July 2011

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Steven Malanga

A radicalized union that twice before has tried and partially succeeded in shutting down America's largest city is once again holding New York hostage. Using such aggressive tactics, or the threat of them, over the last 40 years, the Transport Workers Union (TWU) has won for its members a wage and benefits package that far outshines what most blue-collar workers in the private sector can earn, including retirement at age 55 with half salary and cost-of-living adjustments.

If New York state and city officials are ever to stop the TWU's recurring blackmail, which has burdened taxpayers and riders with enormous costs, they should use this illegal strike to impose the Reagan solution. Faced with a militant public-sector union that violated the law with a walk-out, President Reagan dismissed thousands of air traffic controllers in 1981 and rebuilt the nation's air traffic system with a new work force. New York's Metropolitan Transportation Authority (MTA) could do the same by terminating striking workers and hiring new ones, because its relatively unskilled unionized jobs are highly sought-after, with over 30 applicants for each position.

Founded in 1934 originally to represent workers in the private sector, the TWU was one of the radical unions that formed the Congress of Industrial Organizations. An early president, Mike Quill, was a member of the Communist Party who reveled in his nickname, "Red Mike." Though Quill quit the party when it refused to back an early transit fare increase (on the grounds that it would hurt the working class), he remained a militant power for decades, especially after New York Mayor Robert Wagner misguidedly signed an executive order giving public employees the right to organize and bargain collectively in 1958. Quill began a predictable cycle: Every few years, during the critical Christmas shopping and tourist season, the TWU threatens to shut down New York if officials don't acquiesce to its demands.

The union first struck on New Year's Day, 1966, John Lindsay's first day as mayor, demanding a 30% wage hike, a four-day, 32-hour work week and retirement after 25 years service. Workers stayed out for 13 contentious days, and though public opinion mostly opposed the strike, in the end the union won a rich settlement, estimated at some $70 million (about $400 million in today's dollars), or twice what city negotiators had originally offered. In 1980, with the city still recovering from the fiscal crisis of the late 1970s, the union struck again, this time for 11 days, and when a judge imposed fines on workers, they simply upped their demands to cover the costs, winning 18% wage increases over two years.

Today TWU bus drivers earn, on average, $63,000 annually, while subway motormen make $54,000 and subway cleaners $40,000. Workers get full health benefits, make no contributions to insurance premiums and can retire after 25 years of service or at age 55. The MTA has an unfunded pension liability of $1 billion. Given the strike, one might think the MTA is asking for significant givebacks of these perks. Hardly. It asked to push the retirement age back to 62 for new workers but dropped that demand and is now merely asking that they contribute 6% of their pre-tax salaries toward their pension for their first 10 years on the job, as well as pay 1% of salary for health insurance. By contrast, the TWU demanded that the MTA lower retirement age to 50 for its current workers and grant 8% wage increases over the next three years.

In heavily pro-union New York, these kinds of demands are not only taken seriously but often prevail. Nearly three-quarters of all government workers in the Greater New York area are unionized, the highest level of public-sector unionization of any major metropolitan region. With so much muscle, they typically earn 15% more on average in wages than private sector workers, according to a recent study by New York's Citizens Budget Commission. When porcine benefits packages are added into the mix, total compensation is often 50% greater. The cost of all this has become a huge burden. New York City's pension and benefits costs have soared 60%, or about $4 billion, in just four years. The transit system's pension costs alone have tripled since 2002, while the bill for health benefits is up 40%.

Public unions rarely have to strike to win such benefits. The vast and growing political power they wield in state legislatures and city halls is usually enough to swing contract negotiations in their favor. But the TWU has always been a militant organization, whose leaders, egged on by the membership, seem engaged in a game of one-upmanship even with other unions.

But now New York officials should take a page from President Reagan's playbook: The MTA should start sending out termination letters to striking workers for breaking the law, and hiring a new work force -- including offering jobs to current workers, but on terms set down by the MTA.

While rebuilding the work force, transit officials could unleash the privately owned van services and bus lines, which they currently prohibit from operating along public bus lines, to protect the MTA's and the TWU's monopoly. The MTA should begin handing out long-term contracts for these operators to provide alternate, competitive services on a permanent basis.

