Nearly 300 Ann Arbor city workers represented by AFSCME Local 369 say their paychecks can't keep pace with the city's housing costs, and most of them don't even live there anymore. The union's median annualized base wage sits around $63,600, and its president says the vast majority of members have been priced out of the community they serve.
The dispute has landed the city and its largest municipal union in months of state-mediated bargaining, with the two sides meeting again on Thursday, August 27, for their next scheduled session, as reported by MLive.com. AFSCME Local 369's labor contract with the City of Ann Arbor expired eight months before that report, and the union's last mediation session before this week's was held on June 30. Union president David Kastner says only about 17 percent of the local's 281 members actually live within city limits, while roughly 15 percent earn less than the wage the MIT Living Wage Calculator says is needed to get by in Ann Arbor.
The Numbers Behind the Standoff
According to the MIT Living Wage Calculator, a full-time worker without children needs $25.30 an hour, or $52,624 a year, just to break even in Ann Arbor. Some AFSCME workers started under the expired contract at $16.66 an hour, or $34,653 a year, well below that threshold. Local 369 members' annualized base wages range from about $40,600 to $88,200, with an average of $64,369 excluding overtime, per the same MLive report.
Kastner told the outlet that cost-of-living adjustments have not exceeded 3 percent in any year over the prior two decades, and members took a 0 percent raise in five of those 20 years, including 2025, when the contract included no cost-of-living adjustment at all. Workers did receive lump-sum payments that year and picked up about a 2.3 percent increase from contractual step raises, according to City Administrator Milton Dohoney. Kastner says members experienced negative real wage growth in 11 of the last 20 years, and he pointed to spiking utility costs, grocery prices he says have doubled, and mounting childcare expenses as squeezing household budgets.
Housing Costs Outpace Pay
The union's affordability argument tracks with broader local housing data. Zillow figures through July 2026 put the typical single-family home value in Ann Arbor at $536,036, up 3.0 percent year-over-year. Federal fair market rent for a two-bedroom apartment in the city is set at $1,656 a month for fiscal year 2026, contributing to an estimated break-even cost of living near $61,031 a year for a single adult, according to housing benchmarks compiled by Every City in the USA. U.S. Census Bureau data for 2024 put Ann Arbor's median household income at $80,603, compared to $90,523 across Washtenaw County as a whole. Regional inflation has not helped: the Bureau of Labor Statistics reported the Midwest Consumer Price Index rose 3.5 percent over the 12 months ending in July 2026.
City Says Union's Ask Would Force Cuts
AFSCME Local 369 is requesting 12 percent raises across three years, along with shift premiums and double-time pay for holiday hours, according to MLive's reporting. Ann Arbor city officials have argued the union's financial demands are unreasonable and financially unsustainable, and they have suggested that meeting them could require cuts to city services. Mayor Christopher Taylor has shared that view, according to the outlet, while City Council Member Travis Radina said the city is negotiating with the union in good faith.
The city has also floated eliminating the AFSCME union president position from the city budget and redirecting the savings into higher worker pay. That position traces back to a deal AFSCME members struck in the 1980s, when they agreed to give up one personal day annually to help fund it; Dohoney said members later received an additional personal day in the early 1980s while keeping a full-time union official role. Kastner took a leave from his duties at the city's water treatment plant after becoming union president. Dohoney also noted that members currently receive four personal days annually.
Union Alleges Union-Busting as Talks Drag On
AFSCME members have accused city officials of union-busting tactics and have recently rallied at Ann Arbor City Hall and spoken at council meetings to press their case, per the same MLive account. Dohoney said mediation sessions are scheduled weeks apart based on the state mediator's availability, and reiterated that the process remains underway with no tentative agreement reached. Under Michigan's Public Employment Relations Act, public sector employees are legally barred from striking, which is why the dispute is playing out through state-administered mediation rather than a walkout. The Michigan Employment Relations Commission's mediation process is confidential and non-binding, meaning neutral mediators can facilitate talks but cannot force either side to accept a settlement.
Kastner maintains the union's wage requests are realistic and backed by data. The union's tenure breakdown shows 51 percent of members with one to five years on the job, 21 percent with six to ten years, 11 percent with 11 to 15 years, 7 percent with 16 to 20 years, 6 percent with 21 to 25 years, and 4 percent with 26 years or more; the median tenure across the local is 5.6 years. AFSCME's contract had included 2.25 percent wage increases in 2022, 2023, and 2024, before the no-raise year in 2025.
Budget Backdrop and a Leadership Transition
The city's own budget picture adds context to the standoff. Ann Arbor's City Council adopted a fiscal year 2026 municipal budget totaling $680 million in overall revenues and $638 million in expenditures, including a General Fund budget of more than $146 million reflecting a 7.6 percent increase in recurring expenditures over the prior fiscal year. An MLive/The Ann Arbor News analysis found 267 city workers made six-figure pay in 2025 when overtime and other cash perks were included. Dohoney's own base annual salary is $300,000, and the City Council gave him $50,000 in raises and nearly $17,000 in bonuses over the prior two years, per MLive's reporting. The city has said it will weigh any wage adjustments against internal equity, market competitiveness, recruitment and retention needs, financial sustainability, and total compensation costs, and it notes that it already provides health insurance, retirement benefits, paid leave, longevity pay, shift premiums, and overtime on top of base wages.
The negotiations are unfolding just as city leadership is set to change hands. According to Hoodline, Yousef Rabhi, who defeated incumbent Mayor Christopher Taylor in the tight Democratic primary on August 4, is poised to become mayor in November. Rabhi previously served three terms in the Michigan House of Representatives and chaired the Washtenaw County Board of Commissioners, and this summer's mayoral race centered heavily on housing affordability, energy policy, and public safety priorities. Rabhi has also been an outspoken critic of tax incentives for large local developments, including the brownfield package approved for the $300 million-plus Arbor South project, positioning him as a figure likely to bring added scrutiny to how the incoming administration handles labor and housing policy once the AFSCME contract talks are resolved.
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