Chicago officials said Tuesday that they will investigate "credible" allegations that a company recently awarded a $31 million contract to provide airport security is paying its employees a base rate below what's called for in the city's living-wage ordinance.
Aldermen, including those loyal to Mayor Richard Daley, strongly criticized the contract after the wage discrepancy was highlighted Tuesday at a public hearing by the president of the Service Employees International Union.
The union, which represented workers at the company that previously had the contract, has pushed the contract issue in its first major confrontation with the administration since it successfully bankrolled some aldermanic challengers to Daley-backed candidates in elections earlier this year.
Some Daley allies opposed by SEIU in the elections sided with the union Tuesday, saying at the joint Finance and Aviation Committee hearing that the contract should be canceled because the company appeared to have violated the city ordinance that sets a minimum pay rate, currently $10.33, for large contractors.
"There's one thing...that is as clear as the nose on my face, and that is when I voted for a living wage, I voted for a living wage," said Ald. Bernard Stone (50th), a Daley loyalist who was strongly opposed by organized labor in the elections. "Clearly this is a bad contract."
Universal Security Inc. was the winning low bidder among 16 companies seeking the five-year deal to provide unarmed security workers at O'Hare International Airport and Midway Airport. It took over the job June 1, replacing longtime contractor McCoy Security, which employed workers represented by SEIU.
Tom Balanoff, president of SEIU Local 1, showed aldermen a posterboard-size version of an employee's pay stub that showed workers under the new contract were earning a base pay rate of $7.50 an hour. The workers were being paid the equivalent of an additional $3 an hour in untaxed transportation and uniform allowances.
Balanoff and several aldermen said the arrangement could have given Universal an edge in the bidding process because it effectively reduced its own federal tax burden by paying workers a lower rate.
Nuria Fernandez, the city's aviation commissioner, said that when she learned of the pay issue Monday afternoon, her office contacted Universal CEO Mark Lundgren and told him it was "a very unusual practice" and that the company "immediately had to fix that problem."
No company representatives attended Tuesday's public hearing. Lundgren did not return a phone call seeking comment. Lundgren provided a one-paragraph letter to the city saying that paychecks would now show employees earning $10.50 in wages.
The public hearing lasted nearly three hours as a room full of aldermen took turns blasting the contract in front of Balanoff.
"I don't believe there's anybody in this room that believes this is a good contract," said Ald. Isaac Carothers (29th), one of Daley's staunchest allies on the Council.
The irony of siding with SEIU and Balanoff was not lost on Stone.
"SEIU spent $500,000 to beat me and here I am agreeing with them," Stone said to a Daley aide on the side of the council chamber during the hearing. "It hurts me to agree with [Balanoff]."