New York officials should also privatize big chunks of the transit system, as many other cities in the U.S. and abroad are doing. For the past 50 years New York has unfortunately moved in the opposite direction, preferring to take over private lines and to house transit operations in a gigantic state agency, the MTA, or to offer no-bid franchises to a few politically connected and heavily subsidized private lines -- all in the mistaken belief that having workers on the public payrolls would prohibit strikes and make the system more reliable.

Elsewhere, transit authorities are more like outsourcing contractors than operators, bidding out lines and overseeing routes. Denver and San Diego have contracted 35% of their bus routes. But perhaps the best model is London, where, spurred by Margaret Thatcher, officials began an aggressive transit privatization program nearly 20 years ago. London's bus lines, though designed by the city, are now operated by some 40 private companies. Only on such a model can New York begin to rein in its high costs and stop repeated union blackmail.

Audrey Brubaker

From yesterday's Wall Street Journal:

Yesterday the 33,000 New York City transit workers presented their Christmas gift to their seven million customers: an illegal strike that has paralyzed the city they "serve."

One predictable result has been gridlock. During one of the most frigid mornings of the year, the Brooklyn Bridge was clogged, not just with cars, but with hordes of New Yorkers on foot, in many cases walking miles to work. The strike is walloping the city's economy with an estimated $400 million of lost commerce each day the strike persists. Retailers are missing out on the busiest shopping days of the year.

Make no mistake: This strike is a carefully timed union strategy to inflict maximum economic damage in exchange for maximum extortion at the bargaining table. The Transport Workers Union is playing hardball, and we only wish New York Governor George Pataki and other officials representing the state's commuters and taxpayers would be as tough. But since public-employee unions are among the largest donors to the coffers of the very politicians with whom they are negotiating, it's not surprising that the union bosses have full confidence that the state will eventually pay their ransom.

No doubt adding to union bravado is the knowledge that city and state officials have for decades caved to virtually every union demand. Mr. Pataki famously buckled to Dennis Rivera and the health-care workers union -- offering a $1.8 billion payoff before the 2002 election -- even as the state was awash in red ink. New York Mayor Mike Bloomberg failed to use the fiscal crisis after September 11 to drive any changes in public-sector work rules. This is how the unions are repaying them.

The average salary for a New York bus driver is $63,000 a year -- about 25% more than for similar private-sector workers. Over the next three years the union wants a package that would raise salaries about three times the rate of inflation. The real union plum is a "25-55" rule that allows retirement at half salary at age 55 after just 25 years of service. The state wants to raise the retirement age to 62; the union said fuhgeddaboutit.

There's also the gold-plated health-care retirement package, which will saddle the city and state with billions of dollars of future unfunded outlays. (No one knows for sure the real amount because there has never been an audit of the agency's health-care pensions finances.) Current employees and most retirees pay nothing for health-care benefits, and the state is merely asking all new workers to contribute 1% of salary to offset the costs. Again the union scoffed.

On the opposite page, Steven Malanga argues for firing the workers and hiring replacements. That's fine by us. But if that's too much for Messrs. Pataki and Bloomberg, they should at least announce that any fines imposed on the unions by the courts (such as the $1 million assessed yesterday) will under no circumstances be negotiated away in any settlement.

Better yet, they could use this strike as an opportunity to end the public transit monopoly by legalizing all forms of private competition -- including jitneys. Los Angeles, Denver and San Diego have all saved money by contracting out transit services to private bidders, and New York could do the same.

Disabling strikes of this sort are what happens to cities that become dominated by public-employee unions. Political leaders operate as if employers (taxpayers) serve the employees (unions), not vice versa. Labor leaders begin to think they can get away with anything. Meanwhile, the tax burden rises (New York's is nearly twice the national average) while the tax base shrinks. Just as in France, the unions punish a city and pay no price for it. Will New York's political leaders let them get away with it again?

NY Observer

The Transit Workers Union, consisting of some 34,000 or so lawbreakers and led by an arrogant boss named Roger Toussaint, apparently believes the riding public will sympathize with its ludicrous demands.

