Accountably Private

(Above photo by Roman. Panel from Artists of the Wall, artist not known.)

Back in 1994, Alderman Joe Moore surprised everyone by introducing an ordinance that would have regulated privatization of Chicago government, basically by requiring a public exercise of due diligence. The Alderman hadn’t done his own due diligence by discussing the issue with potential allies… such as the Chicago Federation of Labor though it’s not clear that the leadership back then would have been any more enthusiastic. The leadership back then was willing to fight but only when unions’ interests were directly threatened, which is to say not very often.

The ordinance did pick up co-sponsors but it was assigned to committee and never heard of again.

It was a brilliant bit of public policy, though, and I covered the ordinance in New Ground 38, January — February, 1995 issue. Begging your pardon for the somewhat overwrought first paragraph. The actual text of the ordinance is of particular interest and may still be worth pursuing.

Accountably Private

by Robert Roman

George Orwell should have written a sequel to 1984, entitled 1994. In this Brave Newt World (to bring hallucinogenic Huxley into the metaphor), the idea that private enterprise is inherently more cost effective or efficient has become an article of political correctness, to be believed regardless of any evidence pro or con and without reference as to how this effectiveness or efficiency might be achieved. It helps, of course, that all the pigs at this particular trough are potential campaign contributors. In 1994, we face the next step in the commodification of politics. The first step was the destruction of political parties and the rise of a free-enterprise style politics. The next is the mad auction of public capital (or was that the first step, in the book 1884?). Now we have the auction of government itself. The final step could be a form of industrial feudalism.

In truth, there may be instances when privately contracted services would be more effective than the same services provided through municipal government. And there may be ways of doing this in a way that promotes democracy and community development. But there has not been any good tool available for municipal government to effect such a change in a rational, informed manner. The whole topic has been left open to the entrepreneurs of political cant and kickback.

The Privatization Accountability Ordinance, introduced by Chicago’s 49th Ward Alderman Joe Moore in November of 1994, is an attempt to bring some rationality and accountability to the process.

First of all, the municipal departments seeking to privatize a government function must undertake a cost effectiveness study, using a uniform set of criteria. In a statement released upon introduction of the ordinance, Alderman Moore pointed out:

“…in most cases we simply don’t know if privatization has really cut costs or improved service delivery because there are no objective standards in place to measure its effectiveness. The City simply does not publicize any cost effectiveness studies it may undertake nor does it publicly document the contract costs.

“There is also no evidence that the City even considers factors other than direct costs when determining whether to privatize a city service. For example, we don’t know if the City takes into account the hidden costs, such as the expense of monitoring contracts and the cost of contractors using city equipment. We don’t know if the City factors in future price increases. And we don’t know if the city examines the economic impact job loss and lower salaries and benefits have on city employees and the further effect this has had on the economic health of our neighborhoods.”

The ordinance further requires that the cost effectiveness study demonstrate a minimum savings of 10%. The contracts issued must comply with applicable anti-discrimination and affirmative action requirements and the Shakman decree against patronage hiring. The ordinance requires that contractors pay wages and benefits at a rate and level not less than that provided to City employees performing comparable tasks. The savings must come from organizational efficiency and not out of the pockets of the employees.

The ordinance also includes requirements regarding contractor eligibility, the necessity for Annual Performance Reports, assistance for displaced city employees, and city council review of proposed and existing privatization initiatives.

Not surprisingly, the Privatization Accountability Ordinance has received the endorsement of organized labor in Chicago. Following the initiative of AFSCME Council 31, the Chicago Federation of Labor endorsed the ordinance. President Michael Burton had been quoted earlier as commenting that while the ordinance was good, labor would have liked to have had input into the formation of the proposal. Nonetheless, the CFL has already begun lobbying Mayor Daley and the City Council to take action on the ordinance.

The stone requires help to start rolling. The ordinance was committed to the care of the City Council Committee on the Budget and Government Operations, chaired by Lorraine Dixon of the Eighth Ward. No hearings have yet been scheduled. While it may be unreasonable to expect any serious consideration from the City Council prior to the elections, now is the time that the Aldermen and their challengers are most vulnerable to pressure on the issue.

