the subsequent three years. Somewhat predictably, they rejected the terms.

But DC 37 Executive Director Stanley Hill, worried that Mr. Giuliani wouldn’t hesitate to impose much greater layoffs than had been carried out by his friend and ally Mr. Dinkins during a budget crunch in 1991, had already accepted the same terms before UFT members rejected them. When that contract was narrowly approved in early 1996, with an overwhelming vote in favor from DC 37’s largest local even though its members were among the most poorly-paid in the city, two local presidents who opposed the deal publicly suggested the vote had been rigged.

Smoke Turned to Fire

Mr. Hanley was aware of the rumors, but noted they died down after about a week. More than two years would pass before a broader investigation by the Manhattan District Attorney’s Office into corruption within DC 37 would produce evidence that the contract vote had in fact been fixed.

“I was surprised and disappointed,” Mr. Hanley said. But when several unions, including the PBA through an arbitration process, protested that they had been unfairly yoked into a contract pattern created by a fraudulent union vote, “I said, ‘Look, as far as we’re concerned, we had a valid contract.’’’

A prime reason the last three Mayors have had fractious bargaining relations with the PBA — far more often than not winding up in arbitration — is that overly generous arbitration awards granted to cops in Nassau and Suffolk counties have propelled salaries and some other benefits there well past what NYPD officers receive. There has long been suspicion that the arbitrators in the Long Island cases were taking direction from Republican County Executives, as well as GOP-dominated legislatures that gave final approval to the awards, and counted on the police unions for political support.

Mr. Hanley viewed such awards as beyond his control and repeatedly sought to argue in arbitration that the city bargaining patterns were far more relevant. “I always used to refer to Long Island as an island off the coast of America,” he said wryly. Nassau and Suffolk had fire service provided largely by volunteers, and so there was no parity arrangement for them to worry about, and there were no well-established bargaining relationships with Sanitation Workers or non-uniformed employees to worry about, either. “We had a lot more obligations than they do.”

A Good Poker Face

Former Lieutenants’ Benevolent Association President Tony Garvey, remarking on Mr. Hanley’s skills at not showing emotion or giving away his position during heated bargaining sessions, once said, “I wouldn’t want to play poker with that guy.”

Asked about the comment, Mr. Hanley began singing in his pleasant baritone, “You got to know when to hold ‘em, know when to fold ‘em...” Turning more serious, he said of his ability to sit and assess the other players and determine what he might be able to sell to both them and the Mayors whose approval he would need, “It came naturally,” along with the ability to let the verbal abuse roll off his back.

“It has changed,” Mr. Hanley said about the bargaining process over his 41 years as an advocate for the city. “It’s become much more technical in the costing of things. But the basic business itself I don’t think has changed as much. Tony Russo [the city’s chief negotiator during the mid- to late-1970s] used to say your credibility is everything—you lose that and you’ll never get it back. And I think that’s absolutely true.”

By his own account, “I’m a pretty boring guy. I read a lot, do some work in my yard. I don’t travel much.” But as he said when he announced his retirement late last year, he wanted to spend more time with his two grandchildren and a third who’s expected later this year, and “I’d had a major health scare a couple of years ago” due to complications following hip surgery. “Part of me was thinking it would just be nice to take some time to smell the coffee.

“A lot of Mayors had a lot of faith in me, and I dealt with some wonderful people on the other side of the table,” Mr. Hanley said.