San Jose has mostly settled a labor dispute that came close to producing a major city worker strike this summer, though not completely. On Tuesday, Oct. 27, the City Council unanimously approved new three-year contracts that San Jose Spotlight says cover about 4,000 workers represented by IFPTE Local 21 and MEF-AFSCME Local 101. One bargaining group voted the deal down, so its fight goes on.

What's in the deal

City documents show the contracts run from July 1, 2026, through June 30, 2029. They include a general wage increase of about 3% in each of the three fiscal years and a one-time, non-pensionable lump-sum payment equal to 1% of base annual wages for eligible employees. There are also side letters on the city's artificial intelligence policy as it applies to employee evaluations and layoffs. The two sides reached the tentative agreement on Oct. 8. San Jose Spotlight reports that pay and protection from AI-driven job displacement were among the main sticking points during months of bargaining.

The holdout

IFPTE Local 21 bargained for three chapters. A supplemental memo to the council dated Oct. 26 says the union told the city on Oct. 23 that members of the Association of Engineers and Architects (AEA) and the City Association of Management Personnel (CAMP) had ratified their agreements. Members of the Association of Maintenance Supervisory Personnel (AMSP) had not. The city revised its recommendation and dropped the AMSP approval. According to San Jose Spotlight, it's unclear where talks with that group go from here.

What leaders said

"This is definitely good news that we got to an agreement that I think is fair to our workers," Mayor Matt Mahan said at the meeting, as quoted by San Jose Spotlight. District 5 Councilmember Peter Ortiz said city employees "deserve much more than often what we're able to provide." Union officials told Spotlight that a strike would have been San Jose's largest labor action since 1981.

The budget backdrop

San Jose Spotlight notes that the city closed a $50 million deficit in its $5.5 billion budget in June by drawing on reserves and cutting services, and it projects deficits of more than $10 million in each of the next two fiscal years.