The Chicago DSA Executive Committee has also endorsed the Privatization Accountability Ordinance, and we urge you to make your opinions known, not just to your Alderman but to all candidates running for the City Council in your ward. If it happens that you are not sure which ward you reside in, the address label will have (for home address) your ward and precinct on the top line, i.e. “WP/O: 4927”.


Section 1. Chapter 2-92 of the Municipal Code of Chicago is hereby amended by adding new sections 2-29-590 through 2-92-690 as follows:

2-92-590 Title and Purpose

This section shall be known and may be cited as the “Privatization Accountability Ordinance”. It is the purpose of this section and the policy of the City to ensure that the residents of the City receive high quality public services at the lowest possible cost, with due regard for the taxpayers of the City and the needs of both public and private sector workers.

2-92-600 Definitions

Whenever used in sections 2-92-590 through 2-92-690 the following words and phrases shall have the following meanings:

“Privatization” means a contract between a City department and a person or firm in the private sector, regardless of whether the person or firm is a for-profit entity or a non-for-profit entity, for any function performed by personnel employed by a city department on the effective date of this ordinance.

“Displace” shall mean the layoff, demotion, bumping, involuntary transfer to a new class, title, or location, time based reductions, reductions in customary hours of work, wages or benefits of any City employee.

“Cost-effectiveness study” shall mean an analysis conducted in accordance with the standard methodology of the Office of Budget and Management comparing the projected cost of delivering the service under the proposed contract to the cost of delivering the service in-house. The analysis shall include in the projected cost of the proposed contract of inspection, supervision and monitoring. The analysis shall exclude from the cost of delivering the service in-house all overhead costs unless such costs are attributable sole to such service.

2-92-610 Privatization Requirements

Privatization of City services is permissible to achieve cost savings when all of the following conditions are met:

(a) The contracting department must prepare a detailed statement of the services proposed to be privatized and undertake a cost-effectiveness study prior to the award of any contract. Such study shall include, but not be limited to, documentation of all contract costs for each service, the total number and qualifications of all personnel to be retained under the proposed contract, and the nature and cost of the fringe benefits and compensation rates to be provided to such personnel. All cost analyses and documentation thereof shall be public documents available for public inspection and shall be filed with the contracting department, the City Council Committee on Budget and Government Operations, and the Department of Purchases, Contracts and Supplies.
(b) The projected cost savings for a privatization initiative must exceed ten percent of the cost of delivering the service with City employees.
(c) The contract must be awarded through a publicized, competitive bidding process.
(d) The contract must include specific provisions setting forth the qualifications required of the staff performing the work under the contract and assurances that staff will be hired in accordance with applicable anti-discrimination and affirmative action requirements and the Shakman decree prohibitions against hiring and firing employees on the basis of political beliefs or activities.
(e) The contract must provide that the contractor shall not pay wages and benefits at a rate and level lower than that provided to City employees performing comparable tasks.
(f) The contract must provide that fifty percent of all contract work hours shall be performed by bona fide City of Chicago residents.
(g) The potential economic advantage of the privatization initiative must outweigh the public’s interest in having a particular function performed directly by City government.

2-92-620 Privatization Permitted

Privatization initiatives also shall be permissible when any of the following conditions are met:

(a) The services contracted are not available or cannot be performed satisfactorily by City employees, or are of such a highly specialized or technical nature that the necessary expert knowledge, experience, and ability are not available in the City workforce.
(b) The services are incidental to a contract for the purchase or lease of real or personal property, including but not limited to, agreements to service or maintain leased or rented office equipment or computers.
(c) A private contractor is necessary to protect against a conflict of interest or to ensure independent and unbiased findings in circumstances where an outside perspective is clearly needed.
(d) A private contractor can provide equipment, materials, facilities, or support services that cannot feasibly be provided by the City in the location where the service is to be performed.
(e) The services are of such an urgent, temporary, or occasional nature that they cannot adequately be performed by City employees.

