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Aramark fights unions over pension benefits

Last modified: 11/23/2012 12:49:52 AM
Aramark has a long history of battles with organized labor.

It has clashed repeatedly with UNITE-HERE, a union of hotel, food-service and gaming workers. The union has staged protests at Citizens Bank Park in Philadelphia and the Consol Energy Center in Pittsburgh, rallying in support of higher wages and access to health-care benefits. The union has also joined with students at colleges, including Pennsylvania State University and the Massachusetts Institute of Technology, to press for better pay and benefits for campus food-service workers.


Aramark’s business is part of a decades-old trend to save taxpayers money by hiring private companies to manage school cafeterias, run buses, and oversee other functions such as building and ground maintenance once handled by public employees. That has been costly to workers, said Janice Fine, a Rutgers University assistant professor of labor studies who has studied outsourcing.

“The evidence is incontrovertible that the jobs went from being good full-time blue-collar jobs to being lower paying part-time jobs, often with minimal or no benefits,” Fine said.

That’s what happened to Carol Sanders when Aramark took over in New Orleans’s public schools in 2010.

Sanders, 52, began working for the Orleans Parish school board in 1982. She raised three children and purchased a home on her cook’s pay. She had medical benefits, paid days off and was making $15 an hour when Aramark was hired to run food service for the Recovery School District, which took over Orleans Parish schools after the city was devastated by Hurricane Katrina.

One of the company’s owners, the Warburg Pincus IX fund, received a $100 million investment from the Teachers’ Retirement System of Louisiana, the pension system Sanders paid into.

Aramark cut Sanders’s time on the job in half, to 20 hours a week, leaving her working split shifts – 2 hours in the morning and 2 more into the early afternoon, five days a week. Her pay dropped to $9 an hour. She went without medical insurance and began drawing $200 a month in food stamps.

“I raised a family on Orleans Parish, now I can’t raise myself on it,” Sanders said. “I’m barely surviving.”

In August, she was laid off and is waiting to be called back. She’s relying on family to pay her mortgage.

“It’s just a struggle for me,” Sanders said. “By the skin of my teeth, I am still in it.”

Thomas Sueta, an Aramark spokesman, declined to comment.

Pension irony

In Baton Rouge, the state capital, Phil Griffith, the chief investment officer of the Teachers’ Retirement System of Louisiana, said pension managers focus on the returns from private-equity investments. They pay less attention to the effect the funds may have on jobs in companies the firms buy.

“We take a kind of hands-off approach, which is from a fiduciary responsibility,” Griffith said. “We manage it for return and for our own constituents. We don’t get into, ‘Does that mean it lays off public workers?’ ”

“The only thing we look at is the security of the trust, not whether or not it creates jobs or takes away jobs, whether it be public employees in Louisiana or public employees throughout the country,” Griffith said.

“Our responsibility is to the trust. The decisions of school boards to outsource those positions are outside our control,” he said. “I am not happy that folks don’t have jobs, but I don’t think it’s a direct impact of our investment.”

Like many communities, Chelmsford, Mass., strained to keep up with rising employee-benefit costs while investing in the classroom, said Janet Askenburg, the School Committee head.

After considering outsourcing for years, the committee sought bids for janitorial work in March 2011 and received 10 responses. Aramark made the low bid, and the board gave the custodians represented by Council 93 an opportunity to match it. They couldn’t.

“We were going to give back sick days, cut pay,” said Mike Greenwood, president of the local union, who worked in the school system for 13 years and is 60 years old.

Aramark offered to hire the 24 affected workers at $8.25 to $8.75 an hour. None of the custodians, who made $19 on average, accepted.

Firing higher-paid employees in unions and outsourcing the work to Aramark’s non-union labor let the town spend $250,000 to hire more teachers, Askenburg said. The school system also had $129,000 in severance and unemployment costs.

“It was a tough decision but also a bit of a no-brainer as well,” she said, adding that the committee and the superintendent were running the system like a business. “If we were to run this based on emotions and feelings, we wouldn’t have made this decision.”

Aramark employs 27 custodians in Chelmsford’s seven schools, at an average wage of $12 an hour, said Kathleen McWilliams, business manager for the schools. They receive health benefits, contributing a third of the cost, and can enroll in a 401(k) retirement-savings plan, she said.

Greenwood, whose wife has cancer, and Rick Thorne still don’t have new jobs, 16 months later. Both get pensions through the Middlesex County Retirement System. The school district continues to pay two-thirds of their health insurance. Thorne has sought jobs at a local police department, a school and a hockey rink. Had he worked eight more years for Chelmsford, his monthly pension would’ve more than doubled.

“If you can hire a 30-year-old or a 55-year-old, who are you going to hire?” Thorne said.

After a choppy transition to the new custodians, “the schools have never been cleaner,” Askenburg said.



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