Subway Standoff Shows Workers' Rising Fortunes ; New York Avoids a Transit Strike. Settlement Symbolizes How Municipal

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After years of belt-tightening, municipal employees are starting to catch up as they tap into the budget surpluses in most cities and states.

Although their new contracts are not fat - and they don't look anything like the money flowing on Wall Street - the gains are improvements over the give-backs and zero-percent increases of the 1980s.

In some ways, they are a testament to a somewhat renewed vigor in the labor movement. But the better contracts also are a result of the tight job market, in which cities and states are competing against corporations' signing bonuses, profit-sharing, and stock options.

Yesterday, in one of the latest examples of the …