2-92-630 Eligibility of Contractors

All contractors submitted bids must submit an eligibility report to the department overseeing the privatization contract, the Department of Purchasing, Contracts and Supplies and the City Council Committee on Budget and Government Operations. Such reports shall include, but not be limited to,

(a) documentation of compliance with Federal, State and City labor, anti-discrimination, affirmative action, unemployment, occupational safety and health, environmental protection and workers’ compensation laws;
(b) quarterly payroll records listing the name, address, Social Security number, hours worked, hourly wages paid and fringe benefits paid for each employee for the last two years;
(c) the union status and representation for each employee for the last two years;
(d) the ethnic, racial and gender make-up of its workforce for the last two years; and
(e) a list of the political contributions of the contractor and its principals for the last four years.

Such reports shall be public documents available for public inspection.

2-92-640 Annual Performance Reports

All contractors awarded a procurement pursuant to sections 2-92-610 and 2-92-620 of this ordinance shall submit annual performance reports to the department overseeing the contract, the Department of Purchases, Contracts and Supplies, and the City Council Committee on Budget and Government Operations. Such performance reports shall include but not be limited to,

(a) documentation of compliance with Federal, State and City labor, anti-discrimination, affirmative action, unemployment, occupational safety and health, environmental protection and workers’ compensation laws;
(b) payroll records listing the name, address, Social Security number, hours worked, hourly wage paid and fringe benefits paid for each employee;
(c) the union status and representation for each employee;
(d) the ethnic, racial and gender make-up of the workforce; and
(e) a list of the political contributions of the contractor and its principals for the last year.

Such reports shall be public documents available for public inspection.

2-92-650 Withholding Reimbursement

Where privatization initiatives are funded pursuant to sections 2-92-610 and 2-92-620 of this ordinance, the Department of Purchases, Contracts and Supplies shall include a withholding clause in the privatization contract providing the City with the authority to withhold reimbursement if the contractor fails to comply with sections 2-92-640 of this chapter.

2-92-660 Assistance for Displaced City Employees

Where privatization initiatives are funded pursuant to sections 2-92-610 and 2-92-620 of this ordinance, the department overseeing the privatization contract shall prepare and implement a plan of assistance for City employees who will be displaced as a result of the contract. Such plan of assistance shall include efforts, including training if necessary, to place displaced City employees in a comparable position within that agency or any other City agency. The plan of assistance shall include notification to the City of Chicago Department of Personnel at least three months prior to letting the contract. Such notification shall include all supporting documentation and analyses in support of the privatization initiative and a copy of the contract. The Department of Personnel shall within five business days of receipt of such notification, forward notice and all supporting documentation provided in this section to all duly certified collective bargaining representatives who represent City employees who may be displaced by such contract.

2-92-670 City Council Review of Proposed Privatization Initiatives

Any City department proposing to execute a contract pursuant to sections 2-92-610 and 2-92-620 of this ordinance shall notify the chairman of the City Council Committee on the Budget and Government Operations of its intention. The chairman of the Committee on the Budget and Government Operations shall thereupon call a meeting of the committee for a date not more than thirty days thereafter, at which meeting representatives of the City department shall explain the reasons for privatizing the city service. All organizations that represent City employees who perform the work to be contracted, and any person or organization which has filed with the committee a request for notice, shall be contacted by the Committee upon receipt of this notice so that they may be given an opportunity to appear before the Committee to comment on the proposed contract. The City department submitting the proposed contract shall provide committee members seven days before the meeting all data and other information relevant to the proposed contract and the application of the standards and criteria set forth in sections 2-92-610 through 2-92-640. No contract shall be executed until thirty days after the adjournment of the aforesaid meeting.

2-92-680 City Council Review of Existing Privatization Initiatives

The City Council Committee on the Budget and Government Operations shall conduct annual hearings on all contracts executed pursuant to sections 2-92-610 and 2-92-620. The City department overseeing the privatization initiative shall provide to all committee members seven days before the hearings all data and other information relevant to the privatization initiative and the application of the standards and criteria set forth in section 2-92-610 through 2-92-650, including, but not limited to, data setting forth the cost-effectiveness of the privatization initiative.