As usual, the union bosses and their sheep-like members have it exactly wrong. This illegal strike will stir no feelings of brotherhood or solidarity among the rest of New York’s work force. It didn’t happen in 1980, and it certainly won’t happen now. Instead, a strike such as this, at the height of the holiday season, is precisely the sort of thing which can reverse a recovering economy and plunge the city into a fiscal crisis. The city’s businesses, retail stores and tourist attractions will lose millions of dollars, endangering a still-fragile economic foundation, and all New Yorkers will suffer the long-term consequences.

Mr. Toussaint and the members of the T.W.U.’s executive board deserve not only to be severely fined, but to be prosecuted for this illegal act, to be held accountable in a court of law for placing their own greed and self-importance ahead of the best interests of the city.

Eventually, Mr. Toussaint will have to cave in. He thinks he has the power to shut down the city. He thinks he can persuade New Yorkers that his followers deserve a pay increase of some 24 percent over the next three years. He thinks his fellow citizens will sympathize with workers who have fabulous medical benefits and a guaranteed public pension.

It’s hard to fathom this kind of thinking.

Here’s something else that didn’t enter into Mr. Toussaint’s craven calculations: the lingering memories of 9/11. The story of New York City since those dreadful attacks has been one of determination, of sacrifice, and of perseverance. New Yorkers have been justly proud of the way all city residents have worked together since 2001 to bring New York back from the brink, stunning many experts as the economy steadily rebounded, crime remained low and real-estate values rose. But the city is still recovering, still figuring out how to rebuild, still trying to persuade tourists that New York remains the world-class showcase it was before 9/11.

And now this. Mr. Toussaint clearly doesn’t give a damn about the bigger picture. He chose to engage in a game of chicken with an emboldened Metropolitan Transportation Authority. When the moment of truth arrived, he chose to put his union and its ridiculous demands ahead of public service and civic obligation.

He chose to break the law.

DOES IT MATTER TO MR. TOUSSAINT that the people he is hurting most are less-affluent workers who don’t have the luxury of working at home in front of a computer, who can’t simply blow off a few days around the holidays? These workers—health and hospital staff, clerks, salespeople, cashiers and others—simply have to get to work somehow. And they are finding a way to do so, but no thanks to Mr. Toussaint. He is costing them time and, if for some reason they can’t get to work or show up late, he’s costing them money. Many of these lower middle-class and middle-class workers don’t receive 8 percent annual raises and have very little in the way of public health benefits and a pension. These are the people Mr. Toussaint is victimizing. This is a brutal attack on the working poor and low-income New Yorkers who depend on mass transit.

Of course, the only workers he allegedly cares about are his members. And how are they doing under his leadership? Well, they are off the job at the moment, not collecting a cent and at risk of a huge fine—two days’ pay for every day they strike. None of this would have happened if Mr. Toussaint had accepted the M.T.A.’s final offer. The fact is, despite all his blowhard posturing to the press, Mr. Toussaint was winning major wage concessions from the M.T.A. Yes, the agency has proposed that new employees should pay more to their pension funds, which is standard operating procedure in the private sector. Mr. Toussaint could have negotiated a pension change, but instead chose to strike and throw the city into turmoil.

Even the union’s national president, Michael O’Brien, says he does not support the strike, because he believes the M.T.A. was negotiating in good faith. Governor George Pataki, who controls the M.T.A., should not cave in to the union’s demands. Instead, he should punish the union with substantial fines, such as the $1 million a day fine imposed by State Supreme Court Justice Theodore Jones, for breaking the state’s Taylor Law, so that the lesson of 2005 is costly to the union and prevents future strikes. Peter Kalikow, chairman of the M.T.A., has rightly encouraged State Attorney General Eliot Spitzer to pursue a contempt citation against the union. And Mayor Michael Bloomberg is correct in asking the city’s corporation counsel to bring additional fines and charges against the union.

Mr. Toussaint and the T.W.U.’s board will soon learn what others might have told them: It is hard to win the public’s sympathy when you are literally threatening the life’s blood of this great city.

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