In a move City of Chicago officials claim is designed to decrease a massive budget deficit, the City is toying with the idea of privatizing its residential recycling program.
Three vendors, Waste Management, Midwest Metal Management, and Lakeshore Sanitation are competing with Laborers' Local 1001 for a highly coveted contract to handle the City's residential recycling.
Former Mayor Richard M. Daley's administration issued the first request for proposals for private companies to take over recycling services. Current Mayor Rahm Emanuel has introduced a competitive trial scenario, in which the City will evaluate performance by pickup crews from the three vendors and the union to determine how to deliver services more efficiently and cost effectively and to decide among the four crews. The competition starts in January.
Currently, 90 union workers handle residential recycling within Chicago's neighborhoods, and many organized labor leaders fear the trial could be the first step toward privatizing all City waste removal. "Sometimes, municipal governments will use privatization as a means to bust unions," said Anna Marie Schuh, an associate professor of public administration at Roosevelt University.
After spending 25 years auditing federal human resource programs, Schuh sees the importance of unionized civil service jobs within a large city.
"The public sector has traditionally been a place of social mobility for people with lower skill sets," Schuh said. "When you eliminate those jobs, you eliminate the opportunity for social mobility.The post office was and is a great example of class mobility. A lot of people with high school degrees or even wage laborers with no high school degree were able to move their families into the middle class by working for the postal service. Governments have also traditionally discriminated less against certain races than the private sector."
City spokespersons are quick to note the new mayor inherited a budget deficit of more than $600 million, with unfunded pension liabilities in the billions of dollars. "Other cities have privatized collection services, and it is not unusual to have both public and private crews providing collection services," said Matt Smith, a spokesperson from the Department of Streets and Sanitation. "The ultimate goal is to reduce the program costs and expand the recycling program throughout the city."
"Presumably, private sectors can function more efficiently because they operate for profits and have stronger incentives to adopt advanced technology and equipment and to achieve economies of scale and expand the market," said Ning Ai, an assistant professor of urban planning and policy from the University of Illinois at Chicago. "In terms of municipal solid waste, private companies often have capacities to accept more types of recyclables, which could be another condition to divert more waste from landfills.
When more waste materials are diverted from landfills, less waste volume is sent to landfills. Consequently, landfill disposal fees, which have been increasing over the years, can be saved."
Local 1001, however, maintains the City would be ill advised to hand over recyclables to private companies for free. "The company that picks up the recyclables can then keep those materials," Local 1001 Business Manager Lou Phillips said. "By the City's own numbers, we pick up $3.5 million worth of recyclable materials every year. The City also says that Local 1001 is about $2 million more expensive than the private bids they've received, but we're actually $1.5 million dollars cheaper."
City could lose revenue
According to Phillips, the City also could lose revenue from property and sales taxes. All sanitation workers currently are required to live within the city limits. "People who collect the recyclables and the trash live here," said Phillips. "They buy things here, they're your little league coaches, they're your school board members. When you hire from a private company, the workers don't necessarily give back to the community. The private company doesn't pay a living wage or enough money to buy a house."
An independent arbiter, Edwin H. Benn, recently ruled that this push toward privatization is legal but commented it might make life difficult for the mayor in the future as he tries to work with organized labor to reduce the City's debt by negotiating union pensions and other worker related expenses.
Traditionally, western cities such as Phoenix, Seattle, and San Francisco have led the push toward privatizing waste removal and recycling. In most Midwestern cities, government still operates waste removal programs.
"The first big wave of privatization came in the early 1990s," Schuh said. "A book called Reinventing the Government was released, and it talked about how Phoenix privatized garbage removal. There were a lot of local governments that followed Phoenix's lead in the early ‘90s."
According to Schuh, three factors must exist for city residents to support privatization. "Certainly, there's got to be a money crunch within your local government," she said. "Next, if the government doesn't have credibility and the people don't trust their government to take care of basic services, then you will see a lot of support for privatization. Finally, corruption plays a huge role. When there are contracts that are awarded to companies that don't deserve them, people are m