2-92-690 Severability

If any provision, clause, sentence or paragraph of sections 2-92-590 through 2-92-680 or the application thereof shall be held invalid by a court of competent jurisdiction, such invalidity shall not affect the other provisions of this ordinance which can be given effect without the invalid provision or application, and to this end the provisions of this ordinance are declared to be severable.

Section 2. This ordinance shall be in full force and effect after its passage and approval.

It’s a Hard Rain That’s Gonna Fall

(Partial “Artists of the Wall” panel, artist not known; photo by Roman.)

Racine County has been in the news lately in connection with the great Foxconn give-away, or rip-off if you prefer. Back in 1991, though, the city of Racine was the location of a rather nasty strike at Rainfair. The mostly female workforce stayed out, braved “permanent replacements” and eventually successfully settled the strike.

It might be just another nasty, forgettable episode in the long history of class conflict in America, but rumor on the street was that Management’s aggressive stance was not entirely a result of the company’s circumstances but rather that Wisconsin’s business community had decided it was time to tame the union movement. If you take the long view, this strike may have been the start a long process culminating in Governor Scott Walker and his ilk.

The two articles below were published in the Winter, 1991, and the Spring, 1992, issues of New Ground.

It’s a Hard Rain That’s Gonna Fall

by Bob Roman

A small civil war is simmering just across the Wisconsin border in Racine. It is there that the 136 members of the International Ladies Garment Workers Union Local 187 have been on strike against Rainfair, a manufacturer of rain gear. The mostly female employees of Rainfair have been on strike since June 20, after the company provoked a strike by presenting a final offer demanding unreasonable concessions from their workers. The average wage of Rainfair workers was $6.60 an hour. The company demanded an increase in employee co-payment of health insurance to over $100 a month, the elimination of two paid holidays, and the scheduling of weekend work without overtime pay. Since the strike has begun, Rainfair has hired 72 scabs as “permanent replacements”. The strike is widely seen as the opening move in a statewide campaign against organized labor.

Labor has good reason to be worried about this skirmish. Racine is a small industrial town with a population of some 80,000 just south of Milwaukee. It’s a union town, but it’s also a company town. The economy is dominated by Johnson and Johnson. Rainfair is owned by Craig Leipold, a relation to the Johnson family by marriage. While Racine is the Johnson family’s home turf, the family’s influence extends far beyond the town’s borders. In Wisconsin in particular, the family is part of a network of interlocking directorates among a wide variety of corporations. The word on the street is that the Johnson family has been pushing a “get tough on unions” line in the corporate boardrooms that they inhabit. The IAM and UAW have contract negotiations coming up next year with some of these companies.

It’s not just the union bureaucracies that are worried. The membership is worried and angry too. There’s been no problem in recruiting support for the Rainfair workers from the rank and file of other unions. For example, one day recently some 500 members from the Communication Workers of America showed up at the plant gate, surprising pickets, police, and scabs alike. The police, of course, regarded the event as a “riot” and the company lawyers are attempting to use it as justification for an injuction limiting picket line activities, but the unions do have difficulty in telling their members to be non-violent. It’s becoming dangerous to be a scab in Racine.

These “permanent replacements” were the occasion for a march and rally in Racine on Saturday, October 5th. The demonstration was organized to support the Rainfair strikers but also to demand the override of Wisconsin Governor Tommy Thompson’s veto of Wisconsin legislation which banned “permanent replacements”. A small, hastily recruited delegation from Chicago DSA attended the rally.

The rally was coordinated by the Wisconsin AFL-CIO. Some 700 people attended the rally, representing an impressive list of unions: AFGE, AFSCME, CWA, IAM, IBT, USWA, and UAW to name just a few of the more obvious. Eleven speakers exhorted the crowd to support the strikers and to lobby both state and federal legislators on anti-scab legislation. Some speakers were very good and some were not, but it didn’t seem to matter. The crowd’s spirit seemed to carry each speaker regardless of ability.

