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Scranton, Pa., slashes workers' pay to minimum wage

About 400 municipal workers are now earning minimum wage because Scranton, Pa., faces $16 million in red ink. Scranton is just one of several struggling cities around the country grappling with budget deficits and searching for ways to bring in more money. NBC's Ron Allen reports.

 Updated at 5:55 p.m. ET: Unions representing civil servants in Scranton, Pa., filed suit Tuesday after the mayor cut pay for police, firefighters, garbage collectors and other public workers to minimum wage, saying that was all the city could afford.

Unions representing police, fire and public workers in the city of 76,000 filed three lawsuits after the city defied a judge's order and issued paychecks Friday that paid 398 city employees at the minimum wage of $7.25 an hour, according to the Scranton Times-Tribune.

The lawsuits against Mayor Chris Doherty include one filed in federal court under the Fair Labor Standards Act accusing the city of failing to pay wages on time and failing to pay overtime. Another lawsuit seeks to hold the mayor in contempt for violating a judges order. Yet another alleges that benefits for disabled police and firefighters were cut without a hearing.

The Times-Tribune, quoting City Business Manager Ryan McGowan, reported that as of Monday the city had $133,000 in cash, but owed $3.4 million in vendor bills. One of those bills was health insurance, McGowan said.

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Scranton is among a number of cities struggling to pay their bills amid rising labor costs. Earlier this month, Stockton, Calif., became the largest city in U.S. history to file for bankruptcy protection from creditors.

Scranton's mayor and the city council have been locked in a dispute over how to raise money in a city that has steadily lost population over the past 50 years and has been hit hard by the real estate slump and the Great Recession that followed. Doherty has argued that the city needs to increase taxes, but council members want to find other ways to raise money. Doherty is a Democrat. The city council  is comprised of Democrats.

The Scranton newspaper said the city has been designated as financially distressed for 20 years.

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