But two speakers deserve special mention. One was Jane Brosseau, who represented the Racine chapter of the National Organization for Women. She began by stating that she was talking to the women of the labor movement and the female strikers at Rainfair. This was an immediate turn-off for much of the crowd. In particular, the small but vocal delegation from the Teamsters was not at all impressed, and began talking loudly amongst themselves. But they didn’t talk for long, because they quickly perceived that Brosseau’s message was a union message: that the fight at Rainfair was important because it was a fight for equality; the women were not working for “pin money” but to support their families. By the end of her speech, Brosseau had earned the crowd’s enthusiastic approval. The other speaker of note was Illinois’ own Congressman Charles Hayes. Despite all the militant talk and demands for justice, it was Congressman Hayes who brought upt the idea of class conflict. He did it deftly, without jargon; the crowd knew exactly what he was talking about and they approved.

It’s hard to convey the spirit of the rally. Mostly it was a feeling of intense togetherness with an edge of nervous worry and anger. But there was something more. Frank Klein, a staffer with the ILGWU, observed that the labor movement is something of a counter-culture in America. The sociologist in me wants to substitute “subculture” in this observation, yet there is a romance to the movement that is instantly obvious to an aging hippie. On the final chorus of “Solidairity Forever”, the low drizzly clouds finally and decisively broke. The rally was flooded with sunlight. It may not have been Woodstock, but it sure felt like it.

Return to Rainfair: Solidarity Works

by Bob Roman

The ILGWU strike against Rainfair, reported in the last issue of New Ground, was settled on December 20. All the striking workers returned to work with a 20 cent per hour raise and a limited health insurance co-payment. The settlement is being credited to labor solidarity.

While the strike took nearly six months, the settlement reached would probably have been acceptable to the employees had it been offered to them within the first few weeks of the strike. It was only the bloody-minded anti-union attitude of the Rainfair company that kept the conflict going. It was this hostility set against an underpaid, mostly female work force represented by a small union that made the strike a perfect metaphor for the state of labor today. Sensing a public relations bonanza, the AFL-CIO started to mobilize its resources in support of the strikers.

One has to wonder at the stupidity of the Rainfair company. Most of its product is used by police, firemen, letter carriers and the building trades. Faced with the prospect of a labor boycott, Rainfair’s distributors made it very plain to the company that its goods were not worth the hassle: If a boycott developed, the wholesalers were not going to continue distributing Rainfair products. Faced with this prospect, Rainfair’s effort at union-busting collapsed, even to the point of returning production shifted elsewhere to the Kenosha plant and bringing back all the strikers. The only face the company saved was the retention of at least some of the “permanent” replacements.

The scabs do not seem to have a long life expectancy. This is not because the ILGWU is particularly interesting in running them out of the plant but rather the circumstances of work at the plant. Some of the scabs were only interested in earning Christmas money and not much interested in continuing to work past the holiday. Others had become accustomed to the lenient working conditions during the strike and were not at all prepared for the strict workplace discipline that is normal to the plant. And finally, while the “market place” does not highly value the work of the employees, it is not an unskilled occupation. These “new” employees just do not have the skill necessary to keep up with the older employees.

The strike has also had beneficial consequences outside the ILGWU. At least one Wisconsin employer, U.S. Can, has begun contract negotiations early specifically to avoid a strike. What was intended as the opening move in a campaign to break organized labor has ended in something of a retreat.

At the same time, solidarity often seems to be given more lip service than concrete application. It is true that at least part of the Rainfair victory is due to Capital’s ill-considered choice of a battleground: a company whose product is used mostly by unionized employees at the workplace and whose plant is located in a solidly union town. But rightly or wrongly, many other unions have been considerably less aggressive in soliciting outside help. It’s worth asking to what extent this is a considered judgement based on the “objective” political situation and to what extent it is that solidarity is a lesson that must be continually relearned.